Microsoft's Expanding Collaboration Strategy
Microsoft creates a multifaceted strategy for addressing communication channels and collaborative workspaces.
by Peter O'Kelly

December 14, 2004

The enterprise markets for communication and collaboration products and services are in the midst of a major transition. "The Future of Microsoft Collaboration" [November 2003] provided an overview of Microsoft's collaboration and communication strategies and products at the end of 2003 (see Resources). This column updates you on the market dynamics and Microsoft's progress since then.

Communication and collaboration were pretty simple a few years ago. Communication generally meant e-mail, and collaboration was whatever vendors claimed it was. There was no market consensus on the meaning of collaboration, so the word was used inconsistently in contexts including content management, groupware, teamware, and workflow. (Communication products were much more pervasive than collaboration.)

Over the last few years, however, most vendors have converged on a new and simpler model, with channels for communication, workspaces for collaboration, a shift toward contextual communication/collaboration (so that users and developers may work in their preferred tools and focus on their tasks at hand), and broad support for related industry standards. The market convergence is far from complete, but there is increasing overlap among communication, collaboration, and content tools and services (see Figure 1).

The shift toward contextual collaboration means you no longer need to distinguish between synchronous and asynchronous tools, or between intra- and inter-enterprise scenarios; they're all part of the same communication/collaboration continuum.

Microsoft and IBM have dominated the market for asynchronous enterprise communication tools, with Outlook/Exchange and Notes/Domino, for several years. Until 2003, however, Microsoft was not a leader in enterprise collaboration, and its realtime communication tools were limited. But Microsoft has made significant communication/collaboration progress during the last two years.

The foundation of Microsoft's collaboration platform starts with services included with Windows Server 2003. Windows SharePoint Services, building on the .NET Framework and SQL Server, is a platform for collaborative workspaces (personal and team sites). Windows Right Management Services, while not yet widely deployed, provides important services for sharing sensitive content securely. Windows Media Services, including services for realtime media streaming, is also part of Microsoft's collaboration platform.

In asynchronous collaboration, SharePoint Portal Server extends Windows SharePoint Services with enterprise-scalable frameworks and services. SharePoint Portal Server has been quite successful, with Microsoft claiming more than 30 million client licenses sold by late 2004. Exchange Server remains the center of Microsoft's asynchronous communication strategy for enterprise messaging, calendaring/scheduling, and personal information management (contacts, to-do items, and so on). And while not strictly collaboration-focused, Exchange includes many services that are helpful in collaborative contexts (such as supplying calendar data to supplement presence indicators).

Microsoft Extends Live Meeting
Microsoft's realtime collaboration and communication products and services have expanded greatly during the last two years. Live Meeting, a hosted service for Internet conferencing based on Microsoft's PlaceWare acquisition, was extended in 2004 with a native Windows client. Microsoft also entered strategic Live Meeting partnerships with vendors including BT, InterCall, and MCI, making Live Meeting a significant global competitor to vendors such as WebEx.

Live Communications Server (LCS), introduced in 2003, is a SIP/SIMPLE-based enterprise instant messaging and presence awareness server for enterprise instant messaging. LCS 2005, which Microsoft released to manufacturing during October 2004, adds important extensions, including the ability to connect with consumer instant messaging services from AOL, Yahoo!, and Microsoft's own MSN. In these days of increasingly stringent regulatory compliance requirements for all forms of communication, the federated, SQL Server-backed model in LCS 2005 is well-positioned.

Microsoft also offers several products for business process collaboration, including BizTalk Server and Project Server. BizTalk Server has broad applicability, ranging from enterprise application integration to XML document-based business-to-business commerce. Project Server is a more specialized product that's powerful for project-oriented collaborative activities.

Microsoft's collaboration and communication products and services are available across multiple versions of Windows, for both PC and non-PC devices (such as Smartphones and personal digital assistants). Browser clients (including non-Microsoft browsers) are also supported. Office, unsurprisingly, is the primary information worker environment in Microsoft's collaboration platform. Office 2003 added several new collaboration-related capabilities, such as shared meeting and document workspaces (hosted in Windows SharePoint Services), and Microsoft recently unveiled a new realtime collaboration client for Office code-named "Istanbul" that will be available during the first half of 2005.

Overall, Microsoft now offers a broad and deeply integrated suite of communication/ collaboration products and services. Of course, Microsoft isn't the only vendor seeking to capitalize on the growing market for enterprise communication/collaboration offerings, and Microsoft fully appreciates the fact that communication and collaboration are critical to the ongoing success of its traditional product franchises in platforms, applications, and tools. As the market converges around channels, workspaces, contextual communication/collaboration, and key standards, Microsoft's most formidable enterprise competitors are IBM and Oracle.

IBM has broad customer bases for Notes/Domino (more than 100 million licenses sold) and Sametime (also known as IBM Lotus Instant Messaging and Web Conferencing, with more than 11 million licenses sold). IBM's new Workplace product family is well positioned to address emerging contextual communication/collaboration opportunities. Workplace builds on facets of all of IBM's software product groups (DB2, Lotus, Tivoli, Rational, and WebSphere), with an integrated suite that's architecturally similar, in scope, to Microsoft's product family.

Oracle is the relative newcomer to enterprise communication/collaboration, with Oracle Collaboration Suite (OCS). OCS builds on Oracle Database and Oracle Application Server with a suite of communication and collaboration services ranging from messaging to Web conferencing. OCS also supports Outlook and Windows Explorer seamlessly, so it offers a multiplatform, DBMS-centered alternative to Microsoft customers exploring alternatives to Exchange.

