Today, Microsoft begins life as a real competitor in the enterprise voice space. It has slain dragons (like enabling call access control and E911), faced mighty jousters (Miercom has called Lync a resilient, feature-rich, scalable UC system in their review), and emerged triumphant to compete for enterprise accounts looking for unified communications and collaboration (UC&C) solutions. Microsoft has amassed an impressive list of early adaptors — of both Office Communications Service Release 2 (OCS R2) and Lync — that includes large and small deployments with varied features/capabilities enabled.
Lync required Lighthouse accounts to use a wide array of services at significant scale, so I expect to see big accounts like Marquette University and the Dominican Republic Ministry of Education join current OCS enterprise voice users like Shell, Intel, AT Kearney, and Sprint on Microsoft’s “Customer Success Stories” page. In talking to many early adopters, I heard very few complaints about voice quality or reliability of the solutions, and:
Almost every firm using Lync is connecting employees together using Lync AND other Microsoft products.
Improved voice quality and reliability drives customer satisfaction and makes Microsoft’s story more credible in delivering UC&C solutions.
Microsoft began opening its own retail stores in 2009 and recently began a push into more US cities. A recent post by George Anderson on Forbes.com about Microsoft's new store format prompted me into some late-night analysis. It appears Microsoft's store format strategy is to ride in the draft of Apple by building larger-format stores very near, if not adjacent to, Apple's own stores. As a retail analyst and both an Apple and Microsoft customer for over 25 years, I feel compelled to weigh Microsoft's retail strategy against Apple's (and since I cover retail strategy from a CIO perspective, it feels appropriate to publish here).
Comparing eight success factors
Location: I'll start here, as it was the subject of the original post. Across from Apple may be the only sensible choice for MS, but the challenge MS has is that Apple is a destination store, i.e. people plan to go there for the experience. This makes it less likely they will decide to browse the MS store because it is close. On the other hand, assuming MS does some promotions to attract traffic to its stores, they are likely to also drive additional traffic to Apple. Predicted winner = Apple.
Store architecture: Size isn't everything! Sure Microsoft can copy Apple and go for outstanding store designs and even build them bigger, but Apple architecture is designed to reinforce a consistent brand image: minimalist, clean lines, designer. Microsoft's designs can reinforce many things about its brand, but it's hard to see the consistency in a way that's possible with Apple. Predicted winner = Apple.
I'm in the business of identifying when there's a change in the wind coming that will push us in a new direction. On balance, I've been successful. So much so, that when something I staked my career on becomes commonplace, people are so used to it that they look back and think I was only pointing out the obvious. Like when the most senior faculty member in the advertising department at Syracuse University rejected the "Interactive Advertising" course I proposed to teach in 1996 because online advertising was "just a fad." I took a stand and got to teach the class, over his objections. Fast forward to today and online advertising is so obvious that predicting it is a thankless task.
I say this because I am about to take a stand I want you to remember. Ready? Starting November 4th, Kinect for Xbox 360 will usher us into a new era Forrester has entitled the Era of Experience. This is an era in which we will revolutionize the digital home and everything that goes along with it: TV, internet, interactivity, apps, communication. It will affect just about everything you do in your home. Yes, that, too.
I've just completed a very in-depth report for Forrester that explains in detail why Kinect represents the shape of things to come. I show that Kinect is to multitouch user interfaces what the mouse was to DOS. It is a transformative change in the user experience, the interposition of a new and dramatically natural way to interact -- not just with TV, not just with computers -- but with every machine that we will conceive of in the future. This permits us entry to the Era of Experience, the next phase of human economic development.
It was common knowledge that Microsoft was releasing a new version of its communications and collaboration suite this year, but behind the traditional development cycle, the Microsoft marketing machine was operating at full speed as well. The name “Communications” has been replaced by “Lync” broadly across the traditional OCS product line, reflecting in my opinion, the fact that enterprise communications and collaboration is all about linking the people, processes, and thoughts that drive creativity. I am fond of saying that there is the verb “to collaborate” (what humans do to create new and better ideas together) and the noun “collaboration” (what many tech vendors sell in the form of collaboration platform software). By adopting the name Lync, I believe that Microsoft is taking to heart the requirement for communications software to link people, processes, and ideas, while SharePoint remains the place where those ideas are stored and shared on enterprise networks for companies that have adopted Microsoft’s unified communications and collaboration (UC&C) products broadly.
Beyond the name, I believe that the most compelling news is that Microsoft is now getting serious about its Microsoft Lync Server being ready to replace the private branch exchange (PBX). Many Microsoft execs — from Gurdeep Singh Pall, corporate vice president for the Office Communications Group, through BJ Haberkorn, OCS senior product manager responsible for voice — have spent extensive time telling me about the reliability and scalability of Microsoft’s voice services within its UC&C solutions. Microsoft continues to expand its feature set to compete robustly with other communications vendors. New capabilities of the Microsoft Lync Server include:
Rich presence providing access to things like location or user skills.
I’ve been getting a number of inquiries recently regarding benchmarking potential savings from consolidating multiple physical servers onto a smaller number of servers using VMs, usually VMware. The variations in the complexity of the existing versus new infrastructures, operating environments, and applications under consideration make it impossible to come up with consistent rules of thumb, and in most cases, also make it very difficult to predict with any accuracy what the final outcome will be absent a very tedious modeling exercise.
However, the major variables that influence the puzzle remain relatively constant, giving us the ability to at least set out a framework to help analyze potential consolidation projects. This list usually includes:
To paraphrase Charles Dickens, Q2 2010 seemed like the best of times or the worst of times for the big software vendors. For Microsoft, it was the best of times; for IBM, it was (comparatively) the worst of times; and for SAP it was in between. IBM on June 19, 2010, reported total revenue growth of just 2% in the fiscal quarter ending June 30, 2010, with its software unit also reporting 2% growth (6%, excluding the revenues of its divested product lifecycle management group from Q2 2009). Those growth rates were down from 5% growth for IBM overall in Q1 2010, and 11% for the software group. In comparison, Microsoft on June 22, 2010, reported 22% growth in its revenues, with Windows revenues up 44%, Server and Tools revenues up 14%, and Microsoft Business Division (Office and Dynamics) up 15%. And SAP on June 27, 2010, posted 12% growth in its revenues in euros, 5% growth on a constant currency basis, and 5% growth when its revenues were converted into dollars.
What do these divergent results for revenue growth say about the state of the enterprise software market?
So what does this mean for CIOs and IT, the custodians of enterprise technology architecture?
It is clear Jive wants to play with the big boys in the enterprise software space. To date, many Jive deployments have not involved IT. This ability to deploy its technology without IT’s involvement has no doubt helped Jive to this point. Of course, having market-leading functionality hasn't hurt. (Jive has featured highly in recent Forrester Wave reports).
At the recent Enterprise 2.0 conference in Boston, I sat down with Jive’s new CEO, Tony Zingale, to explore the company strategy. From our discussion, it was apparent that Jive intends to compete for a big slice of the enterprise collaboration marketplace. Fundamentally, this is the right direction for Jive, but I foresee some big challenges for the company along the way.
What is the opportunity for Microsoft partners (or other VARs, SIs, ISVs and technologists) in the emerging cloud computing space? Don't think of cloud as a threat but as an opportunity to ratchet up your value to the business my evangelizing and encouraging their transition to the cloud. How? At the recent Microsoft Worldwide Partner Conference I addressed this issue in an Expo Theater presentation. Missed it? Now you haven't: