Well, my friend Alec Saunders has done it again, giving us another weighty post to wrap our heads around. This one isn't a "manifesto," but nonetheless, Alec raises some really vital points for anyone playing in the unified communications space. And his thoughts on Microsoft lead me off into some tangential, but pertinent thoughts of my own.

Note: Sometimes I wonder if Alec tackles things like this just to drive us all to think and post. Sometimes he makes my head hurt.

Aikido, Retreat or War. What’s your Microsoft strategy?

One of the more interesting trajectories to watch in the communications space over the last decade has been the growth of the Microsoft ecosystem. Literally a decade long strategy, it was conceived at the time that I ran the Windows CE planning group in the late 1990’s, when the first Microsoft smart phones were being designed. From the beginning, the core strategy was to tie the phone to the Microsoft Office and BackOffice product lines – Outlook, Exchange, and to a lesser degree the core productivity applications like Word and Excel.

Fast forwarding to today the biggest growth area in Microsoft’s Office Systems Division is, unsurprisingly, communications. That strategy, coined a decade ago, lives on. Live Communications Server, the newly announced Office Communications Server, Office Communicator, and the total integration of these technologies with the Office 2007 suite suggest a world where communications and productivity applications are inextricably entwined.

With the delivery of these products, we are witnessing the beginning of the end of the transition of communications systems from yesterday’s PBX and desk phone solutions, to complete software solutions. Pioneers in the market, using systems such as the Open Source PBX Asterisk, have long been proponents of this vision, but the entry of a market dominant player like Microsoft, with its deep pockets and channels, will drive the adoption of software solutions at a much faster rate than any grass roots movement can.
[Read Alec's Complete Post]

I really do encourage you to go read Alec's complete post. I'll reference it and comment, but you have to read the whole to appreciate the detail of Alec's thinking. For now, let me extract some key phrases that set the tone for what we're talking about:

• the total integration of these technologies with the Office 2007 suite suggest a world where communications and productivity applications are inextricably entwined.
• the entry of a market dominant player like Microsoft, with its deep pockets and channels, will drive the adoption of software solutions at a much faster rate than any grass roots movement can.
• Microsoft is careful to position their solution as an adjunct to existing phone systems, rather than a replacement. Adjunct yes, but it’s really only required by those who wish a staged transition. (emphasis mine)

That's right, Microsoft is here to play. And when Microsoft comes to the game, they don't ever aim to come in second. Microsoft may be a much maligned and easy selected target. Any company that size is. And I'm not shy about pointing out their shortcomings, but let's all give credit where it's due. Microsoft doesn't enter a market aiming to be an also ran. They're in it to win.

This is an interesting, even clever sneaky nuance if we're paying attention. Yes, use Microsoft solutions as an adjunct to your existing phone systems. Sure. Do that. But as the MS business solutions more tightly integrate to provide converegence from the application layer, isn't your phone system simply becoming an adjunct to the Microsoft infrastructure? And how will will it beg the question, is that phone system a necessary adjunct? Or is it a boat anchor holding you back?

Alec said:

• My friends failed to internalize the fact, articulated in the Voice 2.0 Manifesto, that voice is just a big application. Intellectually they understood this fact, but software isn’t in their genes – not the way it is at Microsoft.
• The economics of software are powerful, far beyond legacy hardware businesses.
• Omnivorous as ever, Microsoft has also extended its reach into embedded platforms. The Windows Mobile and Smartphone platforms have continued to grow at a rapid rate, leveraging the .NET APIs from the Windows desktop to gather developers, and adding capabilities like push email to the Exchange server.

These are really key points. Too many legacy players in voice, and even in VoIP, grew up socialized in the world of hardware. Hardware scales in a linear fashion. Software doesn't. The economics of software will always beat hardware economics if done right. And for as many things as Microsoft has done wrong, if we just speak broadly of software, they do it right. They do it more right than anybody on the planet based on their size and revenue. They know how to win the battle of software economics.

Alec worked for Microsoft and sees them from that viewpoint when he says "Their strategy is textbook Microsoft – engage developers with an army of evangelists to write programs for their platform, work with hardware vendors to deliver the end user product, and let the ecosystem do the heavy lifting. "  That textbook strategy has rarely ever failed. Let's be honest. Microsoft is bringing their "A game" to unified communications. If there's an industry that's bigger than the software industry that Microsoft dominates, it's telecommunications. They know they're stepping up to a huge task. It's also huge global business and revenue.

Alec and I traded email on this topic as he was finalizing this post. I don't know if these questions made their way in to the post because of my email comments or if they were already on his mind.

• Can RIM transform themselves into a software company, and weather this onslaught, or will they go the way of the PBX manufacturers? It’s unclear, but one tremendous asset RIM and no other vendor has is the RIM network operations center, which acts as a central clearinghouse for all wireless email on RIM devices.
• And what of Nokia, the dominant wireless handset player the rest of the world over? How will they fare in a world where backend service businesses are dominated by others?"

I'd ask them differently. Is RIM aggressively partnering with companies like iotum to put next generation services and solutions, like Talk-Now, on every handset they make? If not, why not. What are they thinking? That Microsoft will look the other way? Get a grip RIM.

