The Hindu Business Line : Unified rivalry

They have been fighting a pitched battle for a larger share of the global unified communications market for over two years. Now with the Indian enterprise segment increasingly investing in efficient networks and productive systems, the brawl between Microsoft, Avaya and Cisco has hit Indian shores. Ironically, one is a software giant while the other two are leaders in traditional communications hardware. While Microsoft wants to leverage its dominant position in the deskto p software market, Cisco and Avaya are banking on their IP-based voice solutions to tap the unified communication space.

Depending on whom you talk to, unified communications is described as telephone and video collaboration, or as a converged network for voice and data, or as an all-encompassing term for all forms of call and multimedia/cross-media message-management functions. Put simply, a unified communications system includes elements of presence, instant messaging, IP telephony, audio conferencing, Web conferencing or data collaboration, unified messaging (a common message store for voicemail, email, and faxes), mobility, and/or video conferencing — all accessible through a single client interface or within an embedded application interface.

When done right, unified communications can reduce downtime, which is implicit in any interaction. According to a study, more than 70 per cent of business calls are placed on hold for an average of 45-60 seconds each in a traditional legacy network. The average executive spends 17 minutes each day on hold, and some 80 per cent of phone calls end up in voice mail. Unified communications (UC) curbs wastage of time by letting users reach the right person at the right time through their preferred mode of contact. This goes way beyond just slashing hold times or steering clear of voice mail. It means organising information faster and getting that information to the right person in a usable format when the recipient needs it most.

“The prime deliverables of UC are cost reduction/ optimisation and productivity improvement. These are the prime objectives of business leaders in India. This convergence of deliverables and objectives is driving the interest in UC and its uptake,” says Vivek Porwal, BU Head – Unified Communications, Avaya GlobalConnect.

Big growth seen

The global market for UC is estimated to touch $48 billion by 2012. In India, the UC market is still nascent, at about $600 million. But this is growing exponentially as the small and medium enterprise segment begins to understand the benefits of deploying UC solutions. The growth rate for UC in India is among the highest globally. According to a forecast from Frost & Sullivan, the UC market in India is likely to exceed $1 billion by 2010. K.B. Sanish, Research Analyst, Gartner India says user analysis done by them in North America and Europe in the SME segment shows that the major reasons for UC adoption include improved speed of business (cited by 44 per cent of respondents), and improved communications for distributed sites and remote or mobile workers (39 per cent of respondents).

According to Gartner, other factors included the need to replace equipment and lower total cost of ownership.

Agrees Sudhir Narang, Managing Director, BT India, “With the advent of collaboration and globalisation, the awareness of and need for UC has increased manifold. UC is truly a transformational technology as it can change the core processes of an enterprise, leading to better and agile business models. It is an emerging class of applications and services designed to improve communication and productivity across multi-site organisations and mobile workforces. This helps to keep workgroups connected in a resilient manner, to enable them to collaborate effectively and streamline business process.”

Scramble for market share

While everyone agrees on the potential and benefits of UC in India, vendors are working on ways to garner a larger share of this market. As expected, Microsoft’s approach is focused on desktops and email-based applications. It is integrating several collaborative applications to enable UC functions on the desktop. Microsoft is playing to its strengths here because it’s the market leader in desktop software and has a long history in many aspects of UC such as email, office productivity tools and instant messaging.

“Microsoft has long seen that the path to UC lay in powerful, well-integrated software. Microsoft UC solutions enable customers to preserve their investments in their PBX and avoid upgrading their network infrastructure while quickly realising the productivity and cost-reduction benefits of unified communications. Designing unified communications functionality into the solution rather than acquiring point products helps provide customers with an enhanced end-user experience and helps make system management easier. Because Microsoft takes a software-platform approach, rather than relying on hardware, customers receive investment protection,” says Sanjay Manchanda, Director, Microsoft Business Division, Microsoft India.

On the other hand, Cisco and Avaya’s strategy is to start with an intelligent IP network and build into it the UC capabilities. Says Minhaj Zia, National Sales Manager, Unified Communications, Cisco India & SAARC, “Cisco’s core business is enabling an IP-based network platform. Since it is the leader in this market and IP enables the ability to converge data, voice, video and mobility, we are well positioned to drive the UC platform in the market over the next few years.” The company is actively targeting the small and medium enterprises segment and has developed business models that offer UC solutions at a lower cost. A fact that some of its clients such as Aztecsoft vouch for. “We compared solutions from various vendors and found Cisco’s to be more cost-effective,” said N. Nataraj, Vice President and CIO, Aztecsoft.

