Allan Sulkin's mid-year study of the voice communications market shows a contracting market overall, but big gains for the new market leader, Cisco.In a sense, neither of these are surprising developments. With the overall U.S. economy anemic, the market for enterprise communications slipped 5% over 1H2007, Allan reports.
Interestingly, Allan also finds that former market leader Avaya had a "strong" first half, but the erstwhile pacesetter was simply blown away (as was the rest of the market) by Cisco's eye-popping 51% year-over-year growth in communications revenues. Cisco out-shipped Avaya by 50% in terms of line station shipments, according to Sulkin.
So as John Chambers prepares to face the financial community this week, it's hard to see how he could ask much more of his communications product lines. Cisco has reached the point where it has to find adjacent markets not only as sources of new revenue, but as drivers for the products they have already sold into enterprises. It has done this very successfully in communications, using the IP telephony transformation to drive network infrastructure upgrades. Now the task is to use its newly powerful (if not yet dominant) position in call control to drive other transformations.
The most obvious move has been the introduction and somewhat surprising (to me, anyway) success of Telepresence. Telepresence is a great driver for bandwidth upgrades, but the real prize in the next generation of communications is to own the successor to the PBX, which most analysts believe is going to be the presence engine, which Sulkin has dubbed the Federated Communications Server or FCS.
Here Cisco's toughest competitor is, of course, Microsoft. Where we're at now in the enterprise is, Cisco is the market leader for real-time voice communications, and Microsoft is the market leader for real-time and non-real-time "data" communications (i.e., instant messaging and email). Most enterprises will probably reach a point in a few years where they have both Cisco Unified Communications Manager (or another vendor's IP-PBX) and Microsoft Office Communications Server (or IBM Lotus Samteimte) in their core. At that point, either these two core elements will be able to exchange meaningful presence information relatively seamlessly, or (more likely) they won't. If they don't, something will have to give: Either the enterprise will standardize on one or the other vendor, or it will forgo meaningful presence. Frankly, I think it's way too early to even try to guess which it'll be.