There was an interesting article by Eric Krapf on VoiceCon eNews about a recent report by Frost & Sullivan on the future of the deskphone.

One of the points in the Frost report was that despite vendors bundling in softphone clients as part of their telephony solutions, very few are being used as the primary solution for voice. No kidding!

Hardware vendors have systematically lacked an understanding of how to build software client experiences that meet users needs, whether it’s integrating experiences into existing applications, developing flexible client side APIs or enabling end to end scenarios. That lack of understanding often translates into a real lack of imagination too …. I mean, take a look at the two softphones below. Guess which is from the existing hardware based vendor?

With softphones like these, why would users adopt? Even the imagery hints at what the vendor really wants them to use … the expensive deskphone sitting next to them.

For softphones to be adopted broadly in the market, you need to think of a world where there are only softphones and mobile phones and design a solution around that. That’s the advantage of not having a hardware business to protect.

Gartner and Frost & Sullivan have different views on the future of the deskphone. I am biased, but I side with Gartner believing that a paradigm shift will happen where companies look at what is possible with softphone only solutions and rethink the need to buy deskphones at all.

For those that really need a deskphone, I suspect there will be a market. It will be increasingly dominated by device manufacturers that specialize in a portfolio of end user devices suited to a workers needs. The days of vertically integrated lock-in solutions must surely be numbered.

Analyst firm, Synergy Research Group, recently tried to size the UC market. Synergy claims to have “cracked the code” to develop a market size estimate that is superior to other analysis. I have to disagree.

The scope definition and inconsistent treatment of technologies leads to significant under sizing of the market. Synergy says they looked at the market for “collaborative applications”. That market is huge and includes Office, Sharepoint, OCS, Exchange in the Microsoft stable for example and could be in the $90B+ range, even if judged by revenue from Microsoft and it’s competitors today. And yet …

“Synergy estimates the 2008 worldwide sales for collaborative applications to total just over 33 million units and $4.6 billion in revenues. This represents strong annual growth from 26.8 million units and $3.8 billion on 2007, or year-over-year growth rates of 23% and 21% respectively. These totals include the sales of standalone collaborative applications as well as UC desktop application licenses representing pre-integrated UC systems.'”

Perhaps more important than an esoteric sizing exercise is the lack of a holistic view of the market. Unified communications encompasses a broad set of technologies that have typically been sold as silos. As these merge, the market will no doubt consolidate as efficiencies between silo purchases leads to discounts for integrated or bundled technologies. A narrow view of the market is sometimes indicative of the lack of recognition of this need for unification across silos.

When we took a look at the data on this market, we estimated an opportunity of $31B in 2006 and $50B in 2011. This represents a big market for the industry to chase after and is more exciting than the $4.6B identified in the Synergy research.

Microsoft has taken a unique view of this market. Our belief is that the industry is shifting in structure from a vertically integrated market (where the same vendor sells hardware, software, devices and sometimes even service) to a horizontal one (where different vendors specialize in hardware, software, devices etc. This approach not only unlocks innovation in the market as specialists working using standards can innovate more, it also opens up revenue opportunities for partners that were hitherto locked out of the market. A good example is devices. By enabling a partner ecosystem around devices, Microsoft is enabling access to a huge revenue opportunity that was previously locked up by PBX vendors. Our partners are excited by this possibility and the growth opportunities for them.

So I would encourage those trying to size the UC market to look holistically at the market and consider the real opportunity ahead for the industry.

A few years back, I complained about the lack of debt in Microsoft’s capital structure and the lack of accountability this fosters in the company. This week, Microsoft issued it’s first bonds to raise $3.75 billion at only a slight premium to US government debt!

My original blog post talked about our own leverage to purchase our first house. Clearly there has been a decline in the housing market, but if you apply leverage prudently, the principles still hold. And that’s what Microsoft is doing now. I am really impressed by the way our CFO has approached both our capital structure and cost structure …. it finally feels like Microsoft is a real company that has grown up from the tech start up money-to-burn mentality.

