Analysis: Microsoft-Skype Not Enough To Beat Cisco in UC (Yet)

Does Microsoft's planned acquisition of Skype pose a threat to Cisco's leadership in the unified communications (UC) space? Analysts say it depends.

If the Microsoft-Skype deal gets approved -- which most industry watchers say isn't much of an "if" -- and if Microsoft integrates Skype's technology as planned and if, moreover, a consumer-oriented offering like Skype can be effectively retrofitted for enterprise customers, then, yes, Microsoft has a shot at challenging the UC heavy-hitters.

However, that's an awful lot of "ifs." For now, market-watcher Infonetics Research places Cisco Systems at the lead of the UC market.

Microsoft has been competing in the UC space for half-a-decade now, chiefly via its Office Communicator product, which it now calls Microsoft Lync (read "Microsoft Partners Are Lyncing Up"). However, Microsoft trails Cisco and other competitors in the overall UC segment.

Microsoft says it will integrate Skype with both Lync and its Outlook collaboration client. Other Microsoft technologies -- including consumer-facing products such as Microsoft Messenger, Hotmail and Xbox Live -- will likewise get Skype ties.

Once Microsoft-Skype becomes a done deal, however, experts say it could give Microsoft a big competitive leg up.

"The move promises to supply a cloud-based voice and video platform to complement the on-premises and cloud-based UC products and services Microsoft sells to businesses," wrote Brian Riggs, an analyst with consultancy Current Analysis, in a research assessment.

That's the long-view upside, noted Riggs, who stressed that "product integration issues, considerable feature overlap and Skype's limited relevance in the enterprise communications market will temper the relevance of...Microsoft-Skype in the enterprise space."

But doesn't Microsoft already offer UC capabilities via Lync? Yes, Riggs conceded, but Skype promises to up the ante.

"With Skype, Microsoft will be able to provide a voice and video platform that can underpin the communications capabilities already accessible via Office and Lync for enterprises, Messenger and Xbox Live for consumers, and Windows Mobile for both enterprises and consumers," he wrote.

Almost as importantly, Microsoft's move takes Skype out of the running, so to speak, as a potential partner for other UC competitors.

"A company that has hitherto been a potential partner to developers of UC solutions will become part of one of their foremost competitors," Riggs said. "Microsoft's UC customers and resellers will, in time, see an expanded set of cloud-based services delivered to them. Moreover, Skype's business customers (again, in time) could benefit from Microsoft's greater focus on the business communications market than Skype has shown to date."


About the Author

Stephen Swoyer is a Nashville, TN-based freelance journalist who writes about technology.