Article

Microsoft's big IP telephony play

Margie Semilof

Offering enterprise customers a full-blown communication system integrated with Office desktop software might give Microsoft some competitive advantage over established IP telephony vendors.

It's not clear, however, if large companies are ready to trust Microsoft as a source of telephony, particularly when these users believe that other vendors may be capable of doing a better job working across multiple platforms.

On Monday, Microsoft revealed its unified communication strategy, which relies on a long list of partners to deliver hardware devices and system integration, including LG-Nortel Co., Polycom Inc., Thompson, Hewlett-Packard Co., Motorola Inc. and Siemens AG.

Microsoft also released a handful of technologies that will be part of the Office-based system: Office Live Communications Server 2007, a Session Initiation Protocol real-time communication platform; Exchange Server 2007 unified messaging; Office Communicator 2007, a presence-based softphone; Office Live Meeting, a conferencing service; Office Roundtable, an audio-video device; and communication software for new voice and video devices, as well as PC devices from partner vendors. All these technologies will be available in 2006 or 2007.

Microsoft has floated the notion of itself as a telephony provider for years, positioning itself into direct competition with the likes of Avaya Inc., Nortel and Cisco Systems Inc. But even those customers who are displacing their old analog systems tend to

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value their relationships with established IP telephony vendors, experts said. Even Cisco has delivered an installed base during the past five years.

"Microsoft has one advantage, in that they can deliver tools that integrate systems," said Irwin Lazar, an analyst at Burton Group, a consulting firm in Midvale, Utah. "But it's a huge challenge convincing companies that have a different view about their phone systems versus their email systems, to go and take a flyer on a [Microsoft] phone system."

Another expert said that Microsoft may be making a misassumption in thinking it has an entry at the desktop for telephony. "Perhaps it's not taking into account well enough the procurement process that the enterprise goes through to ensure interoperability and security," said Jay Lassman, an analyst at Gartner Inc., Stamford, Conn.

Indeed, it may be many more years before Microsoft's unified messaging vision comes to fruition. IT shops need to use Office 2007 as a baseline. "We are on XP and Windows 2003, and to upgrade everyone to the latest version would be very expensive," said Ernie Coldwell, a network analyst at MAHLE Industries Inc., a Morristown, Tenn., automotive parts supplier.

"We use Cisco for VoIP and have some Nortel equipment, and we would stick with those two vendors," Coldwell added. "There is still something about putting your eggs into one Microsoft basket on a new technology -- or at least it's new to them."

One weakness of Microsoft's strategy may be the fact that it must rely on numerous partners to deliver on its plan, Lassman said. But, not all these partners stand on solid ground. For instance, Siemens recently entered an agreement with Nokia Corp. regarding its carrier group. In addition, Siemens has said it will sell off its enterprise business, which makes its IP products. Nortel is also getting back on its feet after years of financial turmoil.

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