By Rob Helm [bio]
Posted: Oct. 15, 2007

• Illustration: Unified Communications Products

The following an excerpt of a Research Report published by Directions on Microsoft, an independent research firm focused exclusively on Microsoft strategy & technology. More samples of our content, as well as a list of upcoming articles and reports are also available.

Communications Server 2007 is Microsoft's latest platform for unified communications, which provides instant messaging (IM), user presence, voice, e-mail and other communications services over a single network and directory infrastructure. Unified communications promises to reduce ongoing equipment and service charges, simplify management, and make communication more efficient for users. Communications Server 2007 will be a more credible unified communications platform than past versions thanks to dramatically improved voice features and new support for Web conferences, which combine voice with synchronized PowerPoint presentations and other data sharing features. However, unified communications technology is relatively new and imposes significant upfront costs, so most organizations will move in stages as the technology and Microsoft's offerings are proven.

Improvements Focus on Voice and Web Conferencing

First introduced in early 2004 (under the name Live Communications Server), Communications Server and its associated client, Communicator, supported enterprise IM and presence tracking. IM enables users to send short text messages to other online users, and presence indicates whether users are actively using a PC or other device and are willing to receive IM or other communications at the device. With each subsequent release, Communications Server and Communicator have added more support for other forms of communication, such as voice calls, video calls, and application sharing. The 2007 versions of these products now support three main forms of real-time communication:

IM and presence. Communications Server 2007 and Communicator 2007 deliver many small improvements to these two services. IM continues to attract organizations as a faster, less disruptive way to send high-priority information than voice calls, while presence can help users avoid wasted phone calls and "phone tag." Like earlier versions, Communications Server provides secure IM and presence sharing both inside organizations and (optionally) between organizations and users of AOL, Microsoft, and Yahoo's public IM networks. Users can conduct IM sessions in Communicator and start sessions and see presence information in a variety of other applications, including the Outlook e-mail client and the SharePoint Server Web collaboration product.

Voice and video. Communications Server 2007 and the Communicator 2007 PC client have been substantially upgraded to support voice and video calling over Internet-protocol networks, enabling incoming calls, multiparty calls, and better integration with conventional phone systems than past versions. The voice and video features will particularly interest organizations (e.g. for customer service) that deal with large call volumes and that want a platform for custom voice applications. However, the new features can also benefit organizations looking to consolidate voice and data on a single directory and network. The Communicator client could also enable users to employ complex voice features (e.g., conference calling) more effectively than they can with ordinary phones.

Web conferencing. Communications Server 2007 and the Live Meeting 2007 client support Web conferences. Web conferencing enables real-time distribution of presentation materials (such as PowerPoint presentations); supports voice and video communications among meeting attendees; helps presenters manage question-and-answer sessions; and allows recording and playback of meetings. Microsoft's Live Meeting online service already offers Web conferencing to subscribers; Communications Server enables organizations to host their own Web conferencing sessions in-house, which could reduce service charges, tighten security, and simplify conference setup. Compared with past versions of the Live Meeting online service and client, Communications Server 2007 and the Live Meeting 2007 client offer improvements such as two-way audio and detection of the active speaker in a meeting.

A Platform for Unified Communications

More generally, the new capabilities of Communications Server 2007 and its clients can function as a platform for unified communications. Unified communications systems enable IM, voice, Web conferencing, and other kinds of real-time communications sessions to run over the same network and directory infrastructure as e-mail and other data services. Unified communications systems also support user presence to guide session setup and routing. (For an overview of Microsoft's unified communications platform, see the illustration "Unified Communications Products".)

Unified communications offer new services that can improve productivity. For example, presence services enable one user to see when another is available for a call, which reduces useless calls and "telephone tag." Voice mail can be linked to e-mail inboxes, speeding access to voice mail and making it less likely that messages are missed. Unified communications systems can also simplify access to complex voice features, exploiting the larger screen, keyboard, and applications of the PC. For example, a user of Microsoft's unified communications technology can use Outlook to prepare a conference call, including looking up participants, scheduling the call, inviting the participants, and tracking the status of their invitations.

Unified communications can also reduce an organization's costs by requiring management of one directory and network, rather than two separate infrastructures for voice and data. Unified communications protocols dynamically register the network addresses of users and devices, which reduces the cost of administrative changes (such as office moves) and simplifies support for mobile users. Also, some organizations can use unified communications to reduce voice and conferencing service charges by running traffic over their own data networks. Finally, in the long term, unified communications could encourage standardization of communications equipment, which in turn will reduce equipment costs when compared with systems built around proprietary private branch exchanges (PBXs), just as Internet protocols ultimately reduced the costs of data networking.

