Microsoft Pushes into Communications and Beyond

In 1997 or so I regularly met with Microsoft executives in charge of the company's telephony initiatives. At the time Mitch Goldberg and Mark Lee were the top spokesmen the Redmond-based software giant offered up to discuss where the company's products fit into the telephony ecosystem. If you have been in telecom longer than seven years you likely remember the industry was once dominated by computer telephony integration (CTI) technologies allowing PCs and servers to talk with telephone switches. Companies like Microsoft, Novell, Nortel, Lucent (now Avaya), Comdial and Inter-Tel distinguished themselves as leaders in this space and throughout the late nineties sales thrived.

In 1997 TMC launched Internet Telephony (ITMAG) to focus on the burgeoning IP telephony space. We were covering the topic in our sister publication CTI/Communications Solutions but we realized early that IP would change communications forever.

Microsoft was one of the biggest innovators in the telecom market of the 1990s having launched a VoIP software product called NetMeeting. It pretty much did what Skype did (just not the p2p part) but was over five years earlier. We regularly covered this software and moreover, in the early days, NetMeeting is what many VoIP vendors used to show their products interoperated correctly. In 1999 ITMAG even gave Microsoft NetMeeting 3.0 an editor's choice award and a grade of “A.”

It was around this time that the Internet became important to all tech companies. I remember buying a UPS system and seeing “Internet ready” on the outside of the box. Heaven forbid my UPS was not Internet ready. . . I am not sure how I would have dealt with the embarrassment.

Microsoft like many companies needed to focus on the Internet too. Many people who began working on various Internet initiatives in fact were part of the telecom group. Soon thereafter a good deal of the telecom team became the Internet team. Obviously this strategy paid off as the company rapidly produced IE, OWA and a number of other “Internet Ready” products. But as Microsoft became a serious Internet player, telephony was placed on the backburner.

We all know what happened next - the telecom meltdown. It is obvious that Bill Gates and Steve Ballmer would not choose this period to launch back into the space. But in the last few years the company has been making more and more noise about becoming part of the telecom world.

This is why last year we invited Microsoft's Zig Serafin, General Manager, Real-Time Collaboration Group, to be a keynote speaker at Internet Telephony Conference & Expo West (www.tmcnet.com/voip/conference) in San Diego, CA. After the presentation, some Fortune-class organizations told me that Zig's talk had made the whole conference worthwhile. I suddenly I realized how serious a player Microsoft wanted to be in communications and, moreover, how much traction they were getting in such a short time.

About seven months ago I asked Steve Ballmer some questions about Microsoft's unified communications strategy and I was blown away at how enthusiastic he was at embracing and evangelizing how his company's software will make communications work better. At this point I realized Microsoft was dead serious about being a telephony leader.

With this in mind, I recently visited the Microsoft campus in Redmond and met with people from various parts of the Microsoft team, and you know what? I am very bullish on Microsoft's potential to help reshape the telecom markets.

Microsoft is a huge organization and their speed to market has become visibly slower over the last five years. My outward impression of the company is that it has become bogged down by its sheer size. Moreover, I have read more than one story of how the company has lately lost some top talent to other tech players.

My perception was shattered by the parade of key executives I met with who head up various areas within the organization. I saw the same passion and enthusiasm in Redmond that exists at every entrepreneurial start-up I have ever visited. The only difference is that this company is no startup, it's the world's largest software company with one of the most recognizable brands known to mankind. Microsoft can move mountains if it gets enough of its organization to aim in the same direction.

Exchange

My day started off with Jeff Ressler, Director, Exchange Marketing, who says that the company sees communications as a broad environment which mixes 'the old' (which refers to telephony) with 'the new' (which refers to IM, video and other new modes of communications).

From his perspective, the goal is to unify the backend, the user experience and provide consistent administration while taking advantage of PC economics to drive cost down.

He referred to communications overload and a Harris study which shows the average person gets 51 messages daily in 7-8 locations. Microsoft's goal is to help reduce not only the number of places where messages reside but, through dissemination of presence information, they may even be able to reduce the number of messages you receive.

Also revealed in the meeting was Microsoft's goal of providing more web-based access to Microsoft solutions, allowing you to work without the need for a VPN. An interesting part of the conversation concerned how Microsoft itself has consolidated 70 Exchange Server locations into four. As they embrace communications they have made sure their solutions handle telecom in a manner consistent with consolidating server farms.

