Cisco needs to worry more about mobility than Microsoft

Glad to hear about Microsoft’s VoIP product launch. About time we saw some fresh perspective brought into this promising market segment. With Microsoft’s vast army of worldwide application developer partners, I hope this product unleashes the real potential of IP. Understandably some PBX vendors will be able to handle this, while others will struggle. Let me take up Cisco’s case. Cisco does not do hardware based IP PBX. But yes it bundles phones with the soft PBX products, and it makes most of its money from those phones. With Microsoft’s entry into VoIP, is that IP Phone business under threat? Obviously not. If I use Microsoft OCS and have to use IP Phones along with it, I will still go to Cisco for the phones. I think the real threat to Cisco comes when we bring in mobility into the PBXs. That will impact Cisco’s IP Phone business for sure.

I would like to rub some more into an already overused analogy of what Microsoft did to the computer market. ‘ ….. OS became independent of the hardware and desktop became independent of the server ….’. Microsoft’s Office Communications Server and things like Asterisk are pure software PBXs and decoupled from hardware. The PC equivalent there would be … what? Will it be IP Phone? Yes, in the short run. But in the long run, I think not. In the long run, the PC equivalent is most likely to be either portable laptop or the mobile phone. We are talking about mobile PBX.

Mobile PBX is the 4th generation PBX that is yet to hit the market on a large scale. If you look at the components of a PBX, it is the desk phone, link between the desk phone and PBX, then the server/PBX part and the backbone. Out of those four components, three will change. The IP extension or the desk phone will be replaced by mobile smart phone a generic device rather than a proprietary one. The network will be replaced from fixed VoIP enabled LAN to a mobile network (WiFi or 3g or gsm). The server side will be a completely software based platform rather than a TDM-hardware or hybrid IP/TDM based platform. Only the backbone stays the same (private IP or public Internet or IP VPN).

So if we see a Cisco versus Microsoft war in soft PBX market, my money is on Cisco for a while simply because their solution is a pure IP PBX solution and not a hybrid solution like those offered by Nortel and Avaya; their solution is tried and tested; they have the most widely deployed end point, their IP Phone; they understand IP and networking much better than Microsoft; and their PBX evolution is already on course incorporating mobility etc. However three things Cisco needs to do to counter a possible Microsoft threat: do not bundle phones and PBX businesses too tight; completely open up the IP PBX platform to third party application developers especially the web developer community; and acquire a mobile handset vendor. The last one is probably the most important bit since mobility will change a lot of things in the PBX market, as mentioned above.

And just when I think I have the final word on the subject, another aspect comes to mind: the hosted voice aspect. The question is whether that imminent shift in business telephony will take place before mobile PBX or after that. I doubt it will happen before mobility conquers the PBX. The reason being that there is negligible amount of fiber outside your office building. You would need that for a dependable and a mass (hosted) offering that serves SMEs as well as large corporates. At the same time hosted voice mixed with mobile PBX would be synergetic because service providers then do not have to worry about providing end point IP Phones to the customers. Mobiles will replace these end points.