TDM and VOIP

Buy now, or wait to see how hard a complete integration all the way to the desktop is going to be?

Robert Poe on August 17th, 2006

Those who feel they really need an IP PBX will face a painful decision over the next year or so. The decision won't about what model of box to buy, though. It'll be about whether to buy one at all, or to hold off a while longer. The cause of all this uncertainty will be the new "unified communications" products Microsoft will be introducing through the middle of next year. Some observers think the products could seriously disrupt the enterprise VoIP market, if not dominate it. The million-dollar question: Will they be worth waiting for?

The products, announced in late June, take advantage of Microsoft's key strength in everything it does: the fact that its products are everywhere in the enterprise, and they all work together. Or to use the jargon, they're ubiquitous and integrated.
The centerpiece is the Office Communications Server 2007, a SIP-based communications platform that provides presence-based VoIP call management; audio, video and Web conferencing; and instant messaging, all working in conjunction with existing software and applications. There is also a unified messaging server, called Exchange Server 2007, that integrates e-mail, voice mail and faxing.

A soft phone called Office Communicator 2007 will work with the communications server. Microsoft Office Live Meeting will provide feature-rich conferencing services. And an audio-video collaboration device called Microsoft Office Round Table will incorporate a 360-degree camera that lets participants see everyone in the room at the other end of the conference. Additional software will let IP phones from Polycom, LG-Nortel and Thomson Telecom work with the other products.

The software giant will start shipping the various products between the end of this year and the second quarter of 2007. And the fact that they're indisputably on the way sets Microsoft up for a momentous clash with existing IP PBX makers, according to Thomas Valovic, author of a newly released report by IDC.

The clash has been a long time coming. IP PBX makers have for some time realized that proprietary hardware and feature sets that users couldn't easily customize and integrate with desktop applications weren't the way to go, according to Valovic. To compete in the future, they needed to have features like presence detection, SIP-based services, click to conference, and sophisticated service personalization capabilities. Avaya has done a particularly good job of moving in that direction, Valovic adds.

In short, PBX makers have been "moving up the value chain going beyond voice towards these enhanced capabilities," he explains. At the same time, "Microsoft has had these enhanced capabilities, but they didn't have the voice. So they're moving down the stack."

But until now Microsoft's move hasn't been all that convincing. "The question for years has been how aggressively Microsoft is going to go after voice," Valovic says. "Do they just want to use it as an enhancement or bundle it with some of their other capabilities, or are they going after the primary voice market?" The unified communications announcement was important, he claims, "because Microsoft finally opened the kimono and stated that they are going after this primary voice market in the enterprise."

Each side will have particular advantages — and challenges — in the battle. Microsoft, for example, will have its ubiquity and integration. On the other hand, it's just getting started in the enterprise telephony game. So at least at the beginning, the call control features it can offer will be minimal compared to what the IP PBX makers have on tap.

"The IP PBX makers have been concerned about Microsoft for several years," explains Valovic. "It will take some time for Microsoft to develop their level of feature richness. They have spent millions of dollars and many man hours developing a lot of the feature sets and capabilities and reliability they offer."

On the other hand, the report says the IP PBX vendors will have to work harder to integrate their products with the IT world, and "strengthen their capabilities in SIP-based applications that integrate with applications that are available on the desktop and enhance business processes."

It could represent a tricky balancing act on both sides. Microsoft, for its part, will have to continue to cooperate with the IP PBX vendors, and make sure its applications work with their products. And in fact, less than a month after the unified communications announcement, it announced a major collaboration with Nortel.
IDC doesn't think IP PBX vendors will start to lose much share to Microsoft until 2008, with what it terms "significant" loss coming in 2009 and 2010. But there may be an even shorter-term effect: IDC thinks Microsoft will be able to convince some customers to delay their purchases until it can "beef up" the call control functions in OCS 2007.

That means some customers could get caught between Microsoft and leading IP PBX vendors like Avaya, Cisco and Siemens, with one side encouraging them to wait, the other urging them to buy now. Thus their decisions will depend not just on how good the products are, but how desperate they are. That's never the best basis for a significant purchase, or any other major decision for that matter.