The PBX Era is Ending: Microsoft

Microsoft has formally launched Office Communications Server and a new version of Office Communicator, the OCS client, and expects the new platform will "change the business structure" of the PBX business, says Microsoft Chairman Bill Gates.

"The era of dialing blind, the era of playing phone tag, the era of voice-mail jail, the era of disconnected communications...that era is ending," says Jeff Raikes division president.

Gates points to a survey Microsoft commissioned that indicates just one in three enterprise users have successfully transferred a phone call. Even fewer ever have set up a conference call, says Gates. Such opaque systems are going to be a thing of the past, he says.

"This is a complete transformation of the traditional business of the PBX, which is sort of like the mainframe," says Gates. "We live a life of rich digital communications but the phone isn’t part of it."

"It is our view that wherever you see the name of an employee, you should be able to right click and see where they are reachable, right now," says Gates. "People also should be able to use their mobile phones to the business phone system."

And while OCS is designed to integrate with existing business phone systems, "over time, the lower cost structure will be to not have the PBX," says Gates.

Voice Mashups Disruptive or Not?

Iotum recently shifted gears and decided to take advantage of Facebook APIs to create a conference call app inside Facebook. Many of you know what Skype has been doing in the area of encouraging third party development around its client. And of course Microsoft has made clear its intention to place communications within the context of every expression of its desktop productivity suite.

Some people would argue this move to voice as an attribute of every application spells the death of traditional "communications as a service." So far, of course, there is no evidence of this, though there is plenty of movement within the service industry. Neither is there any evidence that people communicate less when they have the new tools; the reverse typically being the case.

So far, at any rate, one would have to say that the advent of voice as an application, as an inherent attribute of other experiences and activities, simply is creating incremental revenue opportunities and end user utility. To the extent that it negatively affects the "service" business, providers of services already are transitioning away from reliance on "voice" revenues in any case.

Enterprise phone system providers hope to do the same, and speak only of "unified communications" these days. It isn't the calling, they seem to say; it's the integration. Not an unwise choice given the fact that Microsoft Office Communication Server provides a complete alternative.

But maybe this time around we shouldn't worry so much about disruption. Choice will do nicely. Human beings are starting to have lots more choices, and that's a good thing. Companies will do well providing those choices. It will be enough.

Voice and communications increasingly are available to users as discrete services and integrated applications. This trend isn't going away. But the explosion of choices and richness do not inevitably spell doom, or automatic success, for any contestant. Calling entities "dinosaurs" doesn't hobble them. Nor does "disruption" always succeed. Quite the opposite seems to be true at this point.

Microsoft OCS Starts to Disrupt

Microsoft's Office Communications Server 2007 is going to disrupt market share in today's business phone system market. It also is going to take share and rearrange markets in other areas you might not expect, such as the test and measurement space. Huh? Isn't voice quality testing, on both qualitative (subjective) and quantitative (mean opinion scores, for example) dimensions, something that specialized test and measurement firms do? Well, yes.

But Microsoft also is bringing to market its own "quality of experience" server that automatically tracks end user voice quality no matter where a call is placed--from inside the enteprise or at a hotel. No network test probes are required.

That's just one more example of how incumbents are finding their core businesses under threat of rearrangement from upstarts with deep pockets, strategic motivation, different visions and deep expertise in software and networking.

Microsoft OCS Managed Service for SMEs?

Microsoft's Office Communications Server hasn't begun shipping in general release. But that hasn't stopped OCS from garnering significant mind share among enterprise information technology managers. Some recent surveys by the Gartner Group and Wainhouse Research show OCS in the top spot among unified communications providers, according to Gurdeep Singh Pall, Microsoft corporate VP.

Pall positions OCS as an alternative to private branch exchanges (business phone systems) in either the time division multiplex or Internet Protocol or hybrid flavors. But Pall also notes that OCS obviates the need for a PBX of any sort, though it interoperates with IP and TDM systems. That's one reason Microsoft is introducing a new line of desktop phones that work with OCS.

Less attention has been paid to the issue of how small and mid-sized enterprises will some day be able to use OCS. Warren Barkley, a principal group program manager at Microsoft, says a hosted service ulitmately will be made available to SMEs.

Barkley simply noted that small organizations generally lack the IT resources to set up and run an OCS style unified communications system. It wouldn't be the first hosted service Microsoft offers.

Microsoft already offers a hosted collaboration platform, LiveMeeting, and is moving to offer applications such as customer relationship management as services.

Microsoft OCS: Not Everyone Will Rest Easy...

...despite repeated assurances from Microsoft that it just wants to supply unified communications and presense features to any existing business phone system. Microsoft unified communications manager Mark Deakin says Office Communications Server 2007 is not a replacement for current PBX services. And he's right, as far as it goes. It's just that some observers say they have tested OCS as a full replacement for a PBX and it seems to do the job. And now that Microsoft is supplying U.C. software, desktop software and actual phones.......

Microsoft OCS Launch

The name “Microsoft” is not top of mind whenever one thinks of suppliers of enterprise phone systems. But Microsoft hopes that will change in a big way. Microsoft unveiled its own IP phones in May, and is preparing for a major launch of Office Communications Server, the latest revision to Live Communications Server.

Not be alarmist, but “road kill” comes to mind as one surveys the existing line up of providers of business phone systems. Heck, it has to. As Cisco before it came essentially out of nowhere to claim a lead position in the enterprise phone systems market, so now Microsoft is about to make its move as well.

To be sure, Microsoft is “playing nice” for the next two years, designing its new line of phones to work with existing private branch exchanges. Inevitably, Microsoft will go further. That is what Office Communications Server 2007 and Office Communicator 2007 are about, after all: the full integration of desktop and other enterprise apps with unified messaging and communications in a Microsoft framework, as the Wainhouse Research illustration shows.

“Microsoft’s plan is a 10 to 15 year view of the market, which is only starting to be visible today,” says Alec Saunders, Iotum CEO and former Windows CE executive. “Taken in totality, it’s a plan to dominate every aspect of enterprise communications, with the exception, perhaps, of the carrier network.” And even there, Microsoft would like to have its software embedded.

As Saunders puts it, every provider in the enterprise voice space now has to have an answer for OCS; some strategy for surviving Microsoft's charge.