October 16, 2007 9:45 AM PDT

Microsoft dials up phone ambitions

SAN FRANCISCO--After years of planning its move into telephony, Microsoft is finally ready to start taking calls.

At an event here Tuesday morning, Chairman Bill Gates and Business Division President Jeff Raikes formally launched several products that are key to Microsoft's strategy of offering "unified communications" for businesses--that is, software for bringing together e-mail, instant messaging, voice mail and telephony.

The event took place at the Bill Graham Civic Auditorium--a venue better known for rock concerts than tech launches. It kicked off with fog machines pumping and a rock musician playing an electric guitar signed by Gates.

"The era of dialing blind, the era of playing phone tag, the era of voice-mail jam...that era is ending," Raikes said at the event. He noted phone numbers themselves are the product of the technology limitations of the era in which they were developed.

"I don't want to get in touch with your number," Raikes said. "I want to get in touch with you."

Bill Gates

The most significant of the new products, Office Communications Server 2007, is a considerable expansion of its predecessor, Live Communications Server, which was used mainly for corporate instant messaging. The new version can handle that task, but is also capable of managing phone calls for businesses using either traditional or Internet-based phone systems. In addition, it can plug into existing Microsoft software, such as Office and Exchange.

In addition to the core server software, Microsoft is introducing a companion desktop product, Office Communicator, and a new version of its Live Meeting videoconferencing software. It is also making available its RoundTable videoconferencing device with a 360-degree camera and recording abilities.

Gates highlighted the cost and productivity savings that can come by handling calls over a computer network.

"By moving phone calls onto the Internet using the powerful industry-standard servers, we have a very different way of doing things," Gates said at the event.

A Forrester Research study commissioned by the company found that typical customers could save $5 for every $1 spent on Microsoft's software, provided they adopt all the company's technology and switches from traditional to Internet-based calling.

The company has identified unified communications as its most significant opportunity to increase revenue in its business software unit, a unit that has been fueled largely by the success of Office.

"Frankly, it's the biggest opportunity for growth that we have," Raikes said in a March interview.

The era of dialing blind, the era of playing phone tag, the era of voice-mail jam...that era is ending.
--Jeff Raikes, president,
Microsoft business division

For its part, Microsoft is using a familiar approach, touting partners as key to its eventual success. At Tuesday's event, the company touted 15 new phones and devices that work with its software; new services from Hewlett-Packard and Dell; and support from software makers, such as SAP, that are including Microsoft's "click to communicate" technology in their products. Nortel Networks, one of Microsoft's closest partners in this area, is announcing several new products that build on top of Microsoft's server software.

Raikes has said the telephony market now is much like the server market was in the 1990s. As it did in the server market and the PC market before that, Microsoft is hoping to create the core software, while counting on a legion of other companies to build hardware, add-ons and additional software needed to create the full package for businesses.

"When we think about unified communications, we think about how you can break down all the silos around e-mail, IM conferencing and voice," Kim Akers, general manager of Microsoft's unified communications effort, said ahead of Tuesday's event. "Within whatever application you are working on, you can 'click to communicate.'"

Microsoft first laid out its vision for the market at an event here in June 2006.

Microsoft is far from alone in this quest. Cisco Systems, in particular, is also making a big push in many of the same areas. It offers a number of products in the unified communications arena and in March announced it would buy WebEx, a key rival to Live Meeting.

Whereas Microsoft sees software as the foundation of its unified communications strategy, Cisco sees the network as the key to making unified communications work. Henry Dewing, a principal analyst with Forrester, said that there is room for both companies to do well in this market. Cisco is likely to handle more of the call-control functions, he said, while Microsoft will be used as the application on the desktop, providing presence and video applications.

"It's going to be a messy market for next 5 to 10 years," said Dewing, who did not participate in the Forrester study commissioned by Microsoft. "Microsoft will likely dominate the desktop, and Cisco has already proven that it's strong on the infrastructure side, selling roughly half of the VoIP-enabled telephony lines. So it will be hard to knock them off."

Instead, Dewing sees the companies working together--not because they want to, but because they have to.

"Even with Microsoft's Office Communications Server 2007, I don't think Microsoft is ready to deliver the entire solution," he said. "And I don't think Cisco can deliver a complete solution on its own right now either."

