When Microsoft gets into the game, other companies start to worry—and with good reason. Past experience shows that once the software giant sets its sights on a technology, it often comes to dominate the market, even when there are already well-established players.

Just look to the fall of once-top word-processing application WordPerfect to Microsoft Word, once-top Web browser Netscape to Internet Explorer, and once-top NetWare server software to Windows Server for examples. Most recently, antivirus and anti-malware vendors have looked on with trepidation as Microsoft has poured efforts into developing its OneCare consumer antivirus solution, Windows Defender anti-spyware, and business-oriented Forefront products based on its acquisition of Sybari Antigen.

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So VoIP vendors couldn’t help but sit up and take notice as Microsoft made a deal last summer with Nortel for the two companies to work together to develop VoIP software to run on Microsoft servers. Microsoft has previously made partnership deals with a number of VoIP companies—including Cisco, Alcatel, Avaya, and Mitel—for those companies’ IP PBX equipment to work with Microsoft’s Live Communications Server (LCS) and Office Communicator software.

LCS and Communicator are enterprise-level server applications, but last February , Microsoft acquired Teleo, which made a PC-to-PC VoIP application. That might lead one to wonder about Microsoft’s long-term plans for VoIP—and whether consumer-focused VoIP vendors such as Vonage, Lingo, Packet8, and SunRocket, as well as popular soft-phone provider Skype, need to worry about Redmond nudging them out of the market.
Microsoft finds its voice in the enterprise

When it comes to the corporate market, Microsoft already has quite a few fingers in the VoIP pie. Voice appears to be an important element in the future of its Unified Communications initiative. The next generation of Live Communications Server, dubbed Office Communications Server 2007 (OCS), will function as a centralized command center for VoIP audio and video conferencing, SIP-based instant messaging, application sharing, and the unification of voice and e-mail, whereby you can, for example, have your e-mail read to you over the phone.

With OCS, the Office Communicator client will be able to make and receive voice calls and comes integrated with Microsoft Office programs such as Word, Excel, etc. The Office Communicator 2007 client can also connect to an existing IP PBX through the OCS server. When combined with Exchange 2007, you can see your voice mail (from both regular PBX and IP PBX) in your Outlook Inbox. Find out more about Office Communicator and Office Communications Server from the Microsoft Web site.
Messenger vs. Skype

As of version 7.0, Microsoft included VoIP technology in its MSN Messenger IM application. Now dubbed Windows Live Messenger (WLM), the IM program allows you to make calls to landlines and mobile phones as well as voice calls from PC to PC. Windows Live Call is the VoIP feature of Live Messenger.

Messenger competes directly with Skype and other peer-to-peer computer-based programs, more than with VoIP providers such as Vonage. Like Skype, WLM allows text messaging and video as well as phone calls. In addition, also like Skype, you can call other computers for free but have to pay to make phone calls to PSTN/cellular phone numbers. WLM 8.1 is currently available for beta testing.

Verizon offers the service for making VoIP calls to landlines and cell phones via WLM, charging for calls on a per-minute basis. Microsoft has also partnered with companies such as Uniden and Philips to make phones that use WLM, similar to the USB and wireless Skype phone handsets that are readily available to give that service a more “phone-like” user experience.

The phones are plug and play with Windows, with no installation necessary. One example is the Philips phone. Pricing runs around $100, and the phones offer the ability to download Messenger contacts, and they include features such as speaker phone and color LCD screens.
The future of Microsoft VoIP

In November 2006, Steve Ballmer gave a speech in Tokyo in which he announced Microsoft’s plans to integrate VoIP technologies into the company’s entire line of products—from operating systems to desktop applications—in the coming year.

Fully integrated VoIP opens up a whole new world of possibilities: One day, “click-to–talk” Web sites may be the norm. With the development of VoIP software for mobile devices, the line between cell phones and handheld computers may become even more blurred than it already is. The Xbox chat feature already allows users with a Live Communicator headset to conduct voice communications with fellow gamers.

It’s not that hard to envision a future where most people no longer use the traditional telephone network, and the majority of voice communications takes place over the Internet. We can expect Microsoft to be a major player in that game.

But if operating systems and office productivity apps begin to feature built-in VoIP support, will that make other VoIP services obsolete? Probably not: Consumer-level telco alternatives such as Vonage and Lingo aren’t dependent on a PC to provide VoIP communications, and that PC independence is something many customers will want for several reasons. PCs crash too often, some folks like to turn them off when they’re not in use, and so forth.

What about other PC-based services such as Skype? Will integrated Microsoft VoIP make it go away? Again, probably not: The inclusion of free IM software in Windows hasn’t killed other instant messaging services, although one could argue that it’s reduced their market share. As long as other vendors can provide extra features, better performance, better stability or—for some users—just the allure of being “ABM” (Anybody But Microsoft), we’re likely to always have competition in the VoIP space.

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Deb Shinder is a technology consultant, trainer, and writer who has authored a number of books on computer operating systems, networking, and security. She currently specializes in security issues and Microsoft products, and she has received Microsoft’s Most Valuable Professional (MVP) status in Windows Server Security.