And Nokia, for all the fabulous E-series and N-series devices that are out there, should be banging on iotum's door for Talk-Now on Symbian. How embarassing must it be to the the number one mobile handset provider on the planet, only to get aced out and have one of the most cutting edge, next generation applications that looks to the future of presence by a competitor like RIM. Nokia, why aren't you kicking in the door at iotum? If I were Nokia, I'd buy iotum just to keep that presence knowledge out of the hands of others. Think patent and licensing fees for technolgy.

I'll add, what about Motorola? They're still out there. Not quite dormant, but not thumping their chest. Snoozing a bit perhaps, but they'll wake up again. They always do. What are they doing about presence? Why aren't they paying attention?

Ok, so a big part of that demonstrates the real thought leadership that iotum has when it comes to presence. Alec, Jim Courtney, myself and several others have written about presence a lot lately. We don't always agree on the small points, but we all agree that it is hugely important to the next generation of network services.

Alec offers three approaches to dealing with what I'll call the "Microsoft problem." Defining that is really easy. Whoever you are, whatever segment of whatever business you're in, Microsoft is going to change the way you do business. Period. That's the Microsoft problem in a nutshell. Alec says you can embrace one of three strategies:

• Aikido – using Microsoft’s momentum to launch complementary businesses.
• Retreat to safety, by building vertical market applications that integrate with the enterprise communications server.
• War.

I can't say Alec's very far off the mark, although I twisted his ideas a bit and think the three are really two. And I think they're all tied to having an exit strategy, but more on that in a bit.

First, you can stick your head in the sand, ignore reality, and be an ostrich. You are the blue plate special. Microsoft will happily eat you for lunch. You may not realize it, but you have an exit strategy.

Second, you can take the Ninja approach. For me this idea encompasses two of all of Alec's three strategies. In a word - stealth. You can leverage Microsoft's work for your own success. As long as you leverage synergy and don't tempt the eye of Redmond to fall on you, this is a solid tactic.You can stealthily play to the niches and integrate with the enterprise communications server. Again a solid strategy. Sustainable, and survivable. Good business words.

Lastly, as Alec notes, you can come out of stealth mode and go to war. Like Alec said, there's always room for number two and three. Then again, there's Cisco, Avaya, Nortel, Mitel, and a host of others who are already well established at or near the top of the food chain. The biggest danger I see with the war tactic is that Microsoft won't be the one eating you for lunch. They'll be the distractor that sets you up to be taken out by someone else. I see this as the most dangerous tactic myself.

Do you have an exit strategy? How do you extract yourself from being impacted by Microsoft? How to you survive if Microsoft sets their sites on your core competency? If you're an enterprise business, betting all your intelligence on Microsoft platforms, let's ask an outrageous question thinking in the opposite direction - how to you carry on if Microsoft folds shop and closes its doors?

Exit strategies aren't just for startups hoping to go IPO or be purchased. There's an exist strategy for every aspect of our business. It's in contingency planning and partnerships. It's in creative partnerships that come from unexpected pairings. It's from targeting a competitor who woulde never view you as a competitor, then taking them out before they know what hit them. The advantage everyone has with the likes of Microsoft (and Cisco for that matter) is that they're so huge they telegraph their punches. They may plan ten years out, but they signal their intentions well before they can tactically deliver.

Want to take Microsoft out of your equation? Think about creative partnerships for new competition in new ways that they haven't dreamed of. Let me give you some examples of pairings that could really shake things up.

iotum - forget the other handheld manufactures. Call Steve Jobs and deliver next generation presence on the iPhone first. iotum alone could make the iPhone the disruptor I don't believe it is slated to be.

GrandCentral and TalkPlus - Pair up with Covad, Comcast and Earthlink. Let their customer based monetize your value. Think way outside the box.

Adobe - Quit dinking around, dragging your feet and talking about flash embedded voice and video. At Etech, even your presentation bored people. Go partner with SightSpeed who already gets it right in SIP voice and video. Bundle the talent behind SightSpeed video and SeriousMagic and provide really solid video production cabability to the masses. And do it within six months instead of an eight year development cycle.

Yahoo - Boy if I was going to give advice to Yahoo, it would be listen to Jeff Bonforte. He works for you, but when I watch what you do, sometimes I wonder if you listen to your own best and brightest. Want to do something wild and daring? Take a look at Jaduka and how you could become the portal to the PSTN. You've always been a portal company, so think about it in a whole new way.

Nokia - What will it take to put a iPhone killer on the market the same time the iPhone hits? I hope you're thinking about it, because as nice as they are, the N-series doesn't come close. Ramp up that VoIP client, pull in iotum's relevance, buy Shozu and make it work properly across the product lines. And while you're at it, make LifeBlog support every blogging API there is out of the box. You've got the killer moblogging platform, but the basic tools are weak.

Think outside the box. Don't think Voice 2.0 or Web 2.0. Time flies to fast. It's time to think two generations or more ahead...maybe Voice 5.0.

Note to Alec: I know this isn't what you expected. It isn't what I expected either. How'd I do? ;-)


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