Click here to Play

Video: Microsoft moves to business telephony
Bill Gates takes the stage in San Francisco to announce Microsoft's new line of software aimed at unifying voice mail, e-mail and business meeting technology.

Because customers will likely mix and match products to build a complete solution, the companies will have to work closely to ensure their products work well together.

In August, Microsoft CEO Steve Ballmer and Cisco CEO John Chambers staged an event in New York City where they declared their willingness to work together in areas--such as unified communications--where they will also compete.

"Some people like to see things in black or white--we're either partners or competitors," Ballmer said during the event in August. "But the relationship is much more complex. It's what our customers want. And we have to work together in a sophisticated fashion to give customers what they want."

Ultimately, most customers will have a mixture of Cisco and Microsoft products as part of their communications solution, said Rick McConnell, general manager of the company's unified-communications unit.

"The vast majority of customers will not choose an all-Microsoft or an all-Cisco solution," he said. "It's just not very practical. We don't offer Office-like applications, and they don't have networking products. So the question becomes: where do you draw the line between using products (from) Cisco or similar offerings from Microsoft? And that's where we will compete."

CNET News.com's Marguerite Reardon contributed to this report.

See more CNET content tagged:
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"The most significant of the new products,...
... Office Communications Server 2007, is a considerable expansion of its predecessor, Live Communications Server, which was used mainly for corporate instant messaging. The new version can handle that task, but is also capable of managing phone calls for businesses using either traditional or Internet-based phone systems. In addition, it can plug into existing Microsoft software, such as Office and Exchange..."; So, what compelling interests are there in an "Office" Product that is yet to satisfy the International Organisation for Standards (ISO) Standards such as the Open Document Format (ODF) Standards.
Posted by Commander_Spock (3123 comments )
Reply Link Flag
It's not about Office, it's about your telephone
Open Document Format has no relevance whatsoever to this.

This is an IM client / server package that links your email, IM, desktop telephone, laptop, etc.

Example: I'm out traveling and have my laptop running to check out the interesting news on CNET. Someone calls my office phone but I'm out of the office- a popup window shows up on my laptop and lets me know that I have an incoming call. I can choose to send it to voicemail (and get an email attachment of the message as a .wav file), start up an IM chat session with the caller, or even answer it using VOIP on the laptop's speaker and microphone. All that without being in the office at all. Your telephone essentially follows you around to wherever you are logged into.

It's a pretty neat product and the way it ties into telephone systems is very much a productive tool.

It has nothing to do with Open Document Format Standards and shouldn't be confused with that unrelated topic.
Posted by Vegaman_Dan (6683 comments )
Link Flag
you must have a ton of free time..
..who is paying you, IBM? I see you troll every MS article.
Posted by FutureGuy (742 comments )
Link Flag
microsoft dials a wrong number-again
Stop them before they hurt themselves. And, go back to finishing that fourth rate OS known as Vista. After you finish, maybe it will rocket up to the third rate status.
Posted by The_happy_switcher (2175 comments )
Reply Link Flag
Double Tasks!
"go back to finishing that fourth rate OS known as Vista..." Are you forgetting that "Office OOXML" has not yet jumped the "ISO Standards Hurdle". Read the subject line.
Posted by Commander_Spock (3123 comments )
Link Flag
Blah Blah Vista Blah Blah

Do you have a keyboard macro?
Posted by ncalishome (193 comments )
Link Flag
And still be ahead of Apple?
Sorry, couldn't resist. It was too obvious and easy.
Posted by Vegaman_Dan (6683 comments )
Link Flag
I didn't think this article was about an operating system. However, since you mentioned that Vista is a 4th rate OS. I'm glade that I have the OS and that it handles both my office and personal (DVR, music, pictures, videos and everything else I throw at it- without problems) needs. I guess I should switch to another OS that doesn't do anything better (for a higher price). I'm sorry but you make no sense!!!
Posted by ladyvols (4 comments )
Link Flag
"Unified Communications and Collaboration"!!!
"Microsoft's strategy of offering "unified communications" for businesses--that is, software for bringing together e-mail, instant messaging, voice mail and telephony...??? Nah!