Now, we just need that accountability to run through our management chain a little more and Microsoft could live up to be the great company for shareholders that it has the potential to be.

My brother has been doing some freelance journalism while in Bangladesh and has been writing some really interesting pieces. He visited Pakistan recently and wrote up this piece on the recent terrorist activities there. He is becoming quite a good writer and I am proud of the work he is doing.

There is a link to a video in the article showing a woman being flogged for “being seen in public with a man other than her husband”. The video is incredibly disturbing to watch, but one that is worth looking at to see the gruesome treatment many receive in that part of the world.

I have long abandoned religion as a guiding force in my life, although I continue to find comfort in spirituality. Religion has come to depict the old human social concept of control. Over the millennia, control can be gained in the form of strength of arms or a monopoly on bigotry. I find strength of arms easier to understand but am floored by the apathy of people when it comes to bigotry. Bigotry has really taken off in the last 1000 years with both Christianity and Islam at the helm. But while Christianity seems to have emerged from the stifling era just before the Reformation, Islam has not.

Muslims are for the most part like any other people. My parents are Muslims …. they are the most peaceful and increasingly open minded (thanks to the shenanigans of their kids) people you could meet. And yet millions like them around the world turn a blind eye to the craziness perpetrated in the name of their religion. There are even some that justify it in their minds as a way to maintain morality in society.

Wake up folks. This is every Muslim’s problem. Every visit to the mosque should include a sermon on the values of Islam and denouncement of mindless violence. Most importantly, before looking to scapegoats to blame for problems, every Muslim should be asking what they can do for their own people and how they treat their own. I always remind my Dad that more Bengali’s died in the hands of fellow Muslims from Pakistan than any infidel. Suicide bombings kill their own kind. And the oil rich nations of the middle east continue to build skyscrapers while the Palestinians lack basic housing, schooling and sanitation. These are not the principles of Islam, but they are being tolerated way too much.

It sickens me that so many people around the world are prepared to turn a blind eye in this way. No country is without it’s faults and there is a lot to blame the West for over the last 200 years – from divisions established to further colonialism to modern hypocritical treatment of global issues. But the way to advance the Muslim world’s agenda is to look within first. Will the real Muslims please stand up.

A colleague in Indonesia sent this photo of RoundTable being used in Indonesia for a wedding. Apparently the couple’s friends were budget constrained but wanted to be part of the experience. Sound familiar? :-)

Through the integration of Microsoft Office, Exchange Server, Office SharePoint server and Office Communications server, organizations can have one infrastructure for communications and user experience, without the need to deploy different applications for a viable unified communications solution. With OCS, Microsoft has rolled out the foundation for integrating voice into the daily work flow of the office user in a similar manner as users employ instant messaging and email now. The addition of contact-based presence allows users to ensure they are available to communicate with who they want, when they want; this increases their productivity. OCS R2 still will not completely replace the PBX for large enterprise environments, since it lacks some of the basic features. But new call center type functions, conference features, voice mail and all the other office enhancements, will increase the viability of this product. The degree of integration into applications will help push voice further away from how it has always been done and into how it will be done in the future. Read more by clicking link below ....

Read the last paragraph and the ad on right :-)

"We've got to attract and recruit that next generation of workers. That's the way they communicate. They expect that same type of communication in a business environment."

"Today, many companies are facing the same challenges: how to improve communications and increase productivity, while reducing operational costs, and they are increasingly looking at unified communications software to help meet and solve these challenges. Last month, we highlighted telecom customers that are implementing Office Communications Server 2007. This month, we are taking a look at how manufacturing businesses are benefiting from implementing Microsoft’s unified communications software." Read more ...

Due Date: Mid August!

What a great week. Last week we launched Office Communications Server 2007 R2 through an entirely virtual launch that my team drove (www.OCSR2LAUNCH.com). The launch featured a keynote from Stephen Elop including discussions with customers and partners and focused on the business value of unified communications in these economic times. The launch was an incredible success with tens of thousands of viewers watching the keynote and spending time on the site. Much kudos goes to Avi Sagiv for coordinating all the activities that went behind this effort!

