While IP PBX vendors duke it out for market share in the converged LAN/WAN arena, a recent analyst report warns not to count out a certain software vendor from Redmond.

A report from IDC identifies Microsoft as a potential force in the enterprise telephony market in the coming years, as the company moves forward with its strategy for converging voice, video and chat applications into its PC and server operating systems, as well as its Office applications. Meanwhile, some voice-over-IP (VoIP) vendors are partnering with Microsoft to make their equipment and applications work together.

"We're not talking about every Microsoft server potentially becoming a PBX," says IDC analyst Tom Valovic, who wrote the report on Microsoft and the VoIP market. He says that as Microsoft pushes deeper into the market for collaborative applications - such as software that uses Session Initiation Protocol (SIP) to facilitate multimedia conferences - telecom vendors and IP PBX companies trying to build the same types of systems could butt heads with the software giant.

Many IP PBX vendors, such as Alcatel, Mitel and Nortel, are basing their gear on SIP, which is considered to be the next-generation protocol for voice, video and instant-messaging traffic. In addition to setting up and transporting voice and video calls, the protocol can identify information about clients - whether they're on a phone, videoconference station or a PDA using e-mail, for example. SIP also brings presence capabilities, letting end users know who's online when, and how others can be contacted.

For years Microsoft has had computer telephony features embedded in its operating systems in products such as NetMeeting, an H.323-videoconferencing application, and Exchange Conferencing Server, for managing data, voice and videoconferencing.

Windows XP brought along Microsoft Windows Messenger, which turned some heads in the telecom community for its use of SIP.

Speculation about what Microsoft will do in telephony grew when company representatives began showing up at industry events such as Voice on the Net (VON), and later when it announced development of its Real Time Communication (RTC) Server, code-named Greenwich. RTC, renamed Live Communication Server 2003, is due out this fall. The server will act as a control node for managing conferences among SIP clients.