Microsoft dives into unified comms

Microsoft chairman Bill Gates and Business Division president Jeff Raikes have formally launched several products that are key to the company's strategy of offering "unified communications" for businesses - that is, software for bringing together email, instant messaging, voicemail and telephony.

Speaking at an event in San Francisco, Raikes said: "The era of dialling blind, the era of playing phone tag, the era of voicemail jam... that era is ending."

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," he said.

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 switch 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 fuelled largely by the success of Office.

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.

At the event, Microsoft touted 15 new phones and devices that work with its software; new services from Dell and HP; 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.

But 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 comms work. Henry Dewing, a principal analyst with Forrester, said 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.

Dewing, who did not participate in the Forrester study commissioned by Microsoft, said: "It's going to be a messy market for the next five to 10 years. 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 as customers will want to mix and match products to build a complete solution.

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

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

Ina Fried writes for CNET News.com