 
One of the fun parts about the virtual launch was creating media that viewers would watch online. Unlike a physical event where you tend to have a captive audience (less of course the mobile phone addicts), online you have to work hard to keep people’s attention. But you also need to deliver deeper content for those that want it. We tried to factor this in by creating the keynote as a “TV Show”, complete with commercial breaks. Some people saw this as too much of an infomercial and a little cheesy (Joe Wilcox of MicrosoftWatch for example), but our initial stats show that a lot of people did actually watch the entire show. Having strong messages, mixed in with humor in the breaks, made for much easier viewing. Also, many of the breaks consisted of graphical illustrations of the virtual launch site and how to navigate to key content, creating a “visual imprint” in people’s minds of what they should do next. This seems to have worked in getting viewers to spend time on the site exploring case studies, partners, and product content.

For the actual video content, we tried not to have all the content be 1 hour talking head sessions as a lot of technical content posted on the web tends to be. Instead we broke down the content into three buckets, Case Studies, Product Discovery and Breakouts. The case studies were 2-4 minute videos highlighting the customer story in a succinct way. The breakout sessions were deeper talking head sessions with a PowerPoint deck that focused on key technical content (e.g. how to deploy voice). And the product discovery sections were more fun, short videos showing the end user experience ad excitement. I ended up doing an “infomercial” to excite folks to learn more about software based communications solutions for example. All in all, we are getting great feedback on the site … even Arstechnica said “The Microsoft Unified Communications Group announced a new product yesterday, and it did it in style.”

The press pick up has also been pretty good. What was great was the customer and partner validation of our story. It sometimes get’s old hearing about the vision and value proposition for a product, but customers share their stories and give tangible examples of business impact, that makes a difference. It’s what we all work for and the whole team is thrilled. The press articles really picked up on some of these quotes …. here are some of my favorites.

Victor Nunez – Infonavit: Microsoft OCS R2 Launch Day: His verdict on OCS voice was: "It's working great."

Gregory Bryant – Intel: Microsoft: Your PBX Is 'Dead': "We're really addicted to meetings," noting that OCS R2 helps reduce the costs of doing "about a million minutes on audio conferencing every day."

Mike Browne – Sprint: Microsoft Rounds Out Voice Assault: Mike Browne, vice president of client services, says the company will eventually replace nearly 500 PBXs around the globe. He also ticks off savings including $240,000 annually with OCS rolled out to some 3,000 employees so far, and $5 million by eliminating handset replacement and going to soft phones and headsets.

Terry Gold - Gold Systems: Network World: "Companies can look at this and say Microsoft is serious here. Microsoft is throwing down the gauntlet. This is a viable alternative."

Michael Dinan - TMCNet.com: Praise for Microsoft's VoIP-Driven UC Solution, OCS 2007 R2, from Dimension Data: Hailing a VoIP-driven unified communications solution from the world’s largest maker of software – a cost-effective telecom technology that appears to be thriving in this slower economy – officials at a South Africa-based systems integrator say they’re saving clients’ money.

So all in all, a very successful launch both from OCS team perspective, and as an experimental marketing channel for Microsoft. Expect to see more virtual events from Microsoft in the coming year. In the meantime, time to get heads down onto the blockbuster release for next year!

Just one week to go to the Office Communications Server 2007 R2 virtual launch event, where we will be unveiling a lot of the great content we have been working on! We have some of the snippets of the funnier videos posted up on YouTube at http://www.youtube.com/profile?user=OCSR2Launch&view=videos. Take a look …. my favorite is below.

We are a little over two weeks away from the virtual launch of the next generation of Office Communications Server ("R2") and I am really excited to be driving the effort!

