Microsoft Raises Voice in Business Communications

The Wall Street Journal (17 October 2007)

Microsoft Corp. laid out new software and a strategy that could shake up the already tumultuous telecommunications-equipment business. The Redmond, Wash., company demonstrated Office Communications Server 2007, the software centerpiece to a multiyear effort to reshape business communications. The Microsoft OCS software runs on large server systems and allows a person using Microsoft's Office software to manage voice calling from their PC and in combination with email, instant messaging and other communications. The software can allow a user with a headset to make a phone call from a PC, by clicking on a name in a contact list. But it includes far more advanced features, such as being able to add people to a conference call by using a mouse to drag and drop their name across the computer screen. Such capabilities, which Microsoft and others call "unified communications," are "going to be as profound as the shift from typewriters to word-processing software," said Chairman Bill Gates. Microsoft is also shipping PC software that works with OCS called Office Communicator 2007 and a new version of its video-conferencing software. It is also selling a $3,000 device called RoundTable that can capture in a panoramic view video-conferencing participants sitting around a table. Phones in businesses and the complex systems behind them have long been supplied by equipment makers far removed from the PC-software businesses that have been Microsoft's lifeblood. Now as Internet technologies become more prevalent in telecommunications, they are opening an opportunity to handle voice calling through the current tool for accessing the Internet: the PC. As the world's largest maker of PC software, Microsoft wants to own that emerging market. The Microsoft software is controversial because it breaks down traditional barriers between the PC-software business and telecommunications vendors that have long controlled the lucrative business of building phones and computers called PBXs, or private branch exchanges, which handle businesses' phone systems. Microsoft is trying to woo those vendors as partners and said that Sweden's Telefon AB L.M. Ericsson and Canada's Mitel Networks Corp. will start making products to work with OCS. Those companies join Canada's Nortel Networks Corp., which last year said it would work with Microsoft on the software. But huge challenges remain. Internet equipment giant giant Cisco Systems Inc. is also building its own unified communications products and has been steadily winning customers to its networking gear for handling voice calls, which form the foundation for building more advanced voice-related software. Microsoft also faces the task of convincing potential buyers of software that its products are reliable enough for business use. While traditional telecom equipment is pricier than the Microsoft offerings, it is also reliable: businesses have little patience for dropped or lost calls or voice-mail messages. Larry Dusanic, operations director for Information Technology at Employers Insurance Group in Smithfield, N.C., said he wouldn't use the complete set of Microsoft software until he's assured it's reliable and won't drop calls. "I would like to wait until a few more versions are introduced before I seriously implement a complete system," Mr. Dusanic said. "I want to wait until it matures." Microsoft built the software to work with its already widely used products such as its email software Microsoft Exchange, so the company is betting that those customers will start experimenting with OCS and related voice software, executives said. A business on Microsoft's standard licensing program for large businesses would pay about $55 per PC to add the voice capabilities in OCS and its related software, according to Jeff Raikes, president of Microsoft's business division.