Cisco and Microsoft partnership goes beyond just product certification

by Heidi Elmore

What started as just another Microsoft hardware announcement might shift the UC tide

At last week’s Enterprise Connect, Microsoft and Cisco surprised some of the industry by participating in each other’s keynotes. This move signaled continued alignment between the two giants after announcing Microsoft Teams Rooms support on Cisco devices late last year at the Microsoft Ignite conference.

This newest collaboration between Cisco and Microsoft enables a Webex client to sit behind the Microsoft Teams client on select Cisco hardware. The architecture allows Cisco endpoints to be managed in the MTR Pro Management Portal by IT pros and enables users to easily switch between meeting providers without rebooting. 

While at first glance, this may appear to be a benevolent decision on behalf of users (or a sign of end times), this is also a strong move for both businesses. The pendulum between walled gardens, interoperability, and integration has swung multiple times in UC history. But this particular alignment is noteworthy and groundbreaking in its merit.

Starting in the early 2000s with video room hardware, the ITU originally architected SIP/H323 (and related) protocols as an open standard. If you could dial an H323 address or a SIP URI, you could call other rooms or multipoint control units (MCUs). For years, Cisco, Polycom, Lifesize, etc., supported these standards and interoperability. 

When did those approaches change? When video conferencing services started exerting more control over the room experiences circa 2016 and the launch of Webex Rooms and Skype Room Systems. Each provider had their own room clients, followed by Zoom in 2018.

But the walled garden tactic didn’t last. Before video conferencing clients could take over the rooms completely, vendors, including Zoom, Cisco, and Microsoft, provided video room interoperability gateways for legacy hardware and partners like Bluejeans and Pexip.

Fast forward to today, the client-based strategy in rooms has won out, primarily because of the dominance of Teams and Zooms in meetings. The newest challenge for the hardware ecosystem has been supporting multiple conferencing service clients on the same room device. 

Direct Guest Join last year was the first foray into those client-based solutions being able to participate in other providers’ meetings via WebRTC. USB pass-through with hardware partners also gave users some choice by enabling machines running other conferencing platforms to take over in-room peripherals if needed. But clearly, these options weren’t enough.

One might think that the ability to have two clients sit side by side on a device might be an admittance by Cisco that Microsoft has won the meetings battle. But I don’t think so, at least not in the short term. (The contact center announcement, however, is quite different – more on that in another blog.) Undoubtedly, this took an incredible amount of engineering time on the Microsoft side and strategic acquiescence on the Cisco side.  The flexibility of this configuration and experience should make all the other hardware and conferencing vendors very nervous.

This latest EC announcement from Cisco and Microsoft also progressed their relationship from interoperability to integration. To the room’s end user, at least, the experience will act like one system.

The average room refresh cycle is 3-5 years. Laggards from the pandemic are accelerating through their refresh cycle because of the return to work. That means the next year is critical for both Cisco and Microsoft to protect their bases and grow revenue while hedging against other conferencing competitors. 

This new offering is a strategic defensive decision, and the battlefield will be in the go-to-market. With both parties agreeing to work together, they can minimize customer churn through more at-bats. They may both double sales opportunities and coverage while optimizing each other’s wallet share. The only losers here will be the other conferencing providers. 

Integration as a defensive position is familiar for both vendors. Some may remember when Cisco had a client-side integration called CUCIMOC and CUCILYNC. The intent in those client-side integrations was not to let Microsoft win presence and messaging. It was to allow Cisco to wedge into a deal they would lose anyway to plant a seed for future displacement.

On the Microsoft side, you could argue integration to service providers via Direct Routing and Operator Connect are fallback strategies. Only when the native Calling Plans are either not competitive from a price perspective or not complete from a coverage perspective is Direct Routing used. Service providers, much to their disappointment, have been relegated to pipes.  

So while at first blush, these latest announcements might appear to be dogs and cats playing together, pigs flying, or any other idioms of choice from Revelations, it is a strategic bet on both sides.

This new offering will come at a cost to Microsoft and Cisco. While it might long-term result in more revenue from losing conferencing providers short term, this might complicate the Cisco or Microsoft sales cycle. Since sellers across vendors will hesitate to work with each other on joint opportunities, each vendor will require specialists on their sales teams to understand the other vendor’s offerings. This short term, might increase the cost of sales for both providers. 

What will the other conferencing vendors do? I don’t think they have a choice. Other conferencing providers will unlikely want to take on the engineering and strategic risk of partnering with Microsoft in this way. And there’s nothing in it for Microsoft. While Cisco and Microsoft share a lot of customers they each have unique value propositions – Cisco’s hardware practice and Microsoft’s productivity business. 

Hardware vendors have much more optionality as Cisco will have a limited breadth of offerings to meet every use case. But we will see how long Direct Guest Join and USB pass-through meet their needs. Perhaps the new Microsoft Android OS will give the client switching improvements so loudly requested by the community.

Alignment between traditional bitter competitors is always good fodder for dialogue and speculation. UC history is full of partnerships being created and dissolved. But this is a big one. Time will tell how effectively Cisco and Microsoft can work together in the go-to-market execution, but if done well, it could signal a new era of conferencing and communications.