In 2000, I was employed as a Data Sales Specialist at Lucent which subsequently spun-off to Avaya. Ignorant at the time, I had the fortune of being at the epicenter of a seismic shift in the telephony world. This was the very beginning of the movement from the TDM to IP-based world of telephony. Coinciding with this movement was Cisco’s initial foray into this nascent market. Seeking to feed its ever voracious appetite for new revenue streams, Cisco set its sights on dominating the enterprise telephony market. They would tout IP-transport as a way of legitimizing their presence in this space. So the logic went: IP-transport is the new way for telephony, Cisco owns IP-transport in the enterprise; therefore, one can only conclude that Cisco is the best choice for your new telephone platform. Lucent represented the old world of telephony with a dominant market-share in the TDM-based enterprise market. Cisco was coming to eat our market-share and the slick, marketing-machine it represented caused a considerable amount of angst within Lucent, by this time re-badged Avaya.

In 2001, now jokingly demoted to an Avaya Territory Rep, I spent the next five years battling Cisco for IP Telephony dominance in the heart of downtown Chicago. I witnessed, first-hand, some of the mistakes that Cisco made in the ensuing years, mistakes that Microsoft could learn from in their quest for a place in the enterprise PBX market.

1. Telephony ain’t easy – If I only had a nickel for every time I heard the terms, “It’s just dial-tone” or “It’s just another application on the network”. That dial-tone is considered a god-given right to users and it is not easy to replicate the so-called 99.999% (aka five-9’s) reliability achieved in the traditional TDM world. That application on the network is real-time and demands a steady packet-stream unlike typical data apps. This is something that the Data folks always underestimated. Users are conditioned to Data apps being down. They don’t view telephony in the same way. Cisco learned this lesson the hard way with shaky technology to start. The rumors of botched installs, helped along by FUD from people like me, propagated and subsequent potential customer shied away from it. It became even more difficult as customers within the same industries shared their stories. Over time, Cisco developed a more reliable and feature-rich solution that overcame some of these issues.

2. Know your audience and take a humble approach – Just because a company believes it is a good idea to enter a market doesn’t necessarily mean that customers will embrace you with open arms. At times, customers perceived Cisco to be arrogant and aggressive. They called the TDM-based PBX a dinosaur and demanded it be replaced. This served to aggravate many a telecom manager that regarded Cisco with suspicion in the first place. Cisco talked about architecture and speeds/feeds. Telecom managers wanted to talk about esoteric phone features and call routing. Data and Voice appeared to be on two separate wavelengths. In later years, Cisco recognized this issue and put on a friendlier face by hiring a slew of traditional telecom folks. Today, the Cisco office in Chicago looks like an Avaya reunion.

3. Rip-and-replace is not an ideal strategy – Up to now, Cisco had dominated every market they had entered with relative ease. Cisco learned that hard way that getting customers to rip out their PBX’s wasn’t going to be easy. They eventually learned that a more migratory approach was effective by leveraging their existing strengths. Cisco owns the router market. Almost every customer has Cisco routers at each physical location. By shipping ‘voice-enabled’ routers on the Edge and making it cheap to turn on that call processing, Cisco could grab those small offices on the Edge and work its way inward. This allowed customers time to play with the technology in a low-risk environment as few users would be impacted in an adverse situation. Cisco could have kept quiet and started to ship those ‘voice-enabled’ routers. Once adequately seeded in the market, they could have started to offer that Edge telephone solution. At the same time, they didn’t have to advertise any grand telephony strategy. Once the Edge started to proliferate, they could work their way toward the Core and the eventual PBX replacement.
I believe that Microsoft can learn from the above lessons. To paraphrase George Santayana , “Those who don’t learn from history’s mistakes are condemned to repeat them.” Cisco has provided a playbook on what not to do.

The question is whether Microsoft has the foresight to pick up the cues. What follows are some of my suggestions:

1. Be patient. Sometimes moving too quickly into a market, especially when not ready, can do more harm than good. Microsoft needs to work on its own timetable. They have the luxury of a massive war-chest to do this right. It will take some time before customers can see Microsoft as a potential provider of their telecom needs. In addition, it will take Microsoft time to build the internal infrastructure, like people and offerings, that will be needed to tackle the market. For example, how will Microsoft provide adequate post-installation support in an OCS Voice solution?

2. Sell the Trojan Horse. This is where the title to my little rant comes in. Just like the Greeks offering their little tribute to the unwitting Trojans, Microsoft could place their own ‘Trojan Horse’ in front of unsuspecting Telecom Managers. The strategy is utilizing a feature in OCS called Remote Call-Control (RCC). RCC allows a legacy PBX to be tied to OCS. The client portion of OCS, call Microsoft Office Communicator (MOC) handles Call Control and the Legacy PBX still provides the dial-tone or Voice portion of the call. Customers already want OCS for IM/Presence. Microsoft can sell integration to the PBX for showing Off-Hook Presence. Off-Hook Presence is a feature in OCS that turns the MOC ‘jellybean’ from green to red when a user is on his legacy PBX phone. In my mind, a desirable feature today. Since this integration is already enabled, one could sell the value of customer’s trialing RCC without feeling threatened by PBX replacement. The users will already be using the MOC for IM/Presence. If they can control their PBX phone via the MOC, this gives them the desktop experience of Microsoft Telephony. RCC gives Microsoft the chance to place OCS next to every core-PBX and co-opt the user experience. This provides an elegant migration strategy to the customer.

3. Sell the Desktop. The Desktop provides a key advantage that Microsoft can leverage in their efforts to enter this space. When I sold at Avaya, we continuously fell into the trap of selling to Cisco’s strength. Cisco and the Data folks love to talk architecture and speeds/feeds. I became adept at white-boarding and illustrating how our architecture was more elegant, superior etc. This was a huge mistake. Microsoft doesn’t need to fall into that trap because they have the greatest weapon of all. The Desktop experience is where users can ultimately measure the value of an application. Microsoft’s ownership of the desktop gives them a tremendous advantage that nobody else enjoys. For example, populating Presence information in Clients outside of the MOC such as Sharepoint, MS CRM and Outlook is quite compelling to customers that already own those other applications. I guess the more pertinent question is who doesn’t own Exchange and Sharepoint today? This inter-application Presence gives customers an impetus to buy OCS for IM. Having that MOC Client serve as your softphone, since you are already using it for IM/Presence, is just an extension of that logic. This allows Microsoft to turn the tables on Cisco and sell their value from a different angle. Where does Cisco have a commanding presence on the desktop? One could argue, the Phone. Unfortunately, the phone, in most cases, is not an application that sits on the PC.
The above assumptions are taken from the functionality residing in OCS R1. At the time of this writing, Microsoft plans to release OCS R2 in February 2009. I believe their plans to truly compete head-on in the telephony market will coincide with the release of OCS R3 which should be delivered sometime in 2010.

 I will opine on Microsoft’s progress to date in a later article so please stay tuned...