Cisco Makes its Presence Heard

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Yesterday, Cisco joined the ranks of Microsoft, (Skype), Google, Yahoo, Apple, AOL, Facebook, Salesforce.com, and others with free IM and presence. From the Cisco blog:

Today we’re announcing that we are making presence and instant messaging (IM) capabilities and Cisco Jabber clients available to our Cisco Unified Communications Manager (CUCM) customers globally at no additional cost. Cisco believes that together presence, IM, voice and video call control provide the foundation for real-time communications.

The announcement (and blog post) was made by Barry O’Sullivan, Senior Vice-President and General Manager of Cisco Systems at the Cisco Partner Summit. The offer is to existing customers of CUCM and although it is described as Cisco Jabber, it’s really just the Instant Messaging and Presence component of the Jabber suite. Jabber can be a bit confusing – Cisco acquired Jabber Inc. back in 2008, and then later renamed its UC clients Jabber which also includes voice and video. Jabber clients are available on Windows and Macs as well as IOS, Android, and Blackberry.

Previously, Cisco customers only got rights to Jabber for the seats or users actually purchased. A subset of employees in an enterprise that were enjoying Jabber can now jabber with the rest of the employee base at no additional charge. Sounds good to me, I wonder why?

I think it’s time to talk about Microsoft Lync.

Last month at Enterprise Connect, within the Microsoft Keynote, Koenigsbauer stated that Lync was now in 70% of the Fortune 500. That’s impressive, but he also stated that there were only 3 million Lync telephony users worldwide. Microsoft Lync licensing is extremely complex, but boils down to a very clever strategy. For the most part, organizations with Microsoft volume licensing agreements got access to Lync standard licensing for no additional charge.  Lync has three flavors of licensing – Standard, Enterprise, and Plus. Standard is required, enterprise AND/OR Plus can be added. All three levels combined provide the richest experience.

The Standard level is centered around presence.

Effectively, Microsoft gave away an enterprise implementation of IM and presence. This was well received – it’s integrated with Office, there’s mobile clients (now), it offers federation with other Lync implementations as well as with several other services. By including it in the volume licensing agreement, it actually put fiduciary pressure on the CIO to evaluate it. Furthermore, unlike voice or video, there is very little direct (political) competition around IM. CIOs around the globe said “I’m in.”

Being “in” means that servers need to be set-up, staff needs to be trained, Lync gets integrated into Exchange and SharePoint, and users get the Lync client installed on their desktop. Additionally, users do get voice and video to other Lync clients – so headsets get bought too. This is known as the “Camel’s nose being in the tent.” It really is an impressive strategy – Microsoft found the door with the least amount of guards, and hitched it up to its Office tractor.

PBX replacements have been light, but I’ve seen how it works. Imagine an enterprise with 100+ phone systems comprised of eight different brands and even more generations. Various upgrades and replacements offer a rich and consistent user experience – or simply upgrade the licensing on Lync and replace the antiquated and expensive eyesores. That’s what Sprint did – it replaced (or is in process of replacing) 489 PBX systems with Lync hosted in two data centers. The strategy is simple, elegant, and effective – truly worthy of respect. In practice, it has some major pitfalls, and despite the illusion of free, it can sometimes be more costly than alternative UC solutions. But that’s why we have choices (and a need for experts).

Also this week, Microsoft announced its 3rd quarter, ZDNet wrote “Microsoft delivered a strong fiscal third quarter as the software company’s enterprise line-up—SQL Server, System Center and products like Lync and Dynamics CRM—carried the team.” Microsoft gets bundles, they always have. Word was a winner, but it was the Office bundle that knocked out Lotus and Harvard Graphics. Microsoft is bundling Lync, not only with Office, but with its E-CALs as well.  Microsoft has a strong advantage in premises software, but Google, Amazon, and even Cisco’s WebEx are making a dent. ZDNet also wrote “Microsoft’s online unit continues to lose money…Microsoft’s online unit lost $479 million in the third quarter.”

My guess is Cisco is tiring of its UC customers implementing Lync to support the rest of its employees. Cisco must have figured out that account control is more valuable than the revenue associated with IM seats. Why Cisco didn’t expand the offer to non Cisco customers is probably a legal or contractual thing. Even Lync is really only provided free to current volume agreement customers. It was a defensive move that probably makes a lot of sense. Cisco is doing its best to upsell this to the channel as an upsell opportunity – (“IM is not the revenue you are looking for”).

Well, that wraps up this Cisco post, until next time.

Dave Michels