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Is telecom in the cards for Microsoft?

Microsoft's recent efforts in real-time communications networking have some suggesting that it's on the path to becoming a telecommunications powerhouse.

Microsoft's efforts in real-time communications networking, particularly its embrace of industry standards, have wags once again suggesting the software company is on track to becoming a telecommunications powerhouse.

Whether or not the company wants the role may be another question.

Industry experts have said the company's emerging voice over IP services, as well as its work with the Session Initiation Protocol and its strategic partnerships with telecom vendors for collaborative applications, are new developments that could give Microsoft another chance to become a major player in telecom.

Tom Valovic, director of the telephony program at International Data Corp., a Framingham, Mass., market research company, cited a few recent activities on the part of Microsoft that further its interests in this area. Microsoft is increasing its involvement in VoIP, first by embedding SIP into Windows XP. The company is also about to release Office Live Communications Server 2003, which carries real-time data traffic and is built on SIP.

The company has an agreement with Avaya Inc., Basking Ridge, N.J., that allows Avaya to bundle Microsoft's customer relationship management software into an Avaya IP/PBX for the midmarket. Microsoft also has partnerships with Mitel Networks, Kanata, Ontario, an IP/PBX vendor, and with Siemens Information and Communications Networks Inc., Boca Raton, Fla., which involves Siemens' OpenScape next-generation communication and collaboration suite.

Valovic sees a possible replay of the browser wars in the context of a communications portal at the enterprise desktop. Here is where all applications will be integrated, not just data applications, but converged applications as well, he said. "There will be a lot of customization involved," he said. "It's like the Windows desktop, but it will include communications capabilities."

"The key is, if you can get the eyeballs, it would be the door to capturing end users for other services," he added.

Companies like Sylantro Systems Corp., Campbell, Calif., and Broadsoft Inc., Gaithersburg, Md., offer something similar in the hosted IP/PBX business, where an array of applications can be offered through a portal site. End users can gain some measure of control of their communications, controlling which device their calls may go to during the course of the day, for example.

During the mid-1990s, Microsoft attempted to take the lead in computer-telephony integration, but the wave of applications never happened, and companies held tight to their traditional means of telecom. SIP changes the equation because it is a standard that can be embedded in client devices, including computers as well as telephones.

Ray Keneipp, service director for networks and telecom strategy at the Burton Group, a Midvale, Utah, consulting firm, said he also sees the potential for Microsoft's stock to soar in telecom. The likelihood of Office Real-Time Communications Server morphing into a call server is good, he said.

The IP/PBX companies realize that basic call-switching functions won't be their core business in the future. The core value is understanding how people interact, Keneipp said. "Looking at the data, the CRM applications, and to extrapolate, bringing it all to a single interface," he said. "A lot of them see this happening as they go down the road."

Microsoft's presence in telephony may not be felt for a few more years, simply because it just takes that long for technology to turn over. But if there is any reason that the company does not become a force in telecom, it will be because it doesn't want to, Keneipp said. "It has enough issues undermining other businesses," he said. "I'm not sure if they want to make enemies with some of the largest communications companies in the world."


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