Gates says voice software spells death of PBX

Microsoft Chairman Bill Gates Tuesday launched the company’s unified communication platform, a milestone he said validates the era of software-enabled voice technology and signals the impending death of the PBX.

Gates and Jeff Raikes, president of Microsoft’s business division, formally launched Office Communications Server (OCS) 2007 and Office Communicator 2007, the client side of Microsoft’s unified communication platform. The major upgrade over OCS’s predecessor, Live Communications Server (LCS) 2005, is the addition of sophisticated voice technology.

“What today’s announcement is about is taking the magic of software and applying it to phone calls,” Gates said. “Once you get software in the mix the capabilities go way beyond what anybody thinks of today when they think of phone calls. This is a complete transformation of the business of the PBX.”

OCS 2007 is the centerpiece of Microsoft’s unified communications strategy to bring together e-mail, instant messaging, presence, voice and video. It is a Session Initiation Protocol (SIP)-based server that can route and switch IP-based voice traffic, as well as IM and Web conferencing sessions. With Microsoft’s Office Communicator and other client technology as the front end to the server, Microsoft hopes to storm the voice market that is attracting heavyweights such as Cisco and IBM.

Photo of Bill Gates and Jeff Raikes

Gates likened the PBX to the mainframe of years ago, an all-inclusive system that lacked flexibility. He said moving voice to software would bring efficiencies to workers and IT, and reduce infrastructure and operating costs.

Raikes added that the cost of VoIP and a complete unified communications platform would be 50% less in three years than what it is today.

But Gates acknowledged that the PBX won’t be out in the dumpster tomorrow morning. He said voice would move to software over a period of time and work alongside the PBX into the near future, but eventually the PBX would disappear.

Today’s reality is that presence and IM are the primary drivers of unified communication adoption and not voice. And the other reality is that these individual communication applications are not unified under a single, coherent platform, especially in terms of management.

Regardless, Raikes repeated during the keynote address a prediction he made in March that within three years more than 100 million people doing information work will be able to click to communicate.

Analysts are taking a more measured stand.

“2008 is probably the first step, which is to migrate from LCS to OCS and get stable,” says Mike Gotta, an analyst with the Burton Group. “It will 2009, 2010 before you see people branching out to integrate Web conferencing and other aspects of unified communication.”

Gates said megatrends such as improvements in hardware, abundant bandwidth and the digitization of the economy have laid the foundation for voice integration via software and unified communications.

“Now is the time when communication will be revolutionized starting with the phone call but bringing in screen sharing, bringing in video, bringing in collaboration, bringing in the ability to put into a business application the richness of unified communications.”

As a proof point, Raikes said the next version of Microsoft’s Dynamics CRM would ship with click to communicate features and that those same capabilities would show up in Microsoft’s ERP applications. He also said SAP is working to include those capabilities into Duet, its joint project with Microsoft to marry SAP and Office.

Gates characterized the change as bringing software innovation to the business phone.

“This is not just a technology change, but a change in the business structure so the opportunity for people to come in and do new things is much larger. In the older world, everything came in a vertically integrated communications stack.”

He said the classic vertical structure would turn on its side and become a horizontal structure incorporating phones, applications, open communications platforms and standards such as SIP.

Gates cited a Microsoft study conducted by Forrester Research that showed a 500% ROI in unified communications over a three-year period based on productivity and other savings including the use of existing infrastructure such as network connections and computers.

Raikes said companies would see huge productivity gains by giving users a single identity and presence capabilities within a unified communications platform.

“Our research shows that the average information worker spends 37 minutes per week in voice mail jail or playing phone tag and that adds up to more than 30 hours of lost productivity per year. But by using identity and presence at the core you recapture that lost time,” he said.

Raikes said companies are doing that today and that Microsoft has 150 customers using VoIP and click-to-call features. He said 50 partners Tuesday also introduced new products and services to go along with OCS and Office Communicator, and 800 partners have obtained specialized unified communications training to help support rollouts.

“The era of dialing blind, the era of playing phone tag, the era of a voice mail jail, the era of disconnected communications, that era is ending. A new way to communicate starts today,” Raikes said.

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