Untangling Microsoft's Communication and Collaboration Strategy

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Microsoft announced at its Lync Conference in February that Lync and Skype are connected for IM, presence and voice communication.

That's big news in itself, but it's just the first of a raft of likely developments as Microsoft finally begins to reveal its comprehensive long-term strategy for communications and collaboration.

Once fully articulated, the strategy may make sense of the bewildering jumble of consumer and enterprise tools for communication and collaboration that the company has developed or acquired over the years, including Skype, Lync, Yammer, SharePoint and Outlook.

[ More on Microsoft and Skype: Microsoft-Skype Deal: Three Ways It Benefits Enterprises ]

[ More on Microsoft and Yammer: Microsoft Details Yammer Integration with Office 365, SharePoint ]

What Lync and Skype Bring to Microsoft

Microsoft says that the Lync-Skype announcement puts the company in the unique position of being able to "deliver communications solutions from the living room to the boardroom and all points in between." But to understand the rationale for connecting Lync and Skype you have to consider what Microsoft has learned from its $8.5 billion acquisition of Skype in 2011, and last year's $1.2 billion acquisition of Yammer.

"Microsoft wants to take the business models of Skype and Yammer, and adapt them to Lync and SharePoint," says Rob Helm, and analyst at Seattle-based based Directions on Microsoft. "Both are spread virally, and both have a free tier of service to build up the user base, as well as paid services."

Microsoft has generally required companies to pay for Lync clients in the past, but late last year the company released Lync Basic 2013, a free client for Lync 2013. This includes voice calling, instant messaging and presence; but lacks advanced features like call forwarding, voicemail, and OneNote sharing. These features can be accessed by upgrading to a paid for version. There are about 5 million Lync users, Microsoft claims.

By connecting Skype to Lync, Microsoft will effectively turn the hundreds of millions of installed Skype clients into free Lync clients as well. The company is counting on getting some of those Skype users converted into paid Lync clients. Paying for Lync makes more sense when more people are connected, Helm points out. "The key thing here is the network effect: the value of the network grows faster than the number of people in it. The freemium model, and adding Skype to Lync, builds the value of Lync.

If you can't help thinking that this strategy is not quite coherent, you're not alone. That's because Skype is a consumer product, while Lync belongs firmly in the enterprise. And it's for that reason that Helm says he believes that the two products will be merged into a single Lync client in the next version or two, using the best technology from each.

"I can see Microsoft taking Skype ideas like a peer-to-peer directory and using it to make Lync more robust," Helm says. Where would that lead Skype? It's certainly a valuable brand, so it's not inconceivable that it could live on, perhaps as a communication feature built in to a future version of Internet Explorer.

What Yammer Brings to MIcrosoft

Since acquiring Yammer last July, Microsoft has added few significant features to the enterprise social networking service. One new feature that has been announced is the capability to translate Yammer messages, known as Yams, into the user's native language. This is done by integrating Microsoft Translator to provide the language capabilities.

It's likely that going forward, Yammer will be less of a feature to be developed, and more of a feature to be integrated with other products, particularly SharePoint, Helm says. "You'll probably be able to store documents in Yammer and land in SharePoint, or use Yammer to track sales prospects in Microsoft Dynamics. So there will be less deepening of Yammer, and more integrating it so that it becomes part of the furniture of the Microsoft living room," he says.

For the moment Microsoft is bundling Yammer along with SharePoint online, which is a paid-for service. But since Microsoft's strategy hinges on exploiting the freemium model, it's not inconceivable that at some point in the future there might be a basic free online offering of SharePoint with Yammer. Eventually they even become part of a single product, Helm suspects. "I think it's likely we'll see a merged Yammer/SharePoint online first, and eventually Yammer functionality will be merged in to the on-premise SharePoint offering as well," he says.

The Lync Room System

The most intriguing announcement at the Lync Conference was Lync Room System. This is designed to make it easy to use Lync with conferencing system hardware supplied by partners including Crestron, Lifesize, Polycom, and SMART. "Lync certified hardware makes a lot of sense, as end users are demanding systems that they don't have to configure," says Henry Dewing, an analyst at Forrester Research.

However, Dewing warns that Lync Room System puts Microsoft on a head-on collision course with networking giant Cisco, a company that also wants to dominate the market for unified collaboration and communications solutions. What differentiates the two approaches is that while Microsoft's is essentially software based--with hardware being supplied by partners--Cisco offers both.

But it's possible that Microsoft has plans to join the video conferencing hardware fray itself: Let's not forget that last year the company acquired Perceptive Pixel--a maker of big touch-capable conferencing screens. Microsoft is now in the tablet business with the release of its Surface devices which show off the capabilities of Windows 8, so a move into conferencing hardware to showcase Lync is certainly not beyond the realm of possibility.

So what's the role of Outlook in all of this? The venerable Office email client used to be at the heart of corporate communication and collaboration, but it seems almost redundant in a world of Yams, social media updates and desktop video conferencing. Far from it, Helm says.

In Outlook 2013, the People Card collects contact details about a given individual in one place: phone, email, address, company info, but also social media updates, presence and so on. It's a similar idea to the People Hub or a Live Tile in Windows 8. In the future it will likely be possible to trigger a Lync call, view Yammer updates, examine a LinkedIn profile and more from one of these "cards."

"Microsoft wants to use Office, and particularly Outlook, as a kind of central communications console," says Helm. That means that, for the foreseeable future, Outlook is here to stay.