SHARE



ABOUT THE AUTHOR


Dave Michels
Dave Michels is a Principal Analyst at TalkingPointz. His unique perspective on unified communications comes from a career involving telecommunications...
Read Full Bio >>
SHARE



Dave Michels | February 04, 2014 |

 
   

How Far Will Lync Go?

How Far Will Lync Go? As Microsoft Lync continues to impact the UC market, can it keep up its momentum?

As Microsoft Lync continues to impact the UC market, can it keep up its momentum?

Microsoft Lync has significantly impacted the UC market. Last year, Microsoft stated it had already sold more than 5 million voice licenses and was already a billion-dollar business. The company recently revealed that Lync grew more than 25% last quarter. Customers seem to love it, and others are intrigued. It is a success by most definitions, so the question is: Can Lync continue its rapid growth?

It is difficult to pinpoint specifically what makes Microsoft Lync so compelling. Common responses include an encompassing approach to UC, tight integration with other Microsoft products, a broad set of capabilities, an intuitive client, and its bundled licensing.

Despite these attributes, Lync has its issues and challenges. For all of the innovation Lync has brought to the industry, it has also lagged in some key areas--namely mobility and cloud. Yet, these gaps have been closing with ongoing product enhancements.

Later this month, Microsoft will host its second Lync Conference. Last year the event took place in a boutique hotel, and it sold-out quickly. This year, it moved to a larger Las Vegas venue--though event organizers evidently still intend to keep it from getting too big as it sold-out the selected venue once again. Expectations for this year's event are high since many major announcements were made last year.

A Brief History of Lync
Lync really dates back to 2003, when it was known as Live Communications Server. However, most of the activity and adoption has taken place since the 2010 Lync re-branding and release. Microsoft recently made significant enhancements to the product, including clients for most mobile devices, improved options for video integrations, and a significant increase in Lync-approved applications and devices. Additionally, its integration with Skype created a unique B2C model for rich communications.

There was plenty of skepticism about Lync because it entered real-time communications late, and went up against many mature products. But being late hasn't been a problem for Microsoft in the past. Many times now, it has leveraged its dominance in desktops and productivity applications to create a leadership position. Consider how it took on Lotus 1-2-3 with Excel, or even Harvard Graphics with PowerPoint. Or how Windows became the successor to DOS years after Apple introduced the GUI OS. NT successfully unseated Novell, and IE was the browser that took down Netscape.

On the other hand, Microsoft's dominance in operating systems and productivity suites is weakening. In 2004, there were 56 times more PCs than Macs. That figure and the following quote comes from Horace Dediu, who writes:

In the 1980s and 1990s, computing platform decisions were made first by companies, then by developers and later by individuals.... In the 1980s, if the Fortune 500 companies all standardized on Windows, then their suppliers and customers would also standardize on it. Add governments and other institutions, and 80% of the market is probably decided.... In other words, in the '80s, a platform could win by convincing 500 individuals who had the authority (as CIOs) to impose through fiat a standard on the centers of gravity of purchasing power...Today, with mobile products, there are billions of decision makers. 500 decisions mean nothing.

Dediu claims that in 2013, PCs outsold Apple devices by only 1.18 times. While the Mac was not particularly relevant in his calculations, iOS--i.e., mobile--devices were. He predicts the disparity will be completely eliminated in 2014. That doesn't even factor in Android devices, which outnumber iOS devices.

This poses a risk because one of Lync's key strengths is deep integration within the Microsoft environment. Lync's full potential is realized via other Microsoft components, including Exchange, Active Directory, SharePoint, and Windows. That hasn't been a problem to date because these solutions are dominant in large enterprises, exactly where Lync has been building momentum.

Will the Decline in PC and Server Sales Affect Lync?
IDC estimates PC sales experienced an overall decline of 10% in 2013. HP and Dell restructured, and IBM had already exited PCs and just sold its server division. The browser has largely neutralized the desktop OS wars, which has kicked-off a contentious browser battle featuring Microsoft, Google, Apple, and Mozilla. Additionally, enterprise servers are increasingly being replaced by cloud services (SaaS and IaaS). Microsoft is not the leader, but competes here with Azure against Amazon and Google as well as VMware for private clouds.

