It’s been about a week since I returned home from Microsoft Worldwide Partner Conference 2011. Now that I’ve had some time to digest what I heard and saw, I’ve come to a conclusion: Lync is rapidly emerging as Microsoft’s next killer platform for channel partners, including MSPs. Here’s why.
Sure, cloud computing chatter dominated WPC11. Some channel partners have eagerly embraced Office 365 and Windows Azure. Others want Microsoft to adjust its cloud billing policies so that partners can wrap broader monthly services around Office 365.
Shift your attention to the world of Microsoft Lync and all that debate largely goes away. Lync is Microsoft’s unified communications software platform — blending voice, instant messaging, web conferencing and more. Yes, Lync is available in the Office 365 cloud. But I suspect the vast majority of Lync deployments will remain on premise for years to come. One prime reason: Microsoft has not introduced full PBX capabilities in the cloud, meaning that Lync’s most complete capabilities remain on-premise.
Billion Dollar Business
During WPC11, multiple Microsoft managers told me Lync is set to become Microsoft’s next $1 billion platform (annual revenues). Imagine that: Lync, formerly Office Communications Server (OCS), will essentially generate more annual revenues than Red Hat, which has been one of the industry’s fastest-growing software providers for more than a decade.
In many ways, Microsoft’s Lync strategy emulates the SharePoint strategy: Build an application, then open it up to ISVs (independent software vendors). Microsoft later this year will extend Lync out to smartphones like Windows Phone 7, Apple iPhone, Google Android and more. And you can bet Microsoft will connect the dots between Lync and Skype, assuming Microsoft’s buyout of Skype receives regulatory approval.
The SMB Opportunity
My main criticism of Lync so far: Microsoft hasn’t done a great job positioning Lync for SMBs. During WPC11, Microsoft spoke about attacking 10 million legacy VoIP lines that Cisco controls. But that’s an enterprise target for Microsoft and an enterprise opportunity for partners.
To succeed in the SMB space, Lync is going to need help from managed services providers. And I suspect plenty of MSPs are going to get on the bandwagon. During private conversations at WPC11, five MSPs — all current or former MSPmentor 100 companies — told me their next Microsoft certification will involve Lync.
I don’t want to paint Lync as “all good.” I haven’t tested the software directly. I don’t know how much margin partners can make when deploying Lync. And I don’t know what type of recurring revenue models MSPs can build around Lync.
That’s a lot of question marks. But I do know this: Assuming Lync maintains its current sales trajectories, it will become Microsoft’s next $1 billion application business. That fact alone warrants your attention.
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Posted In: On Premise | Partner Program
Tags: Microsoft Lync | Microsoft Worldwide Partner Conference | Office Communications Server | unified communications | WPC 2011 | WPC11
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Microsoft LYNC will have a consideration rate build faster than Cisco within the next 24 months. Think about it, why did AVAYA announce a IPO during time like this. What would motivate them to take a fraction of the capital they put in AVAYA. In the telecom UC business it’s all about consideration rates. IT departments will be running at this product if for nothing else obtaining the certifications. This is what drove Cisco to market leader within 10 years and now will probably place Microsoft somewhere ate the top of the list in less than five.
Joe,
Good conclusion.
Totally agree with the “Billon Dollar Business” with the “SMB Opportunity” and I also see the winning platform being one that has both an element of on-premise + cloud = hybrid. That said the financial realities are simple for MSP’s. MSP’s must be able to drive better value to their customers and financially survive, if they are to acquire more customers and scale their business. Further, MSP’s must deliver a low price the compete with the existing and coming pure cloud based platforms yet drive MSP’s cost way down (“more margin”). Thus, one might think open source while remembering that Red Hat did not focus on the SMB market via MSP’s, yet built what is now almost a Billion Dollar Business. The next five years are going to be fun and we are excited to watch Microsoft execute with LYNC.
See you at the CompTIA Breakaway event in DC early next month.
Michael Proper
ConexionPoint@1: I don’t necessarily see a connection between AVAYA IPO and Lync momentum. But I do agree: Microsoft Lync business will build faster than Cisco’s original VoIP business. I think Cisco faced the challenge of providing VoIP was ready for business. Now that VoIP is industry standard, Microsoft’s job selling Lync is far easier.
Michael@2: Yup, Microsoft mentioned Hybrid Cloud frequently when discussing Lync. I look forward to an update on your own biz during Breakaway. Safe travels.
-jp
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With JAJAH partnering with Microsoft to provide VoIP services to Lync. Once might conclude that they will be bringing a fully hosted Lync with integrated VoIP solution to Office 365.
Eric: Thanks for triggering my memory. Microsoft mentioned JAJAH during some briefings at WPC11. It sounds like JAJAH warrants a closer look by our media sites. We’ll be sure to follow-up on the next few days.
-jp
Joe,
My company WorkSpace Communications has a multi-tenant, voice-enabled SaaS offering of Lync. E-mail me or visit http://www.workspacecommunications.com and you can get a free demo account to experience Lync.
Bryan
Hey Brian: Thanks for the heads-up. So, are you a SaaS provider to SMBs? Something else? Feel free to share more details.
-jp
Joe,
Hear anything about MS making hosted Lync a full VoIP system?
Microsoft is investing very heavily in hosted Lync, and it should be a full VoIP system by the middle/end of next year.
[...] and instant messaging, and Microsoft (Nasdaq: MSFT) has said the software is set to become its next billion-dollar business. Lync is expected to be available on Android, iOS, BlackBerry and Windows phones before the end of [...]