Microsoft Reveals IP Communications Roadmap

Current Analysis

In its own words, Microsoft's major announcement this week was a "roadmap and partner ecosystem" announcement for the unified communications market space. Somewhere back in our early science days, we learned that an ecosystem is a dynamic complex or community of hunters and prey functioning as an interdependent ecological unit. So much for science, Microsoft has come out with a bundle of announcements that turn many of the Redmond giant's IP communications rumors into a nasty reality for competitors and some partners. Part of the reality is that the announcements of June 26 aren't due to actually ship until mid-2007 (hence this is designated a roadmap announcement), but at least the ecosystem participants have time to plan and scheme and react. For those who have paid attention, several developments have foreshadowed the current situation, including Microsoft's formation of the Unified Communications Group (UCG) last year, combining real time communications with Exchange; the acquisition of Media-streams which pretty much guaranteed that Microsoft would be getting into voice (Media Streams CEO Erich Gebhardt was a speaker at our Berlin conference in April-06 and spoke of Microsoft's voice strategy) ; as well as the acquisition of Groove (and Ray Ozzie) to boost the synch-asynch connection within Microsoft's UC thrust. So, we aren't surprised one bit by all this. Here are our top five bullet points from the roadmap announcement.


Live Communications Server (LCS) has been renamed. The "Live" designation will now be limited to Microsoft's service offerings. The new name for the server is Office Communications Server (OCS). In addition to IM and presence management capabilities, OCS-2007's new features include VoIP call management capabilities on-premises web conferencing (same capabilities of Live Meeting service delivered as CPE, with the same user interface), audio conferencing, and videoconferencing, and the ability to initiate any type of conference, including multipoint with voice activated switching, with the same interface for both IM and telephony, from Office Communicator or from Office programs such as Word, Excel, etc. That's a pretty big claim, though one that Microsoft has talked about for two years as "coming eventually." Multipoint only works, however, for RTA and RTV, Microsoft's proprietary realtime audio and video codecs Microsoft's unified communications machine will have internal capabilities for voice and video both as a launched communications program as well as through an interface embedded in productivity software. OCS will support its own web conferencing platform, and the web conferencing client will support both PSTN and IP voice. OCS also will support internal and external web conferencing participants with an edge server deployed for users outside the firewall.


Office Communicator 2007 will include full softphone features (including NAT and firewall traversal support through the ICE initiative), access to Exchange Unified Messaging, mobile IM and presence, and PBX integration with Office Communicator Mobile. With OCS 2007 users will be able to make and receive telephone calls from their PCs and bring control of the PBX phone to users' desktop.


Microsoft is in partnership with Polycom and others to develop business-enabled IP desktop phones that will support presence and other Microsoft OCS functions, including scrolling through buddy lists. We believe these phones will connect directly to OCS. Polycom will initially develop a USB speaker phone for OCS, although other phones will certainly come along.


Live Meeting will be available as either a premise-based product or a service. Both will integrate more closely with Office and Outlook and support VoIP as well as PSTN audio. The dreaded installer program will be updated and is supposed to be much easier to use. In fact, the Live Meeting client for the Live Meeting service will be the exact same software (down to the .exe) as the Live Meeting client used on Communications Server 2007. Different features will 'light-up' based on what is licensed/subscribed to and what is supported in each implementation.


Once known as RingCam, Office RoundTable is a 360-degree USB camera for conferencing with some sort of active speaker recognition. Other details, including pricing or photographs, were not forthcoming at the briefing, however, we note that audio and video compression for RingCam is done in software running on the PC.


Here's What We Think


There are several interesting points to ponder coming off this very important Microsoft announcement. It is now very clear that Microsoft's intentions in the real time, unified
communications space are broad and deep. Just how broad and just how deep of course are subjects for conjecture.


OCS will take on some of the functions (multipoint audio and video) that are currently provided by Tandberg, Radvision, Polycom, and Arel partnerships. Yes, the partners will be quick to point out that their bridges do transcoding and continuous presence, and most likely scale to support a larger number of ports, but there can be no doubt that a Microsoft-branded product, while expanding the market, will take some market share and impact negatively the business potential for all of these partner companies who will need a very good market navigation system moving forward. The partners all knew it was coming of course and they'll all have good stories to tell while whistling past the graveyard.


OCS walks like a PBX, quacks like a PBX, and looks like a PBX, but Microsoft will insist that OCS is not a PBX, even though it provides SIP call control management capability and supports IP telephony handsets directly. Microsoft's PBX partners like Cisco, Avaya, Siemens, Mitel, NEC, Alcatel, and Vonexus will all maintain that their 500+ function PBX systems are far more sophisticated than OCS, but in the end, today's IP-PBXs are really just software running on a Windows or Linux server and industry-standard hardware. And guess who owns the marketplace for enterprise software? While Microsoft doesn't have a good solution for local survivability and a few other bothersome IP telephony details yet, this announcement will certainly cause PBX sales cycles to lengthen. Listen carefully and you will hear many PBX vendors whistling past the graveyard while trying to navigate around OCS as a telephony device.


The quirky RingCam, combined with last week's non-announcement of two new Microsoft-branded webcams, reminds us that Microsoft can be in the hardware business when it wants to be. We wonder how long it will be before we see Microsoft-branded IP telephones. A year ago, we spoke about softphones and USB handsets replacing the traditional desktop phone; some of Microsoft's partners will be producing these. In the Redmond ecosystem, today's partners often become tomorrow's breakfast food.


Two months ago in Berlin, I stated during one of my own presentations (after Erich Gebhardt spoke) that I believed Microsoft and Cisco would be head-to-head competitors in many areas before 2006 was over. We now have Cisco's Unified Communicator client competing with a Microsoft Communicator client, and both firms have Presence engines; now we have Microsoft coming into Cisco's IP Telephony space. Can you say co-opetition smoothly and without smirking? That will be the buzzword moving forward. Whether any of this can light a fire under IBM Lotus and the Sametime team remains to be seen, but IBM should be the third leg of the stool (with Microsoft and Cisco) representing the unified communications market.


The concept of embedding VoIP within Office (or even video communications within Office) is interesting and could actually prove very useful, unlike the myriad of features and functions embedded in Word and Excel that few people actually use. Voice within Office productivity tools could be the magic to take unified communications to the next level.


This announcement strengthens Microsoft's server (OCS) to services (Live Meeting) story, but the flavor of the announcement certainly made the server side appear far more important. Microsoft also announced, however, that fully featured OCS solutions will be available to the service provider market. Many companies already offer hosted Exchange services; adding OCS will give them additional avenues to revenue. Shell, a large LCS user stated that if a good services company offered an OCS solution that was robust, it would prefer to use the service provider's offering instead of owning and managing the service in-house.


Microsoft is shrewdly moving from a position in the $5 billion enterprise messaging business to a player in the enterprise voice business which is 5-10x the size, depending on whether you think there is a future in proprietary voice hardware platforms. Since the CTI (computer telephony integration) days of a decade ago, Bill Gates has wanted Microsoft to be in the voice business. Now the company appears to have crossed the point of no return, with an announced roadmap that redefines partnerships and competitors. Besides Microsoft, the real winners here stand to be 1) the solution partners like Polycom with Microsoft-certified telephony gear and 2) the channel partners and managed service providers who can integrate the pieces and support the customers to make these already affordable solutions reliable and easy to use.

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