For Microsoft and its partners, unified communications represents a major business opportunity: Microsoft estimates that the worldwide market for unified communications hardware and software will be US$45 billion by 2009. If successful in this market, Microsoft's unified communications platform will provide ample opportunities for partners to help customers migrate existing functions (such as telephony) to Microsoft's unified communications platform and to sell hardware and software that build on and complement the platform.

Microsoft is not the only vendor betting on unified communications: Cisco and many existing telephone vendors also hope to exploit the transition. Microsoft hopes to distinguish itself by offering customers a low-cost, software-based platform running on standard computer hardware that integrates easily with well-established products such as the Office suite and Exchange Server.

Cost, Risks Encourage Staged Approach

In five to 10 years, unified communications will probably be as common as e-mail is today. Users and IT staff will be more familiar with the technology, its management and productivity benefits will have been identified, and the technology itself might support interoperability (and vendor competition) on par with today's Internet infrastructure. However, unified communications today is not for the faint of heart, and most organizations will adopt the technology gradually.

Near-Term Adoption Barriers

All unified communications vendors, including Microsoft, face several barriers to adoption:

User resistance. For many voice and video users, the benefits of unified communications are hard to measure. Outside of call centers, for example, the benefits of presence must be weighed against the time users will spend managing and monitoring their own presence information. Services such as Web conferencing also have low-tech alternatives (such as e-mailing a PowerPoint presentation and organizing a voice conference) that are reliable and familiar. Users could prove particularly reluctant to give up conventional phone systems, which perform their main task of transmitting voice calls between two parties nearly flawlessly, even if advanced features such as conferencing can be harder to use.

IT costs and management. Unified communications systems involve significant upfront costs for hardware, software, and integration. Networks and power systems may require upgrades to improve reliability and quality, and systems should support emergency location services (to meet legal requirements that the system accurately transmit the caller's location). Unified communications projects require coordination among telephony, data networking, and data center experts whose expertise rarely overlaps, presenting a difficult management problem for the CIO.

Limited interoperability. Today, customers cannot mix and match vendors for unified communications as freely as they do for data networking. Microsoft and its competitors all support basic protocols, such as the Session Initiation Protocol (SIP) to set up and control communications sessions, and the Real-Time Transport Protocol (RTP) to transfer voice, video, and other media during sessions. However, each vendor uses its own extensions to these protocols to improve security and voice quality and to provide features that differentiate them from the pack. Consequently, unified communications is more like today's voice market—organizations have to commit to a vendor and its partners and hope that the vendor's product roadmap and pricing will continue to serve their needs for an extended period.

Microsoft Approach Promotes Gradual Adoption

Microsoft's software-based approach to unified communications has some particular benefits:

• Unified communications features integrate with widely used software, such as the Office suite and Exchange Server
• Custom applications can be built on its platform to incorporate voice and video features
• A larger choice of hardware could eventually appear from Microsoft partners than from hardware-focused vendors like Cisco.

Microsoft also faces some challenges. For example, the company has a shorter track record in the field than hardware vendors like Cisco, and it has to prove that standard hardware and Windows software can meet the high quality and reliability standards of real-time communications. Microsoft's software-led forays into other areas of network infrastructure, such as routing, firewalls, and voice, have not pushed aside incumbent vendors.

Nevertheless, Microsoft's approach does enable organizations to adopt unified communications gradually, which mitigates the risks. For example, an organization can initially deploy Communications Server strictly for presence and IM, features that have been supported for three versions and that are not as critical as voice. It could later add support for Communicator as a voice client while leaving conventional phones on users' desks, and then finally make Communicator and Communicator-compatible devices the primary voice clients. Consequently, even organizations that don't believe in the vision of unified communications today will do well to evaluate Microsoft's unified communications products, compare them to competitors', and draw up their own timelines for adoption.

What's Ahead

This report outlines the major improvements in Communications Server, Communicator, and related products, focusing on the key new capabilities that support unified communications.

"IM and Presence Improvements" summarizes many small improvements delivered for these services, which are the most widely used services in existing deployments of the products.

"Voice and Video Improvements" outlines the essentially new capabilities of the products for handling voice and video calls, which enable the products to supplement or even replace conventional corporate phone systems.

"Web Conferencing in Communications Server 2007" explains how the product supports on-premises Web conferencing and analyzes the tradeoffs between those capabilities versus Microsoft's Live Meeting online Web conferencing service.

"Future Directions" forecasts future releases and retirements for the product line and related online services.

"Availability, System Requirements, and Resources" summarizes prerequisites to deploying the products and provides links to further reading and technical resources.

"Communications Server 2007 Packaging, Licensing, and Pricing" explains how organizations license the products and the tradeoffs between buying licenses individually versus buying them in Microsoft's enterprise license bundles.