Microsoft / Nortel Move UC To The Cloud

We're now seeing the fruits of Microsoft and Nortel's alliance with this week's joint announcement to offer hosted unified communications. Looks like Nortel chose not to skip over Microsoft on this one, like Nortel did with the Social Security Administration deal. And this new announcement surpasses March's hybrid UC which still required on premise hardware. The real winner here is small and medium businesses, who no longer have to buy on premise software and hardware. The Microsoft / Nortel hosted UC solution means there's no hardware to buy for the little guy.

I chatted with Terry Gold, President and CEO of Microsoft partner Gold Systems who specializes in unified communications solutions based on Microsoft OCS. Terry's take, "I've expected from the beginning that OCS and UM would be offered as a hosted solution...for the small to mid-sized market." And I agree with Terry here, offering this as a cloud UC solution is perfect for the small-to-medium business market.

But this announcement also means a lot for partners, and where Microsoft is taking their products. One of the byproducts of Microsoft beginning to bring to market hosted solutions is Microsoft has to make their own products work in a multi-tenant, SaaS offering. Microsoft has to eat it's own dog food, as the saying goes, in S+S now along with traditional on premise software. Terry told me, "I think it is great news for my business as it shows the commitment Microsoft has made to make this a successful and widely adopted product." Microsoft can't afford to fail in a S+S product suite for unified communications, which means they'll likely take the needed features and deficiencies in hosted environments even more seriously. The solution relies on hosted Microsoft Exchange 2007, Microsoft Office Live Communications Server 2007 and Windows SharePoint.

And just because Microsoft is offering a hosted solution for "carriers" doesn't mean there isn't room for other partners to do the same. Specialization, customization, vertical industry focus, and more, are all things Microsoft partners can do to differentiate themselves in the Software-plus-Services era of Microsoft products. That's what the "services" S in S+S is all about. It also means partners will have lots of services revenues converting SMB/SME users from on premise Exchange and Sharepoint over to the equivalent hosted services, whether they be large or small partners' hosted UC services.

While the announcement called this a hosted solution for carriers, that doesn't mean the Microsoft / Nortel solution is ready for primetime in the enterprise space. Hosted enterprise class solutions are a ways off as we'll see adoption in the lower end of the market first. The good news about that is it will require a reliance on automation in order to make a profit at the SMB/SME end of the market, again helping Microsoft make their products more scriptable so automation is easier, in the end also helping Microsoft partners who want to move into hosted solution offerings.

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