Skype for Business: Great Marketing Move or Colossal Brand Blunder?
Enterprise competitors are sure to capitalize on Microsoft's decision to build its UC future on a brand name originating in the consumer space.
Now that the flurry of pundit commentary about Microsoft's recent decision to rename Lync as Skype for Business has died down, I want to weigh in with a perspective on how the rebranding might impact competitive positioning, especially in the enterprise unified communications market.
While I understand the company's desire to combine the two platforms and create a single brand identity, as enableUC partner Kevin Kieller discusses in today's Living With Lync: Succeeding With Skype post, I have to wonder if the rebranding will create issues for Microsoft in winning the enterprise and even in growing consumer use.
Most users have come to understand the difference between a consumer service and a business service. The two carry distinctively different value propositions, including expectations of quality, features, privacy, and, of course, pricing and cost. Clearly, many of us don't want to mix our private and business lives -- that's why we have both a Facebook and a LinkedIn account, one cellphone for personal use and another for work, and separate email addresses. We value keeping our lives separate and using different tools.
Now Microsoft is essentially positioning a business solution as a "subset" of a consumer offer and, in creating a single brand name for both markets, but may very well lose focus. If positioned as the same Skype offer but for businesses and with extensions or some other differentiation, the question is whether enterprises will want to associate with a consumer brand in this way.
Lessons of Old
We can look to the early VoIP days as a good example of how naming and positioning can dramatically impact adoption. As you might recall, as companies like Nortel and Avaya entered the market by adding VoIP onto their existing TDM PBX platforms, Cisco built a VoIP platform from scratch. It riled up the market with its messaging that bolting VoIP to an existing PBX was like "tying a horse to your Ferrari." Prospective VoIP adopters who bought into Cisco's positioning and decided they wanted a "pure" IP-PBX stopped talking to the VoIP-augmented TDM vendors.
In late 2001, the Nortel team responded by creating the CS1000 platform from the Meridian PBX code base running on a POTS server and using a VoIP-to-TDM gateway in a rack. In a deliberate decision that allowed the CS1000's positioning as a pure IP-PBX, Nortel only supported VoIP phones off the platform. Many customers evaluated the CS1000, liked that it could integrate with Nortel's other platforms, and ended up buying a VoIP upgrade. The key point is this: Getting users to accept the platform as a pure IP-PBX meant restricting its use to VoIP and creating a new name for it.
When Nortel extended the CS1000 name into the hybrid platform market in 2005, industry watchers took issue -- wasn't this supposed to be a pure IP-PBX? As the saying goes, "You can fool some of the people all of the time; you can fool all of the people some of the time, but you can never fool all of the people all of the time." Perception can become reality.
Going for the Jugular
I expect Microsoft competitors to use this new naming and positioning as a way to discredit the Skype for Business offer. I have already heard at least one vendor talking about Microsoft now having a "single client" for businesses and consumers and how that limits value for both classes of users. I can hear the messaging to CEOs now: "Do you really want your employees using that Skype service to talk to clients? It will seem unprofessional."
I also expect a set of questions regarding the differentiable value between the "free" Skype offer and the "paid" Skype for Business. What services does a Skype for Business user get that a regular Skype user doesn't, and how do those extras translate to business value?
My intent isn't to criticize the Microsoft team on the rebranding but rather to point out how competitors for enterprise UC dollars could use the naming and changed positioning in the battle for enterprise UC buying decisions. I can see the value in having a single brand for communications and collaboration, though I wonder if the lost residual value of the Lync name may be equally as high.
Obviously Microsoft sees an opportunity to become the dominant communications and collaboration cloud vendor and to realize value for the $8.5 billion purchase of the Skype business (and brand). And Skype does appear to be succeeding in the marketplace, reportedly having more than 50% of international long-distance minutes on Skype.
However, brands and brand loyalty are a finicky proposition. Remember that before Facebook there was MySpace and that BlackBerries were once the cat's pajamas in the enterprise. The challenge for Microsoft is to accomplish what Apple did with the iPhone: Translate consumer adoption to business usage, and not lose position due to a changing marketplace. However, for this to work, the consumer brand loyalty to the consumer offer needs to be very high.
It will be interesting to watch Skype for Business and the competitive messages as they emerge in 2015. I expect it will become a key part of the marketing messaging for many UC companies at Enterprise Connect Orlando and that Microsoft will be ready to more clearly differentiate the offerings and positioning.