It isn't even clear if a full desktop is needed within enterprises any more. Viable options exist with virtual desktops (VMView, Citrix, Amazon Workspaces) and alternative operating systems such as iOS, Android, and ChromeOS--all of which are experiencing significant growth.

Lync's growth rate will likely slow due to the laws of large numbers alone, but the competitive pressures also are real and increasing. There's been tremendous activity in the UC space over the past year, with product improvements, hosted offerings, and acquisitions. For example, several vendors now offer free instant messaging and deep integrations to business applications such as Oracle and Salesforce.

Maintaining Momentum
There are a few things Microsoft could do, in my opinion, to continue Lync's impressive growth:

* Cloud: UC, like computing in general, is seeing a strong migration toward cloud offerings. Microsoft was late to the cloud, but its Azure, Office 365, and Dynamics CRM services are now selling well. Microsoft reported 100% growth here last quarter and claims 70% of Fortune 500 companies are now using at least one of those cloud services. However, Lync Online is not a full UC solution, and the hosted Lync offerings from third parties tend to be focused on large implementations. Expanding the capabilities of Lync Online within Office 365 would likely significantly widen the addressable market.

* Skype: Most UC solutions offer HD audio, IM/presence, and HD video--but these modalities don't play well with the PSTN. Lync offers rich inter-organizational communications through Lync-Lync and Lync-Skype federation. Microsoft is using Skype to improve Lync's reach, but Metcalfe's Law suggests Skype would be even more powerful if it interconnected with other vendors, potentially creating the model for the next-generation carrier. The current model of federation treats the symptoms of a limited public network. As these modalities become more widespread (and even expected), overall demand for UC will increase.

* Infrastructure Independence: Tight integration, both technically and via licensing, is part of Lync's attraction, but there's an applicability gap with non-Microsoft infrastructures. For example, users who want unified messaging must use Exchange, however, most other UC products work with Exchange as well as with other third-party messaging systems. Many competitors have the advantage of infrastructure independence. Esna and gUnify are building connections between UC platforms and Google Apps. Mitel and Unify have direct integrations with Google. Lync could expand its addressable market if it could be more independent from other Microsoft products (and position tight Microsoft integration as an option).

* Adoption: The vast majority of Lync users are not implementing voice. Multiple reasons are cited for this, including complexity, feature gaps, application gaps, and TCO. Microsoft will have to address the root cause of these concerns in order to retain its growth and claim market leadership.

Microsoft approached UC with a very disruptive angle, and it took time for customers and partners to adapt. For example, Microsoft positioned voice as an add-on while most of the industry started with voice and positioned presence as an add-on. It has taken time, but the market has now responded. Microsoft opted to rely on an ecosystem of partners to complete Lync (applications, devices, gateways, peripherals, etc.) instead of internally creating them. This ecosystem has grown tremendously and now offers an extensive selection.

There is little reason to expect momentum will slow in the near term. New information will emerge at the upcoming Lync Conference, and demonstrations will likely follow at Enterprise Connect 2014. Microsoft Lync is here to stay; the question is how high will it go?

Dave Michels is a Contributing Editor and Analyst at TalkingPointz.

See more from Dave Michels about unified communications and other important topics at Enterprise Connect Orlando 2014!

Follow Dave Michels on Twitter and Google+!
@DaveMichels
Dave Michels on Google+





COMMENTS



July 12, 2017

Enterprises have been migrating Unified Communications & Collaboration applications to datacenters - private clouds - for the past few years. With this move comes the opportunity to leverage da

May 31, 2017

In the days of old, people in suits used to meet at a boardroom table to update each other on their work. Including a remote colleague meant setting a conference phone on the table for in-person pa

April 19, 2017

Now more than ever, enterprise contact centers have a unique opportunity to lead the way towards complete, digital transformation. Moving your contact center to the cloud is a starting point, quick

July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular BlogGeek.me blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.