As part of the Redmond software giant's mobility strategy, Jeff mentioned that ActiveSync has been licensed some device manufacturers which, of course, means the power of unified communications can be enjoyed on-the-go. I mentioned some rumors I heard about the iPhone supporting ActiveSync soon and Jeff told me he couldn't comment. Perhaps this meant that there are serious talks with Apple in the works - he didn't say they aren't talking, after all. Then again, Jeff could have a really great poker face. Time will tell.

Jeff surprised me by mentioning technologies they are developing that would eventually target the call center. I imagine Microsoft's CRM software package would be a great fit for this initiative.

Jeff finished by mentioning that they think of the PBX as 'the last mainframe'. This is pretty accurate, in my opinion. He went on to explain that their similarities included the high cost of these systems and their proprietary service contracts. They believe Microsoft will help reduce the cost of communications going forward; their upcoming IP communications devices will be less expensive than traditional IP phones, yet able to do much more.

Unified Communications

My next meeting was with Michael Kerle, Senior Product Manager, UC Group and Huat Lim, Program Manager. Michael spoke a bit about Office Communications Server being the company's approach to the real-time communications world. I also got to see Office Communicator, which is a unified communications solution for the enterprise. In the demo there was an emphasis on safety and encryption and Kerle pointed out how using this product will reduce exposure to worms and viruses (when compared with other solutions). One big benefit of OC is that it takes your Outlook Calendar and telephone status into account when displaying your presence.

The system allows encrypted federation between companies so you can have your interoperability cake and security too.

Mike's main points are quite interesting and are best summed up as follows:

• Half the calls are internal in an average company.

• With proper presence information, you don't make calls if they are not needed.

• The Microsoft solution results in less wasted time, thanks to find-me, follow-me technologies.

• Microsoft won't replace the PBX.

• They want instead to integrate applications, mobility and presence into communications.

As Mike explained all of this, Huat waited patiently to show us a plethora of gadgets sitting on a table between Mike and I. Can you imagine how hard it was to concentrate on what Mike was saying when some of the shiniest new products to come out of Microsoft's R&D department were just inches away? Thankfully, I resisted the temptation to rudely grab a fancy new phone off the table while Mike spoke and grabbed a Danish instead, which, although having a higher calorie count, seemed more acceptable at that moment.

Qualified Devices

Poor Huat was forced to sit in the room, listening to his co-worker talk about software and amorphous concepts like encrypted interoffice federation. It was no wonder that when he finally had the opportunity to speak, he unleashed a steady stream of gadget and device information. He said there are 15 devices qualified to work with Office Communicator and nine device vendors in the ecosystem. Other devices not qualified will still work but may require additional configuration. The benefit of being qualified is that your product seamlessly connects to the OC.

Huat made the interesting point that it costs $700 to install a telephone on Microsoft's network today and there is a $180 annual fee per employee associated with the device.

Office Communicator Devices

The discussion started with a demo of a simple USB phone code-named Catalina. We also saw a more advanced phone with 320x240 color screen resolution code-named Tanjay. This phone works over Ethernet and has PoE support. Expect these devices to be made by LG, Nortel and Polycom. Tanjay has a built-in fingerprint reader and excels at advanced telephony features like call forward and transfer. Street prices have not yet been set for these models.

As for the wideband codecs offered on all of the OC ecosystem products, all the devices certified to work with Office Communicator support enhanced codecs which sound far superior to traditional telephones. This is why new devices are needed for this communications offering. In other words, even the best, state-of-the-art phones from other vendors won't support Microsoft's codecs today.

This is actually great news when you recall Michael Kerle's first bullet point that half the phone conversations in your company could be wideband calls.

Continuing on my device tour, I got to see what is likely the smallest and largest products to work with Microsoft's communications solutions: the Bluetooth headset from LG/Nortel and the RoundTable which is a sophisticated videoconferencing device consisting of a slew of small cameras focusing on three mirrors arranged in a triangular fashion. Sophisticated software stitches together the resulting image and compensates for distortion. It also determines who is speaking and sends the appropriate image. I believe this device - or something similar - will replace the standard conference room speakerphone in the majority of offices within ten years. While I was vacationing a month ago, I used RoundTable to call into my office's conference room. The voice and video quality and voice detection were excellent. For more, check out Tom Keating's excellent review (http://www.tmcnet.com/949.1) of the workings of the RoundTable product on his VoIP and Gadget Blog.

Rich Tehrani had such a tremendous tour of Microsoft that his Publisher's Outlook just doesn't fit into this month's issue. To read this piece in its entirety, go to this web address: http://www.tmcnet.com/950.1

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