Will Microsoft Office Communication Server change unifed comms market?

Microsoft Office Communication Server officially into business applications and hinting that software-based telephony could mean the demise of the IP PBX.

Microsoft Office Communication Server (OCS) 2007 and Office Communicator (OC) 2007 promise once again to be the ultimate deathblow to the IP PBX as we know it. But unified communications (UC) experts questioned whether enterprises will trust their telephony to Microsoft and let gear from other vendors fall into obsolescence.

OCS is Microsoft's UC and VoIP server, while OC is the desktop UC client. For nearly a year, Microsoft has been gearing up for the releases, claiming at VoiceCon Spring in Orlando last March that eventually OCS will replace the IP PBX and that software will serve as the core telephony platform for enterprise users.

Today, Eric Swift, senior director of Microsoft's Unified Communications Group, again stressed that OCS will change the way enterprises communicate.

"Right now, we're putting out the first wave of the next-generation communications system, and over time we believe telephony will be handled by a software-based platform," Swift said. "It promises to change the way businesses communicate."

Swift said moving telephony from a siloed PBX environment to a software platform integrating collaborative tools like presence, instant messaging, unified messaging and telephony eases management and can ultimately reduce costs.

Still, analysts are skeptical about whether companies will buy Microsoft's software-centric VoIP vision. "I don't think it changes the game," said Burton Group Inc. senior analyst Mark Cortner. "The market has known for a year that Microsoft is planning this."

Essentially, OCS and OC combine to create a unified communications suite that can fit in a telephony environment, offering VoIP applications, instant messaging, voicemail, unified messaging, conferencing, email and a host of other collaborative applications when tied into Exchange Server 2007. Along with the OCS and OC announcements today, Microsoft also announced a new Exchange service pack and Outlook 2007, which will be key components to embedding UC applications into daily business apps.

Cortner, however, said he feels most enterprises won't bite and won't trust Microsoft alone to power their communications. Instead, he said, companies that deploy OCS will likely keep their IP PBXs from Cisco Systems Inc., Avaya Inc., Nortel Networks Ltd. and other competitors and use OCS to complement them. For example, OCS will sit beside an existing IP PBX and voicemail system.

At the OCS announcement yesterday, Microsoft put strong emphasis on coupling Exchange 2007 and OCS for unified messaging and also placed a great deal of weight on its RoundTable videoconferencing solution, which uses a 360-degree camera and speakerphone for long-distance "face-to-face" meetings, a competitor to Cisco Systems Inc.'s TelePresence offering. Along with the product-related announcements, Microsoft also introduced a list of partners including Nortel, Ericsson and other vendors that will provide a unified communications ecosystem with OCS and Exchange 2007 as the backbone.

Replacement for the PBX?

Cortner noted that building up to OCS's launch, Microsoft has been more aggressively positioning the server for its telephony capabilities, instead of just its collaborative potential.

"Microsoft is saying they're willing to complement [the existing IP PBX], but also that it can stand on its own and replace that functioning IP PBX," he said. "They're saying: 'Is the IP PBX even necessary?'"

Microsoft's Swift said the early stages will see integration between OCS and existing PBXs, but he noted that eventually the PBX could fizzle out. He said Microsoft is working closely with PBX makers to ensure interoperability.

"Today, a lot of people have invested a tremendous amount in their IP PBX, and we're not saying rip it out and replace it," he said. "There are a lot of areas for collaboration and interoperability."

Swift added that a number of enterprises are still figuring out how to manage their unified communications infrastructure and over time business models will need to change to leverage the new levels of functionality.

Most peoples' perception of their IP PBX is that it just never goes down. But many people have the perception that Microsoft and its Web-based servers do go down; they hiccup.
Mark Cortner
Senior AnalystBurton Group
OCS ownership issues

Also still up in the air is who within enterprise IT will be responsible for managing OCS. Will it be the telephony guys, the desktop team, the networking group, or the Exchange managers? Swift said he sees the best approach as a combination of everyone working together. Some companies will default to whoever handled telephony before, but making it a software tool touches many different groups that haven't traditionally worked with VoIP and VoIP applications.

Yankee Group Research Inc. senior vice president Zeus Kerravala said he sees the telecom and network managers claiming ownership of OCS and its peripheral applications, while the Exchange administrator and desktop manager will be key influencers.

"The buyers of this need to think about that," he said. "There's a lack of penetration in the market because UC is too broad. Enterprises need to think about what applications they run and what options they have."

Cortner agreed that determining ownership of OCS will be tricky. "It'll most like be the same group responsible for instant messaging and conferencing," he said. "In the vast majority of situations, it won't be the telecom organization or the network organization. But the desktop organization has never handled telecom needs, so they have little or no insight."

Cortner pointed out that OCS uses Session Initiation Protocol (SIP) signaling for call control, the protocol used by many VoIP and UC tools and applications. He noted, however, that as companies make the move toward SIP, they lose some of the features and functions inherent with digital PBXs or IP PBXs based on H.323.

"OCS could replace an IP PBX today architecturally, but in terms of features and functions it will fall short," he said. "We'll still see the PBX retain its place in the immediate future. There will still be a hand phone connected to the PBX."

However, Cortner added, some "pioneers" will make early attempts at going with solely Microsoft, but even that could take a two- to five-year period to truly take hold before enterprise telephony traffic is moved onto OCS.

"None of them are anticipating that once OCS is commercially available they'll migrate from their IP PBX to OCS," he said. "However, their future telephony investments will be rationalized and cautious."

Changing industry perceptions

Cortner called it "foolhardy" to cut telephony onto OCS immediately and said many companies just won't allow their communications to hinge on a Microsoft server. He said it's easy to criticize and downplay Microsoft based on perceptions of Windows and spotty application performance. Microsoft's battle will be to overcome that perception.

"Most peoples' perception of their IP PBX is that it just never goes down," he said. "But many people have the perception that Microsoft and its Web-based servers do go down; they hiccup."

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Partnering with strong hardware vendors may help alleviate that. The OCS announcement also opens a new door to "competitive collaboration," Cortner said, where Microsoft will pair with IP PBX vendors like Cisco to work together. Many companies, he said, have a lot invested in Cisco and a lot invested in Microsoft and want to know that the two platforms will play nice with each other.

"Each will continue to retain more than their share of business where they have experience and a solid track record," he said. "And they'll continue to struggle in areas where they don't. It's as much of a challenge for Cisco to become a software vendor as it is for Microsoft to be considered a legitimate player in the real-time space.

"If we look back a year from now, I think we'll see some organizations, the pioneers, using OCS for telephony applications," Cortner continued, adding that the majority of the companies will continue to use their Cisco, Avaya or Nortel gear and use OCS to complement it. "In most situations, the communication-type of telephony applications will continue to go Cisco [and others'] way, and instant messaging and other collaborative applications will go toward Microsoft OCS."

Kerravala agreed. "I think what they want is both," he said. "Microsoft can be used for the desktop collaboration piece and the PBX can be used for voice functionality."

Still, Kerravala said Microsoft sets itself apart from the pack by not focusing on VoIP as the underpinning of a UC deployment. Over time, as the market shakes out, the big winners in UC are going to be Microsoft, Cisco and Avaya, while others tend to fall by the wayside.

"More than anything, Microsoft is positioning OCS to be more about a set of capabilities and less of a product," he said. "[UC will] be an embedded component in the applications. You'll no longer have to leave the application you're working in to communicate and collaborate."

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