Editor's note: This article is a continuation of part one, Cisco and Microsoft duke it out for UC market share.
Cisco still dominates in the major UC categories -- voice, video, mobile, conferencing and call center applications, according to TechTarget's recent UC survey. But Microsoft beat out long-term UC vendors with its Microsoft Lync Online in the presence, cloud-based UC options, and general "UC applications" categories.
"Lync is a disruptive force in this market because it will bring in new buyers and users. But the real disruptive factor is more the 'who,' because it's the Exchange admin and the Windows apps developers who look at Lync," Zeus Kerravala, founder of ZK research, said.
If the future of unified communications is a set of features to integrate into other applications, who's better positioned to do that than Microsoft with its great developer environment and desktop mindshare?
In an increasingly software-based world, Cisco has acknowledged that it shines in hardware but lags in software, according to Frost & Sullivan UCC analyst Michael Brandenburg. That's an issue Cisco's John Chambers said the company has to change at this year's C-Scape analyst meeting.
Cisco also needs to integrate its UC product line to keep its lead position in the unified communications market. "It shouldn't burst like the sun on Cisco that it has to create unity among its Unified Communications solutions, WebEx and telepresence," CIMI Corp. President Tom Nolle said.
In terms of actual 2012 market share, Cisco and Avaya are one and two, said Kerravala, with Avaya first in total telephony and Cisco first in IP telephony. "Microsoft is a very small player overall today, but when I put on my Johnny Carson Carnac the Magnificent hat and look at the intent to purchase, we'll see a reshuffling of the top three. As long as Avaya executes well, it should be able to keep its base, but growing new customers could be difficult." After Avaya, there will be a huge drop off to the number four UC, which almost becomes irrelevant at that point, he added.
Which companies want Lync?
Very small and very large companies are adopting Microsoft Lync first, Kerravala said. This is because large enterprises understand how UC changes business processes, and for the very small, it's a relatively painless deployment process. The number of companies that have deployed Lync fully is fairly small, he added, but if you look at the number of companies with partial deployments, it's fairly big, so there's a big adoption wave coming. Lync 2013 will provide the infrastructure for enterprise IM, video calling, multi-party voice, presence, file transfer, audio, video and Web conferencing, and PSTN connectivity through a third-party gateway or SIP trunking.
Assessing the 'Lync is free' myth
What is the real cost of Lync? Survey respondents said their biggest concern about Lync is that it has too many hidden costs.
Where Microsoft found unified communications market share
Lync has been gaining steam under the traditional UC radar because it didn't have an actual handset, so it hollowed out market share where people weren't looking, according to Brian Washburn, research director of Network Services at Current Analysis.
Unlike Cisco, Microsoft went to market with free Lync licenses, even though users end up paying for the hardware to run it on, including Microsoft Lync servers, IP phones and gateways to legacy systems and PSTN lines. If you're not using the latest version of Exchange, Microsoft will force you to upgrade, unlike Cisco, Kerravala said.
"But companies can get Lync onto a desktop for no money and use it for chat and presence. Then slowly over time, why not use it for mobile voice or desktop voice? But there are a ton of hidden costs. It's like death by 1,000 cuts," he added.
Microsoft is aggressively building Lync into its enterprise agreements, and it's making a lot of companies pause and question their strategy before spending a ton of money on Cisco gear, said Frost & Sullivan's Brandenburg. "If you're an old dog telecom guy, of course you know Avaya. But if you're a server guy who just got handed the phone system, you think Cisco and Microsoft. So Microsoft is actively going to war on UC," he said.
Skype's place in the Microsoft Lync vision
The survey showed that 19% of respondents have already deployed Lync as their primary united communications solution, while 7.5% have deployed it as their secondary UC solution and another 18% are currently testing it. Another 32% feel that although Lync isn't ready for prime time yet, it is a viable solution. Its use for all UC applications, especially voice, will take time, however.
Integrating Skype into Lync's UC features doesn't have a lot of potential for mainstream corporate buyers in terms of voice because of security concerns, in Kerravala's view, but he adds that Skype has long-term potential particularly with the millennial generation.
Other analysts disagree. With Skype, even though it isn't yet integrated into Lync, Microsoft has two things that no one else has in the UC market, according to Nolle. Microsoft has a global network with tens of millions of users, with call quality getting very good. "No other UC player has a network, not just a product. It's a free on-ramp. If you need more features than Skype has, Lync will be the next logical step," he said, adding that millions of Skype users are now Lync prospects, making Lync the overwhelmingly right answer.
Using only Lync's collaborative applications, businesses are essentially limited to staying within the company. Its advantages "fall off a cliff the instant you walk out the door because nothing is extended into the WAN to other customers or suppliers other than voice over the public switched network," Nolle said. "So you're back with Alexander Graham Bell once you leave the enclave of your own business." He maintains that when integrated with Lync, Skype will create a universal collaborative baseline that is higher than anyone else's because it includes video, IM, presence and other UC features.