Microsoft Pushes into Communications and Beyond

Here is my August 2007 Publisher’s Outlook for Internet Telephony Magazine. It may be one of the longest pieces I have written in a while and it was great fun to put together and hopefully is something you will appreciate.
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 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.
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 320×240 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 of the RoundTable product on his VoIP and Gadget Blog.
Response Point
Did you know that two-thirds of small companies have no phone system but instead use a hodgepodge of cordless phones and an answering machine? In a meeting with Microsoft’s Jeff Smith, Senior Product Manager, I learned that he goes to small business customers and works with them as they try out the latest solutions Microsoft has to offer the SMB space.
Enter Microsoft’s Response Point, a phone system designed for smaller companies that consists of all the features a small business would need, such as speech recognition, call forwarding to cell phones, Outlook integration and the ability to selectively route over the PSTN or VoIP. The system easily parks phone calls and recalls them from park. There’s also a really slick voice interface which is more than impressive.
This product’s goal is to make the phone system easy to understand for small business. A base unit, phone line adapter (what we refer to as an ATA in the industry) and phones are all you need. The product is designed to be sold through resellers and there are sufficient margins to make it a worthwhile proposition for the reseller community. According to Jeff, the sweet spot for this product is an installation of up to 50 phones.
For an in-depth discussion of how Response Point and Office Communications Server compare, I invite you to read Microsoft OCS 2007 vs. Microsoft Response Point.
Quality of Experience
When it comes to VoIP, managing and monitoring quality seems like an endless task. Whereas you can control the bandwidth in your office you cannot control the bandwidth at a hotel or local coffee shop. The bad news is that your company’s employees will be making VoIP calls on these networks and subsequently talking to your customers on IP networks over which you have no control. That’s one reason I met with Francois Doremieux,Senior Program Manager, Product Group: Customer Experience, who explained to me how Microsoft wants to ensure Quality of Experience (QoE) on an end-to-end basis. He said that traditional metrics the industry uses like packet loss and jitter are important, but they don’t account for echo or a microphone positioned close to a hard drive or keyboard.
As part of Microsoft’s desire to provide the best QoE they have developed new codecs and utilize time warping and other technologies to account for situations where packet loss, jitter and/or latency levels are high.
Without getting too technical, Francois explained how the company’s wideband codec allows much clearer conversations. At this point we discussed how the current codecs and filters in use in telephony are responsible for poor sound quality during telephone conversations. He mentioned that this poor transmission of voice is responsible for stress on the listener who must mentally put the missing frequencies back into the original conversation.
Microsoft feels that their codecs are vastly superior to existing codecs, as they are more efficient yet sound better. This is confirmed, they tell me, through third-party testing. Doremieux explains the company will license these codecs to other companies inexpensively and, as he alluded to, the company would love to have larger codec support as this would reduce the need for transcoding. In addition, this would allow wideband conversations over disparate equipment.
The Future
My next stop on the grand Microsoft tour landed me in the Center for Information Work where I visited the Executive Briefing Center. This center’s goal is to be ‘concept car of the software world’, allowing Microsoft customers to see what the future holds in terms of productivity.
The tour was impressive on many levels but I expected more personal electronics. I was told the reason there weren’t more gadgets is that Microsoft is basically a software company and besides, device makers aren’t especially thrilled to give their ideas away years in advance.
This is not to say I didn’t see very innovative things. Something simple yet incredible to behold was an integrated workstation with three virtual screens stitched perfectly together. Each screen consisted of a fabric-like material which was lit by NEC projectors mounted on the floor aiming upward. For about $30,000 you could build one of these for yourself.
Another demo showed the ability to drag a mouse from a monitor to a desk phone and back.
True software innovation revealed itself when I sat down at one of the monitors and witnessed how the desktop had organized my contacts and documents on the screen, based upon projects I am working on. In other words, the software is smart enough to know who I work with and what deadlines I have on what projects. It subsequently presents areas of screen real estate dedicated to these concepts but populates them dynamically.
Another interesting demo was the slider on your inbox which allows you to filter your messages based on importance. For example if you have ten minutes to check messages, you slide the bar to the direction of the word “important” and only the most pressing messages come up. How does the system know what is important? Well, there would have to be some rules. For example, an email from Bill Gates regarding lunch is probably something you want to respond to in a timely manner. The system is also smart enough to know that an email from someone on your calendar is important. This is the case even if you don’t know the person you are meeting with.
Other demos I witnessed consisted of animated, voice-annotated spreadsheet snippets and locked-in document sections allowing multiple authors to simultaneously update a document.
An area of tremendous importance not lost on me was the concept of software which understands your business processes. For example, the ability for software to be aware of areas of specialization and moreover to have an understanding of where the talent lies in your company. A document which a compliance officer should see can be forwarded to a compliance icon and the system will deliver the document to the best person based on various factors.
This deep understanding of business processes is what allows you to place your hand on a 3-D production graph and expand it upwards or downwards. As you expand it, you can see how various areas in your organization will change and you can see the point at which you might experience an inventory squeeze.
Other demos showed the concept of flicking documents off the screen and having the system know where they are destined. Another interesting demo was of various web portals which are updated in real-time with information applicable to the intended recipient. Employees, customers, and suppliers can all have a window into your operation but you choose how high or low the ‘window shade’ will be.
A final demo showed RoundTable in operation with tablet computers in a conference room — a ‘Productivity Center’. All participants were able to see tasks being created and collaborate effectively with one another. RoundTable was actually born and raised in this facility.
From my perspective, this demo shows where things are heading. The technologies I saw are inevitable (although I’m not so sure I really need my cursor to move onto my IP phone). The move to SOA, XML and other standards support this trend. The question is, how do we get to the next level? Enabling software to understand how business works is no easy task and at some level much programming needs to be done to make this happen.
What I can tell you is that all of the software concepts I saw demonstrated are possible today. Perhaps this is what surprised me most. Of course, the level of integration, the understanding of business process and the comprehension of arcane things such as hand gestures are not quite here yet. But we are getting there. We have the tools. In the end, the company which implements this sort of technology first in any industry can run virtual circles around their competition.
The next step for corporations is to embrace business process modeling and comprehension in their computer systems, which will turn out to be an incredible productivity booster.
The Microsoft tour was a great way to end the day. . . Eight hours or so filled with meetings with many people responsible for bringing the company’s communications vision to life. Is Microsoft back in communications? Yes. Do I think they are entrenched this time? Absolutely. Perhaps the best evidence of this fact is the real estate dedicated to IP communications in their “office of the future” demonstration. It seems that the mainstream goals of Microsoft to further enable the technological and productivity revolution intersect squarely with IP communications, thus heralding a sea change in the competitive telecom landscape.
Microsoft has lots of really great communications and other products which are just about to ship. If everything works according to plan, within one year we could be looking at Microsoft as a very serious player in communications. Really, this is Microsoft’s game to lose. When we saw the demos of unified communications throughout the day, my two coworkers and I looked at each other a few times and asked, “When can we get this?” I suspect many others will soon be asking the same question.

  • Ravenii
    July 24, 2007 at 1:33 pm

    Very good outlook and only if they get their stuff together! thank you for informative article. I could not ping back, so this comment.

  • rick
    July 25, 2007 at 10:49 am

    Did you get any comments on alleged theft of Agere’s voip sound technology.
    And if they have such superior codecs, then why did they license GIPS codecs a year ago?
    The smell is bad.

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