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Microsoft Lync: Market Impact and Growth Potential

  • October 2013
  • -
  • Frost & Sullivan
  • -
  • 28 pages

Transformational Force or a Market Byproduct

Microsoft’s portfolio development and strategic direction have been in line with the greater momentum in the evolution of the enterprise communications industry. More important, the company has driven certain key aspects of this evolutionary process. This report evaluates the current competitive position of Microsoft Lync and discusses where Lync-based solutions will stand in coming years. The study also assesses the impact of Microsoft Lync on channel and technology partners and competitors.

Introduction

The first iteration of Microsoft’s unified communications (UC) platforms, Live Communications Server (LCS), was unveiled to the industry ten years ago. Ever since then Microsoft’s initiatives in the unified communications and collaboration (UCC) market have remained a persistent and lively topic of discussion among all parties with a stake in the industry.

Primarily an enterprise presence and instant messaging engine which displaced Exchange Instant Messaging, LCS was designed and positioned as complimentary and a value-add not only for other Microsoft platforms, including Active Directory, SQL, Exchange and more, but also for third-party communications platforms such as private branch exchanges (PBX) and conferencing platforms. As Microsoft gained experience and expertise in the realm of real-time communications applications development and integration, the Redmond-based company increased its appetite and set its sights on a bigger slice of the communications market. Opportunities and greater control could be gained by relying less on third-parties for core real-time voice and video elements—Microsoft could develop these on its own.

It has not been a swift or elegant 10-year journey from its beginning to what Microsoft’s UCC portfolio is today. The company has transitioned from LCS to Office Communications Server 2007 (OCS), and eventually to Lync 2013. PlaceWare (later rebranded as LiveMeeting), Skype, and Yammer were also acquired along the way. With each step Microsoft has added functionality and changed its game plan—ultimately disrupting the nature of the overall UCC landscape for partners, competitors, and customers alike. Due to its assets and influence in the IT software market as well as its track record the company is poised to play a heavy hand in the evolution of enterprise communications for years to come. This article will examine Microsoft’s present impact on the UCC market and will provide a perspective on its future role in enterprise communications.

The Evolving Enterprise Communications Marketplace

Forward-thinking businesses acknowledge the value of UCC and have rolled out strategies and business plans for the integration of existing tool sets with new investments in communications infrastructure and services. The move to fully integrated real-time collaboration capabilities is an evolutionary path for almost all customers. In Phase I, or the traditional phase, enterprises have separate voice, data, and video networks; many companies are still in this phase today. With the growing build-out of IP communications networks enterprises are now moving to Phase II, or converged communications. In the next Xto X years, we expect many organizations to move to Phase III, in which most communications and collaboration applications will be integrated, or unified, with one another and with critical business processes.

Microsoft’s portfolio development and strategic direction have been in line with the greater momentum in the evolution of the enterprise communications industry. More important, the company has driven certain key aspects of this evolutionary process. In fact, Microsoft was largely instrumental in establishing the term unified communications as the next big trend in enterprise communications and promoting its own, desktop-centric view of the technology and its value proposition.

The following section details some aspects and trends of the UCC market that we believe strongly impacted Microsoft’s strategic direction, as well as those that were directly or indirectly driven by Microsoft’s product development and marketing efforts.

Applications Convergence: After more than 10-years into the era of voice and data network convergence, customer expectations have changed. The operational value propositions of a single IP network for both voice and data are well established. Now customers are demanding the next step in IP communications architecture efficiency. Today’s market is saturated with IP telephony, multimedia conferencing, enterprise instant messaging, unified messaging, mobility and other applications—all promising productivity and efficiency benefits. While these applications are being deployed by customers seeking the benefits of convergence they are still often deployed in silos or for specific work groups or locations due to budget, complexity and other restraints. Before performing more extensive roll-outs many customers are demanding better operational results and improvements in ease of use in order to encourage user adoption and ensure utilization of their investments. The demand for applications convergence is market driven.

Communications and IT Convergence: While other UCC developers concentrated on the operational and user needs through voice and data network convergence the IT stack was largely left as its own silo. Microsoft stayed close to its core strength as its company leaders saw opportunity and a competitive advantage in converging the communications and IT domains. Microsoft responded by pushing the user communications experience to the desktop, and into the IT domain for administrators. For end users Microsoft’s aim is to unify the desktop experience with access to both business productivity and communications capabilities. For enterprise internal support organizations, Microsoft’s approach presents a streamlined set of tools across the two domains. Furthermore, Microsoft’s strategy has been well timed with enterprise initiatives to fold their telecom support groups into or move them under their larger IT support teams. Microsoft is a catalyst of communications and IT convergence.

Table Of Contents

Microsoft Lync: Market Impact and Growth Potential
Table of Contents

1. Introduction 3
• The Evolving Enterprise Communications Marketplace 4
• The Lync Value Proposition 7
• Impact on Customers 11
• Impact on Technology Partners 11
• Impact on Channel Partners 12
• Lync Traction and Market Shares 13
• Lync-Skype Integration: Significance and Market Potential 16
• Lync in the Cloud Communications Marketplace 18
Lync v-Dedicated 19
Lync Server 2013 Multitenant Hosting Pack (LHP v2) 20
Lync Server 21
Office 365 and Lync Online 21
• Lync and Microsoft Impact on the Enterprise Telephony and UCC Competitive Landscape 22
• Competitor Response to Microsoft Lync 23
2. Conclusion 25
3. Legal Disclaimer 27
4. The Frost and Sullivan Story 28


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