R2 is a great milestone for the product. It comes just 18 months after we launched Office Communications Server 2007 and started off being a minor release. But the engineering team did some stellar work to take in customer requests and develop something that takes us one step closer to our vision of unified communications .... a seamless end user and management experience across several different communications types. The top things for me are:

·         Some great additions to our VOIP capabilities that rapidly close the gap on enterprise voice requirements. These include an Attendant Console for receptionists and team admins, SIP Trunking to make it easier to consolidate carrier connections with less on premise equipment, Team Calling to provide a simple Automated Call Distribution function and Delegation for anyone who wants other people handling their calls. Some have argued these already exist in IP PBXs today, but the key is the way we have done them. Using software, the experience is much more compelling for the end user and the total cost of ownership is demonstrably lower.

·         We have gone quite far in making unified conferencing a reality. To date, customers have had disparate solutions for web, audio and video conferencing and made it available to only a subset of workers. This not only results in higher costs, but also a much poorer experience for end users who just want to collaborate without having to worry about the underlying technology. Our solution makes conferencing as simple to use as email with easy escalation from IM, to audio, to video to web conferencing. In these times of economic constraints and environmental concerns, remote collaboration is becoming much more important, and OCS unified conferencing goes a long way in helping customers save costs and still increase productivity.

·         Finally, we have made great strides in our developer platform. Avaya rightly takes credit for introducing the notion of embedding communications into business processes to reduce latency and improve service. But to make the vision a reality you need great developer tools, standard APIs and SDKs and an army of trained developers. That is one of Microsoft's core strengths. We have over 6 million developers trained on .NET who can now access and use our APIs and SDKs to build applications.

So this release will bring a ton of value to customers at just the right time. But one of the pushback’s we often get is real customer deployments as evidence of the adoption of our stack. I am happy to say that over the last year, we have made great strides in this area. Our field team and partners have been busy working with early adopter customers who not only realize the value of Microsoft's vision but have made a concerted effort to deploy now. We have referred to Shell and Global Crossing in the past, with 5000 and 3000 users using OCS VOIP capabilities today. And many customers are already at 50%, and some 100% of users on OCS VOIP. We also have customers with tens of thousands of IM users with a path to getting to VOIP capabilities. We will have several other customers to showcase at the upcoming launch. What makes this progress remarkable is that it has all happened in the last year, which is phenomenal for what can be classified as a new technology. It clearly shows the momentum we are building.

Partners have also been embracing the opportunity OCS offers. Whether they are ISVs enriching applications with OCS capabilities, peripheral partners developing devices to work with OCS, infrastructure partners building gateways or carrier connectivity, or systems integrators helping customers implement, we are seeing amazing traction. The reason .... almost because of the economic climate, the value of OCS is more paramount to customers and partners see an opportunity to build a business on this. We will be showcasing many partners at the virtual launch to show this momentum.

The virtual event is a new experience for Microsoft. We have used it as an adjunct for "real" events in the past, but this is unique in that an entire product is being launches only through this virtual channel. But it promises to be a great platform as visitors can view great content at their own leisure and download useful items in a simple way. I encourage anyone interested in unified communications to log in and check it out. You can register for the event by going to www.microsoft.com/ocs.

On the day, Stephen Elop, President of Microsoft Business Division, will be hosting the keynote presentation focusing on Microsoft's vision and momentum in enterprise communications, with customer stories and product demonstrations between 9.30-10.30am Pacific Time. Visitors will also have access to several Breakout Sessions and Product Discovery videos to help them learn more, and to download useful content. There will be a Case Study section showcasing customer evidence. We have over 130 partners with virtual booths where you can find out more about capabilities and experience and download business cards. And finally, you can download an evaluation version of OCS or sign up for a free hosted trial to get a feel for OCS capabilities yourself.

The site will be on a Silverlight platform, so users should ensure that they have the right technical set up to enjoy a smooth viewing experience. And of course, registering ahead of time at www.microsoft.com/ocs will give you access to added functionality.

Please spread the word and sign up for what will be a fun, exciting and informative virtual experience and give you the information you need to get going on Office Communications Server 2007 R2.

We look forward to seeing you online!