Vendors Vie for Unified Communications Dominance

An 800-pound gorilla landed with a thud in the middle of the emerging unified communications market this summer. With two blockbuster announcements, Microsoft Corp. put the industry on notice that it will demand a share of the expected booty from a market that has been dominated until now by network and legacy voice system providers. Not that it was a huge surprise: Microsoft's intentions have been known for some time.In June, however, it outlined in more detail its strategy for unified communications (UC) and introduced new and enhanced products that it expects will propel it into the centre of the fray. In July, it announced a "special partnership" with Nortel Networks and the formation of the Innovative Communications Alliance (ICA), which will help the partners move the unified communications market forward.What impact will the twin Microsoft initiatives have? Will they, as some commentators have suggested, put Microsoft on a collision course with erstwhile partner Cisco Systems Inc., which also recently revamped its portfolio by bringing more products under the UC banner? And how will the alliance impact Nortel customers already implementing unified communications? The principal players are inclined to downplay the drama and the fears, but it looks to us like we're in for interesting times.Unified communications is about integrating modes of communication - voice, video, Web conferencing, collaborative systems, instant messaging, email, voice mail, mobile - mainly to improve worker productivity, but also potentially to simplify network and application management and thus reduce total cost of ownership. It hinges on putting all communications, including voice, on an IP network. A key UC enabler is presence management - the ability to notify users online if the person they want to reach is already on the phone, in a meeting or on a cell phone, and how best to contact them wherever they are.Proponents claim UC can improve productivity and streamline decision making by increasing the chances employees will connect with the right person the first time - reducing what Boston-based consulting firm Gartner Inc. calls "human latency" in business processes.Gartner claims UC is still an immature market, with user adoption in the early stages. It will only become mainstream in 2008, when the industry overcomes current barriers to adoption. In a Research Note posted at the Microsoft unified communications website (www.microsoft.com/uc), Gartner identifies four barriers - poor understanding of central concepts such as presence, poor definition of best practices, complexity of integration and the difficulty of communicating a convincing business case.However, Zeus Kerravala, senior VP of enterprise research at Yankee Group, says there is little doubt of the immediate cost benefits. When a unified communications implementation includes insourcing audio and Web conferencing - which at least some UC products enable - the pay-back period can be as little as seven months thanks to savings on service provider conferencing charges. He adds that unifying communications can also save workers, especially remote workers, as much as 30 to 45 minutes a day spent manually unifying communications - checking voice mail and email, rather than a single unified mailbox in which voice messages appear as attachments to emails, for example.The price tag need not be exorbitant either, assuming you've already made the move to IP voice. Vendors are inclined to be evasive about costs, saying, reasonably enough, that it depends on a number of factors. But they provide some clues."You could be talking anywhere from thousands to hundreds of thousand of dollars to get all the pieces in place," says Bryan Rusche, unified communications product manager for Microsoft Canada. Rick Moran, VP of solutions marketing for Cisco, says, "It obviously depends on what kinds of devices you install and how many devices. It could be hundreds of dollars or it could be $1,000 per station."Kerravala is a little more precise. He says the typical cost of migrating from traditional telephony to IP voice is between $400 and $450 (US) per user. "The cost to upgrade from there to unified communications, including bringing conferencing services in house, will easily add another 30 to 50% - so, say $150 to $200 (US) per user," he says.Three UC ApproachesGartner identifies three basic vendor approaches. Some bundle UC functionality in a single solution. Nortel's MCS5100 and Siemens AG's OpenScape platforms are examples. Others tie together a portfolio of communications functions through shared services, such as presence. The Cisco and Microsoft solutions are examples. Still others, including IBM Corp. and Oracle Corp., offer a communications framework or middleware used by unrelated communication applications. Each has its strengths and weaknesses, Gartner says.Gartner placed Microsoft in the top right corner of its 2006 magic quadrant for unified communications, which it published earlier this year, before the latest announcements. The consulting firm uses two-by-two grids to characterize the roles of major players in a market. Microsoft's positioning places it among leaders, as opposed to challengers (such as IBM), and among visionaries rather than niche players. Cisco and Nortel, along with Siemens and Alcatel, are in the same corner.While their visions for and even basic approaches to unified communications may be similar, Cisco and Microsoft come to this space from different directions and with different strengths."Our experience is on the application side - productivity applications such as the Office suite," says Microsoft's Rusche. "Our vision is very much to communications-enable at the end points, using SIP predominantly, to set up unified communications between devices and modalities."In the June announcements, Microsoft introduced Office Communications Server (OCS) 2007, a SIP-based real-time communication platform that enables presence-based VoIP call management, conferencing (audio, video, Web) and IM, integrating them with existing applications, services and devices. OCS will initially provide only basic call management functions such as hold, forward and transfer.Office Communicator 2007 is the company's UC client, which incorporates softphone capabilities. It will be available in desktop, browser-based and mobile versions. Microsoft also announced Office Communicator phone experience, software that will power compatible IP business desktop phones from partners Polycom Inc., LG-Nortel and Thomson Telecom. Other partners, including GN Netcom Inc, Logitech and Plantronics Inc., unveiled compatible PC peripherals such as USB handsets, headsets, webcams and monitors with built-in audio and video features.Microsoft Exchange Server 2007 enables unified messaging (email, voice, fax) and provides new speech-based auto attendant functions to allow users to access their messages from any phone. Office Live Meeting is Microsoft's conferencing service. Enhancements include support for e-learning, enhanced audio and video, a new user interface and tighter integration with Office.Some of these products, such as Exchange Server, will be available late this year. Others, including the ones that push Microsoft further into the voice world, such as OCS 2007, Communicator 2007 and Communicator phone experience, won't be available until