Microsoft's Voice-Over-IP Strategy Starts To Take ShapeMicrosoft's Voice-Over-IP Strategy Starts To Take Shape

Microsoft has made it clear it covets the voice-over-IP market. This month puts the focus on two major products behind that ambition, though Microsoft is still far from offering everything most businesses need to make VoIP work.

The first is a small-business product code-named Response Point, which Microsoft announced last week, and the second is its latest unified communications line, a test version of which will be released this week that promises the ability to make phone calls from Microsoft Office applications. As Microsoft tries to break in against big VoIP players such as Cisco Systems and Avaya--as well as with its sometimes partner, sometimes competitor Nortel Networks--small businesses will be its first line of competition.

Microsoft's Response Point system for small businesses is slated to be available later this year. It uses phones and other hardware from D-Link, Quanta, and Uniden, and includes a gateway that allows calls to the public phone network. The system uses a PC-based management console and shows Microsoft trying to bring the phone and PC closer together, with features such as incoming call notification on the PC and integration with the Microsoft Outlook address book. "This is part of Microsoft's bigger vision for IP telephony and unified communications," says Xuedong Huang, general manager of the Response Point team.

Comenity, a small business that installs home entertainment systems, has been testing Response Point for eight months. The company wanted to replace a business phone system that required a receptionist to route calls and didn't have voice mail built in. CEO Mark McCracken says Response Point gives him an automated directory that lets callers reach who they need, and the voice mail goes to an employee's e-mail in-box.

Microsoft's test versions of Office Communications Server 2007 and Office Communicator 2007 client will include Web, audio, and videoconferencing alongside IP calling and call management. However, Office Communications Server can't organize calls through the gateway to the public phone network, so companies still need a true IP PBX for that. Still, it's part of Microsoft's planned portfolio of software-centric VoIP products, with a vision of building voice communication into desktop and collaboration applications, and appealing to larger companies that have phone systems with which Microsoft's software can integrate.

RIVALS READY

Rivals won't surrender the small-business market. Avaya's small-office version of IP Office functions as a traditional phone switching system or as an IP telephony server with features such as broadband and Wi-Fi access plus VPN tunneling in one unit. Cisco took its IP PBX functionality and moved it into a router for smaller offices; its newest version, Unified Communications Manager Express, handles voice and data. The Microsoft-Nortel partnership is producing its own small-business product: UC Integrated Branch, due by year's end, delivers VoIP, data routing, and other functions through one device. The companies also are planning products that combine Nortel's enterprise-level VoIP calling and routing with Microsoft's collaboration tools.

There's no clear-cut leader in VoIP for small and midsize companies, so the market is wide open for Microsoft to break in, says Zeus Kerravala, a Yankee Group analyst. His prediction: "Long term, you'll see two dominant vendors in VoIP: Cisco and Microsoft." Microsoft is promising its offerings will be much simpler than today's phone systems--more like a PC, while a traditional PBX is like a mainframe, says Microsoft product manager Jeff Smith. But until Microsoft's VoIP capabilities go beyond the needs of small businesses, count on traditional PBX and routing competitors to keep a strong presence.