9847-64

October 2013

Microsoft Lync: Market Impact and Growth

Potential

Transformational Force or a Market Byproduct

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Microsoft Lync: Market Impact and Growth Potential

Contents

Introduction.............................................................................................................................................. 3

The Evolving Enterprise Communications Marketplace ................................................................... 4

The Lync Value Proposition .............................................................................................................. 7

Impact on Customers ..................................................................................................................... 11

Impact on Technology Partners ...................................................................................................... 11

Impact on Channel Partners ........................................................................................................... 12

Lync Traction and Market Shares ................................................................................................... 13

Lync-Skype Integration: Significance and Market Potential ........................................................... 16

Lync in the Cloud Communications Marketplace ........................................................................... 18

Lync v-Dedicated ..................................................................................................................... 19

Lync Server 2013 Multitenant Hosting Pack (LHP v2) ............................................................. 20

Lync Server .............................................................................................................................. 21

Office 365 and Lync Online ...................................................................................................... 21

Lync and Microsoft Impact on the Enterprise Telephony and UCC Competitive Landscape ........ 22

Competitor Response to Microsoft Lync ........................................................................................ 23

Conclusion............................................................................................................................................. 25

Legal Disclaimer .................................................................................................................................... 27

The Frost & Sullivan Story .................................................................................................................... 28

Authors

Robert Arnold,

Principal Analyst,

Unified Communications & Collaboration

Elka Popova,

Program Director,

Unified Communications & Collaboration

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Introduction � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �cations Server � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �

communications and collaboration (UCC) market have remained a persistent and lively topic of

discussion among all parties with a stake in the industry.

Primarily an enterprise presence and instant messaging engine which displaced Exchange Instant

Messaging, LCS was designed and positioned as complimentary and a value-add not only for other

Microsoft platforms, including Active Directory, SQL, Exchange and more, but also for third-party

communications platforms such as private branch exchanges (PBX) and conferencing platforms.

As Microsoft gained experience and expertise in the realm of real-time communications applications

development and integration, the Redmond-based company increased its appetite and set its sights on a

bigger slice of the communications market. Opportunities and greater control could be gained by relying

less on third-parties for core real-time voice and video elements Microsoft could develop these on its

own. � ! � � " � � # � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �folio over the past ten years.

Exhibit 1: $ % & ' ( ) * & + & , - * . / & 0 & , ) 1 0 2 3 3 4 & / ) , & ' * & 5 6 7 7 8 9 2013

Source: Frost & Sullivan

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Microsoft Lync: Market Impact and Growth Potential

It has not been a swift or elegant 10-� � � � : � � � � � � � � � � " � � � � � � � � � � � � � � � � � � � � � � � � � � � � �

today. The company has transitioned from LCS to Office Communications Server 2007 (OCS), and

eventually to Lync 2013. PlaceWare (later rebranded as LiveMeeting), Skype, and Yammer were also

acquired along the way. With each step Microsoft has added functionality and changed its game plan ultimately disrupting the nature of the overall UCC landscape for partners, competitors, and customers

alike. Due to its assets and influence in the IT software market as well as its track record the company is

poised to play a heavy hand in the evolution of enterprise communications for years to come. This article � � � � � ! � � � � � � � � � � � �present impact on the UCC market and will provide a perspective on its future

role in enterprise communications.

The Evolving Enterprise Communications Marketplace

Forward-thinking businesses acknowledge the value of UCC and have rolled out strategies and business

plans for the integration of existing tool sets with new investments in communications infrastructure and

services. The move to fully integrated real-time collaboration capabilities is an evolutionary path for

almost all customers. In Phase I, or the traditional phase, enterprises have separate voice, data, and

video networks; many companies are still in this phase today. With the growing build-out of

IP communications networks enterprises are now moving to Phase II, or converged communications. In

the next 5 to 10 years, we expect many organizations to move to Phase III, in which most

communications and collaboration applications will be integrated, or unified, with one another and with

critical business processes.

Exhibit 2 illustrates the phases of UCC market maturity and customer adoption.

Exhibit 2: Communications Technology has Evolved into Lower-cost, more Flexible, Software-centric Solutions

Source Frost & Sullivan

Traditional

Converged

Hardware

focus

IP

focus

Unified Communications

Siloed;Separate voice, video,

data networks

Modular; IP everywhere; Point applications;Distributed

communications

Unified< Integrated apps< Communications-enabled

business processes< Multimodal collaboration< Anywhere access

Software

focus