second quarter 2007.How does the Microsoft product roadmap differentiate it from other players, especially Cisco? "We're not moving into networking," says Rusche. "We're not really looking at creating PBXs or gateways." Or at least not for now.Cisco's SideCisco, on the other hand, is very much coming from the networking side and it has created IP PBX products. "For us, is all about the network," Moran says. "The network and network performance are critical. It requires service level agreements, quality of service and performance monitoring. Those are all core skills. Voice is a fairly narrow-band network application, but with very specific needs. We had to learn through the school of hard knocks that it needs a different level of priority."In March, Cisco announced its "new" Cisco Unified Communications system, a lumping together of existing products such as CallManager (IP-PBX), Unity (unified messaging), MeetingPlace (conferencing) and IP Contact Center with new and/or enhanced products such as Unified Personal Communicator (client software), Unified Presence Server and Customer Interaction Analyzer (real-time contact centre analytics). In addition, the CallManager and other voice products now natively support SIP.Cisco's view of how it is differentiated from Microsoft in the market is remarkably similar to Microsoft's view. "Non-traditional competitors like Microsoft don't make voice message systems or call controllers," Moran points out. "They are in the instant messaging and email spaces and we're not. But we are in the call control world." Except it sounds as if Microsoft is moving in that direction with Office Communications Server. Does that mean the two companies will be on a collision course?"There will be instances where we'll be partners and instances where we'll be competing," Rusche says. "In the sense that we're not providing the network, we absolutely need Cisco as partners, as we need other PBX providers." Moran pretty much sings from the same book. "There are going to be placements where we co-operate and placements where we compete. But I think there will be more areas where we collaborate in the long run," he says.Maybe. But the Nortel alliance could have an impact there.The alliance raises more questions than it answers, though. Few details had been worked out at the time of the announcement. The basic premise is that it will find ways to combine Nortel's networking and voice communications strengths with Microsoft software to "accelerate the availability of unified communications."Nortel becomes Microsoft's strategic systems integration partner for its unified communications solution. The two companies will collaborate on product development, including enterprise, mobile and wireline carrier solutions - although it's not clear yet how resulting products might be branded. The two companies will cross-license intellectual property. They'll integrate existing solutions, with Nortel products "complementing" Microsoft's UC platform. Nortel's contributions will include enterprise contact centre applications, telephony functions, mobility and networking infrastructure.With the ICA as its "go-to-market vehicle," Microsoft and Nortel will jointly sell unified communications solutions and integration services to small and medium-size businesses, large corporations and service providers. In preparation, they'll invest "substantial" money and resources in marketing, business development and delivery, according to a press release, including building a "joint channel ecosystem" using both Nortel and Microsoft integrators, resellers and service providers."I don't get the alliance," Kerravala admits. He wonders, for one thing, how much preferential treatment Nortel is likely to get from Microsoft. "I don't see Microsoft making themselves exclusively available to Nortel," he says. Rusche confirms this. He calls the Nortel alliance a "special partnership," but makes clear it will not be an exclusive one."We see it very much as a customer-led play," Rusche says. "If the customer is interested in a solution that involves Microsoft and Nortel, we're happy to go ahead with that. If what the customer wants involves Microsoft and another partner, that's the way we'll go. Where the customer has no preference, due to the advantages of the alliance, is probably what we'll lead with." Note the probably.The MCS QuestionThe other interesting question mark is the fate of Nortel's own UC products, chief among them the mature and well-regarded Multimedia Communication Server 5100. First introduced in 2002, and targeted at medium-size and large enterprises, MCS 5100 is a SIP application delivery solution that integrates IP Telephony, multimedia conferencing, instant messaging (IM), presence and other collaboration tools. What will become of it?The company had already realized the need to move to a more software-based, hardware-agnostic approach to communications systems, especially in the area of unified communications, says Ruchi Prasad, a Nortel VP and general manager of the Innovative Communications Alliance. "If we had stayed as a traditional vendor, it would have impeded the IP convergence transformation," she says. "So we decided we would partner with Microsoft."It appears that in most areas, Microsoft software will take precedence in the joint solution. "The goal here is to take the best of breed of what Nortel and Microsoft offer and bring it together," Prasad says. Asked specifically about MCS 5100, she says, "We plan to continue to support the road map for MCS customers through next year. At the same time, we'll be de-coupling the meet-me conferencing capabilities, making them hardware agnostic so they will be better integrated with some of the features Microsoft offers today." Through the end of next year - and then what?"I think Nortel's entire unified communications portfolio is in jeopardy," Kerravala says. "I'm not sold on this being the best thing in the world for Nortel."The extent to which Microsoft and Nortel can make the alliance work will clearly have an impact on when and how well Microsoft competes against Cisco - and against dark horse entrants such as Avaya Inc., Mitel Networks Corp., Siemens and Alcatel SA. The battle may not be joined immediately, though. It will likely take a couple of years for the new Microsoft products to mature. On the other hand, Kerravala says, "I've talked to a few companies that are willing to wait." That may be the first impact of the Microsoft initiatives: some companies will delay implementing UC to see what Microsoft does.In the medium and even longer terms, Kerravala doesn't believe there will be any clear winners. "If you believe unified communications is something you build into the network and then out to the edge, then Cisco clearly has the advantage," he says. "But if you see it as something you build off the desktop at the edge, Microsoft has the advantage. What the user should want is both - it's not a Microsoft nor is it a Cisco solution. These vendors need to find ways to play nicely together. That will help adoption more than trying to win it alone."That said, fierce competition is inevitable. Kerravala estimates market size at somewhere above $15 billion. None of the principal players is going to be willing to accept the scraps.

Vendors Vie for Unified Communications Dominance

News | December 1, 2006

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