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Whatever the Numbers, Microsoft Lync is Significantly Impacting Enterprise Communications

My colleagues Elka Popova and Rob Arnold have just published a very robust and encompassing insight on the current state of Microsoft Lync in the enterprise. In a 2012 Frost & Sullivan survey of more than 260 North American enterprise decision makers,

We believe that Windows, Exchange, Office, and SharePoint contribute notably to this number, and Microsoft continues to anchor its Lync positioning to cater to this constituency. The company espouses the benefits of a single "people-centric user interface" that facilitates access to the breadth of Lync applications. Tight integration with Microsoft infrastructure and communications functionality accessed from within Microsoft productivity and business software are proposed as a means to promote a familiar look and feel that will encourage adoption and use.

Microsoft is also aligning its cloud value proposition with its established premises-based value proposition of tight integration. Frequent and sustained enhancements to Office 365 and the Lync Online portfolios are closing the once-wide functionality gap between Microsoft's customer premises equipment (CPE) and cloud/hosted UC catalogs and expanding its addressable audience.

Interestingly, for all its technology advancements in the 10 years Microsoft has offered a UC product, beginning with LCS in 2003, the vendor itself may be causing a slowing-down of adoption. Interviews with customer decision makers and support staff indicate that Microsoft's UCC initiatives have introduced a degree of latency in the overall business communications solutions purchasing patterns among end-user organizations. This is particularly acute in the enterprise sector and in accounts without significant existing UCC investments.

Customers are carefully evaluating Lync and Microsoft's roadmap before making their decisions, and many are taking a wait-and-see approach for Lync to mature, whether as a CPE or cloud solution. Other organizations have embarked on lengthy pilots.

At the same time, Microsoft's competitors are working hard to remain entrenched in their existing accounts, dangling generous incentives for upgrades. As a result, customers see an excellent opportunity to migrate to advanced UCC solutions at a substantially lower cost. However, the global economic climate has only reinforced the caution with which customers are approaching their UCC roadmaps.

Presence and instant messaging functionality is included with the base Lync Standard CAL package, meaning that all Lync users have IM and presence. We believe that Lync is now well established as the leading instant messaging engine in the enterprise market, and it continues to gain traction.

Meanwhile, ever since the enhancements delivered with OCS R2, Microsoft has positioned its UC platform not as a PBX, but as a PBX replacement, and Lync competes head-on with call control platforms currently on the market. Frost & Sullivan research shows that Microsoft ranked 7th in 2012 in terms of global IP-PBX line license shipments, with 6.7 percent market share, and also 7th in terms of line license revenue, with 3.8 percent market share.

Elka and Rob spend significant time outlining the specifics of Microsoft's Lync and Office 365 offerings. They also highlight several key factors in the vendors' competitive advantage, as well as the many constraints the company faces in a crowded marketplace; discuss Microsoft's impact on other UCC vendors, partners, and the channel; deliver detailed numbers on the vendor's traction in the marketplace; and do a deep analysis of Microsoft's impact on the enterprise telephony and UCC markets today, and in the future. Clients can download the full report here.

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