At the end of last year, Jim Burton had an illuminating three part series (on this site and No Jitter) about Microsoft OCS and the PBX. It raised several questions, including:
• Would Microsoft acquire a vendor?
• What should PBX suppliers do about this, if anything, and
• What does this mean to the user?

I recently listened to a podcast by Gurdeep Singh Pall, head of Microsoft's UC group, http://www.nojitter.com/blog/archives/2008/02/new_podcast_mic.html, in which he refuted Jim's notion that Microsoft is in the market to acquire a PBX vendor. Pall referred to the PBX as "old technology" that Microsoft would have no reason to pursue. The podcast caused me to revisit my original position on the subject, and also reminded me that Microsoft's foray into the PBX (or "anti-PBX") world could be examined within the context of Cisco’s activities over the last ten years. This was underscored further at VoiceCon '08 a couple of weeks ago where UC and the role of VoIP and the PBX were dominant topics.

The similarities and differences with Cisco and its movement into VoIP, primarily launched with the Selsius acquisition in 1998, are interesting. Cisco went from nowhere to a leadership position in the "PBX business" in under 10 years--quite an accomplishment. They did this with aggressive marketing (leveraging their data networking dominance), ample R&D, and by competing head-on with the likes of Avaya, Nortel and other established voice-centric vendors. Cisco didn't create VoIP but they, in effect, "made the market" by legitimizing VoIP, attracting mainstream customers, and getting the TDM crowd to accelerate entry into convergence. Over time Cisco learned more about telephony (the company was embarrassingly late with music-on-hold, for example) and related voice market requirements. Moreover, their customers seem willing to pay a premium for the Cisco name and its IP networking reputation.

Microsoft is going after the "PBX" at the lower end of the market with Response Point, and elsewhere with OCS. While Microsoft's leverage with IT is based on its desktop and software applications, the company would certainly like voice and telephony to "belong" to the CIO/CTO's domain, as opposed to networking, which has been Cisco's strength. Cisco took the PBX decision out of the closed telecom shop and now Microsoft is trying to reposition it further to naturally play into its own IT sweet spots.

Will Microsoft be able to "out-Cisco" Cisco and achieve PBX success? Cisco has been quite good at leveraging trends and capitalizing on "disruptive" technologies. Microsoft, one could argue, is attempting to create a major transition or quantum shift with UC. To many industry observers and analysts, UC is already a major transition phenomenon. Microsoft has been joined by IBM and others from the IT world (including Cisco of course) in pursuit of UC and, more importantly, UC-related revenue. The road to VoIP and now UC is transforming "voice" from its closed environment and culture to become part of the IT organization, infrastructure and applications. Clearly the IT vendors no longer want to leave those voice dollars on the table for others. (iPhone anyone?).

For those old enough and cynical enough to recall the great voice/data convergence ISDN "phenomenon" of 20 years ago, it's interesting to note how things have changed. Back then the ISDN charge was led by the telephony crowd of voice switch vendors and carriers. Even the federal government was an active participant via NIST's North American ISDN Users Forum. The IT contingent (called "information processing" or "computing" then) showed little interest. Apple was involved some with ISDN, as was DEC (remember them?) and IBM. Data networking (LAN and WAN) were new in the 1980's. By and large, the computer industry ignored ISDN, and its voice/data networking prospects evaporated rapidly.

Back to Microsoft and the PBX or PBX equivalent. My guess is that in five years the top three vendors will be Cisco, Avaya and Microsoft, not necessarily in that order. The way forward will be more difficult for Microsoft than it was for Cisco in 1998 and its entry into VoIP. Part 2 of this article will look at the differences in the landscape and environment facing Microsoft in 2008 compared to what faced Cisco ten years earlier.