As to "Why IBM for Unified Communications and Collaboration"

<a class="jive-link-external" href="http://www-142.ibm.com/software/sw-lotus/sametime" target="_newWindow">http://www-142.ibm.com/software/sw-lotus/sametime</a>

Posted by Commander_Spock (3123 comments )
Reply Link Flag
vs IBM
not really the same:

<a class="jive-link-external" href="http://blog.tmcnet.com/blog/tom-keating/microsoft/office-communications-server-2007-public-beta-launches.asp" target="_newWindow">http://blog.tmcnet.com/blog/tom-keating/microsoft/office-communications-server-2007-public-beta-launches.asp</a>

I for one am looking forward to this. Exchange Server has worked flawlessly for 5 years running and this level of integration would be really sweet. Asterisk is.. meh.. unfulfilling at best, totally down and under maintenance by our hardware group at worse. Besides that, this will likely be free to MAPS subscribers, which include me
Posted by ncalishome (193 comments )
Link Flag
Lotus Notes!!!
*fall down laughing* you are a funny guy (or out of your mind).
Posted by FutureGuy (742 comments )
Link Flag
Microsoft targeting "emerging markets", Hello Antitrust
Where does it stop? Should it?
I realize I'm wasting my breath, but didn't the antitrust trial say the remedy was necessary to prevent emerging markets from being dominated by MS, BY VIRTUE OF it's MONOPOLY desktop operating system and Office applications?
Let's see, Windows, Office, Windows (mobil) Media (crux of current EU Antitrust litigation), Zune digital media format propogator, MS Silverlight (Flash killer), MS Unified Collaboration (Live Meeting - webEx killer), NOW PHONES/telephony?!
Posted by technewsjunkie (1265 comments )
Reply Link Flag
Or if you want it today
<a class="jive-link-external" href="http://www.communigate.com" target="_newWindow">http://www.communigate.com</a>
Posted by rcrusoe (1305 comments )
Reply Link Flag
Several offerings
Microsoft is really stepping on some of their developers toes with this one. Managing voicemail with Exchange has been around for many years, I first set this up in 2002.
Posted by DrtyDogg (3084 comments )
Link Flag
You can't do business without email and voicemail. If your customers now use MS unified technology, and you don't, guess who loses their business. You, Mr. linux user. You Mr Mac user. You Ms iPhone user. You Mr Yahoo messanger user. Even the 3 people who still use Lotus Notes are SOL.

And under DMCA, no one else can reverse engineer this thing.

Only Google can stop them now.
Posted by gggg sssss (2285 comments )
Reply Link Flag
Fear Not!
"Even the 3 people who still use Lotus Notes are SOL..." - Think Again!


"IBM extends the capabilities of unified communications and collaboration into new territory".

<a class="jive-link-external" href="http://www-306.ibm.com/software/lotus/sametime/getthebuzz/" target="_newWindow">http://www-306.ibm.com/software/lotus/sametime/getthebuzz/</a>

Google Ready! Not at least with "Duh" Spread Sheet against 90% market share... How about adding those "3 people who are still using Lotus Notes" to complement the Lotus "Symphony" Orchestra and let the world have some really good "Music"!
Posted by Commander_Spock (3123 comments )
Link Flag
This isnt really that new
It may have a few neat new capabilities, but Unified Communications has been around for YEARS. Both Avaya and Cisco as well as many other companies have products that do just about everything Microsoft wants to do now.

Its just funny that this article makes it sound like Microsoft is taking us toward this new frontier.
Posted by Staszek (79 comments )
Reply Link Flag
It's suppose to work with other software from Microsoft
You know, like Exchange, Outlook, etc.

Try reading the story.
Posted by quikboy2 (95 comments )
Link Flag
So what's Apple got up its sleeve?
Conspicuously absent from this article is: what does Apple have
up its sleeve? 10.5 Server is about to come out, and Apple, more
than ever, is involved in Telecommunications products...

Ron Paul President 2008
<a class="jive-link-external" href="http://ronpaul2008.com" target="_newWindow">http://ronpaul2008.com</a>
Posted by libertyforall1776 (650 comments )
Reply Link Flag
ODF Support
and 300 new features like five new screen savers!!!!! Oh and did we mention ODF support in the free stripped-down word processor that nobody with a brain uses?
Posted by sanenazok (3449 comments )
Link Flag

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