Email vs. voice

Each side feels its approach is better than the other’s. Commenting on Microsoft’s strategy, Avaya’s Porwal says, “Email and desktop UC accounts for only 10-15 per cent of UC revenues. Major revenues are from voice and collaboration. Voice (including IP telephony) contributed the maximum (about 73 per cent) followed by conferencing (video, audio and Web), and messaging and calendaring (which includes email, Internet messaging, unified messaging and mobile business messaging).”

But Microsoft reckons this is far from the truth. “The most used application in enterprises today is email. According to an IDC report on unified communications, standalone email is still considered the biggest productivity tool and ranks topmost (96 per cent ranked it amongst the top three applications impacting productivity). Microsoft is focused on extending the same familiar Outlook experience to other applications. Microsoft has always held that email is a critical component of unified communications and now competitors are changing their approach to fill out clear gaps in their solutions that Microsoft is already offering. In fact, Cisco’s acquisition of Post Path, a Linux-based messaging solution provider (Exchange competitor), is a testament to the fact that unified communications is not just about telephony,” counters Manchanda.

Traditional IP hardware vendors such as Cisco think that voice-based applications are driving the UC market. “Microsoft is talking about email and desktops because it does not have a good voice solution in its UC portfolio,” says Zia.

The software major, whose clients include Marico, Moser Baer, NIIT, BILT and Laxmi Vilas Bank, says it is working to plug the gap as far as voice-based applications are concerned. “We are taking proactive steps in building our voice credibility by showcasing our voice quality and its integration with our email, IM and conferencing environments. In just a year of entering voice, we have featured in the Gartner Magic Quadrant for Telephony (2008) in the Visionary quadrant. The telephony space has been contested by our competitors for many years now, and for us to come from software background and be positioned in the visionary quadrant is creditable,” says Manchanda.

Cisco, which was among the first to move into the UC space and sold millions of IP phones before Microsoft entered this segment, claims that Microsoft solutions are not open sourced. “Microsoft mostly insists on using its software and applications, especially on the desktop, whereas Cisco has always believed in interoperating with existing systems and applications. This has cost implications for users,” says Zia

Manchanda responds to this by saying that Microsoft’s UC solution is compatible and interoperable with other communication infrastructure. “In fact, we offer choice in end-point devices with partners like Polycom and other SIP phone providers which are more cost-effective than competitors like Cisco and Avaya who provide their hardware (server, gateway and phones) to run their applications. Customers are tied into these investments and very often the cost of upgrading this hardware turns out to be more than that of a new purchase,” he says.

Common challenges

But even as they fight it out, there are some common challenges for the vendors. UC is still primarily deployed by verticals that have traditionally used IT to enhance productivity such as the banking and financial sector and ITeS. Other sectors are still weighing their options. Second, UC is highly segmented with not many corporates deploying the entire gamut of services. Currently, companies are deploying only some parts such as IP telephony or an email-based application with video capabilities.

In order to overcome these challenges, rival vendors are also collaborating like in any competitive industry. For example, Microsoft and Cisco have announced an agreement to make their respective UC solutions interoperable. This allows enterprise customers to pick the best of what both companies offer. Microsoft also has a partnership with Nortel, which offers a range of UC products. The vendors are confident that given the huge benefits, more and more corporates would have a compelling reason to deploy UC. Analysts predict that Indian corporates will use UC solutions in a big way in another two years.

This has drawn more players such as IBM and Alcatel into the fray. According to industry estimates, UC deals worth $400 million could be up for grabs in India over the next two years. Clearly, the gloves are off.

The battle is so fierce that even independent analysts with whom e-world spoke refused to stick their neck out with predictions on who will win. The first round though seems to have gone to Avaya, which, according to IDC, has a 30 per cent share and is the market leader in the unified communications space in India. But the war has just begun, with many more rounds to go.

Related Stories:
IBM to tap into unified communications
‘Unified communication no longer a niche technology’
Converging communications, the next ‘wave’

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