An important corollary of the shift to contextual communication/collaboration is the fact that next-generation communication/collaboration applications are no longer distinct from more traditional applications. As such, the systemic and platform-centric approach shared by IBM, Microsoft, and Oracle should be considered an application platform architecture for all application types, not just communication/collaboration needs. This subtle yet significant shift is likely to further concentrate market momentum among the three vendors, as it's not clear that any other competitors (with the possible exception of SAP) will be able to compete across the full spectrum.

What's Next for Microsoft
Take a look at another, more service-oriented perspective on Microsoft's collaborative capabilities (see Figure 2). You can see the holistic approach Microsoft is following as it sets the stage for the next generation of Microsoft communication/collaboration products. (See "Microsoft's Platform Strategies for 2006 and Beyond" in Resources for more details on how all of this fits into Microsoft's evolving and overarching .NET strategy.)

Some of the significant updates Microsoft is expected to release during 2005 include Exchange Server Edge Services, which Microsoft describes as "a new Simple Mail Transfer Protocol (SMTP) implementation that acts as a perimeter or edge guard." This "will enable you to better protect your e-mail system from spam and viruses as well as improve the efficiency of handling and routing Internet e-mail traffic." Edge Services will build on SQL Server and support managed-code application programming interfaces, so it's a good leading indicator of what's to come in the next major release of Exchange (not expected before 2006). The next release is likely to rebuild the full Exchange Server on SQL Server and the .NET Framework. New event management, message broker, and notification services in SQL Server 2005 (also known as "Yukon") will also extend Microsoft's capabilities in communication/collaboration contexts.

Microsoft is expected to extend its realtime communication/collaboration offerings by releasing an on-premise (i.e., traditional server-based) version of Live Meeting, although details and dates have not been announced yet. Between on-premise and hosted/service provider-based versions of Live Meeting and LCS (as well as hosted versions of SharePoint and Exchange), Microsoft, along with its partners, will ultimately offer product and service mixes targeted for organizations of all sizes.

Visual Studio 2005 and .NET Framework 2.0 (together code-named "Whidbey"), expected during the summer of 2005 and now in beta testing, will also include new capabilities for communication/collaboration-intensive applications. Visual Studio 2005 will make it much simpler for application developers to incorporate SharePoint Web Parts, for example.

In the Longhorn time frame (mid-2006 or later), Microsoft will release Office 12, the next major release of Office, which is expected to include a new release of Outlook that, among other things, will be a much more versatile client for multichannel communication services. It might be possible, for example, to build and apply a single set of rules (for filtering and other tasks) across channel types including e-mail, RSS (XML-syndicated blog and news feeds, for example), and PC-integrated telephony.

The Windows Longhorn client is expected to include a new workspace-oriented client environment that will establish a smart client (non-browser) alternative to today's browser-based SharePoint client. Between Longhorn and Office 12, Microsoft aims to establish a new and much more seamlessly integrated work environment for contextual communication and collaboration.

Open Issues and Challenges
Returning to today's market realities, Microsoft faces some challenges such as limited off-line and "occasionally connected" (for example, for frequently traveling, laptop-toting, corporate road warriors) communication/collaboration capabilities. IBM Lotus Notes/Domino has a significant advantage in this context today, as does Groove Networks. Groove and other Microsoft partners such as CASAHL are often used to augment Microsoft's products for off-line needs today.

Microsoft's singular focus on Windows also presents challenges for some enterprise customers. IBM and Oracle, for example, support many Linux and Unix platforms in addition to Windows, but Microsoft has stated clearly that it has no plans to port SQL Server or other facets of Windows Server System to non-Windows platforms. That means any communication/collaboration features predicated on SQL Server, such as Windows SharePoint Services, are also unavailable on non-Windows server platforms.

In another challenging context, Microsoft currently (implicitly) defers to partners such as NewsGator, with its NewsGator Outlook Edition, for customers who seek to incorporate RSS-based communication channels into the current release of Outlook. Microsoft has launched a consumer-oriented blogging service, which supports RSS and MSN Spaces, but it has not announced plans to extend Outlook for RSS feeds.

Microsoft also has yet to articulate a strategy for addressing the rapidly growing wiki market. Wikis are lightweight, often free (and open sourced), Web-based workspaces for collaborative authoring and content sharing. Especially since Ward Cunningham, the person who created wikis, currently works in Microsoft's Platform Architecture Guidance team, it's a safe bet Microsoft isn't oblivious to the utility of the wiki model.

On the server side, Microsoft Exchange has suffered some setbacks on the road to Longhorn. An ambitious release code-named "Kodiak" was expected to take Exchange to a .NET and SQL Server-based foundation by now, but Microsoft quietly retired the code name in 2004 and placed Edge Services at the center of its near-term planning for Exchange. Microsoft also scrapped plans for a completely integrated version of its SharePoint, Content Management, and BizTalk servers during 2004. The offering was code-named "Jupiter," but Microsoft received clear customer feedback indicating two servers, one focused on collaboration and content management and a second focused on integration and workflow, would be more popular.

Overall, Microsoft is clearly placing a huge communication/collaboration bet on its Longhorn-era products. If Office 12 and key Longhorn subsystems such as WinFS (which will be released after the first release of the Windows Longhorn client) fail to accomplish Microsoft's goals, the company's communication/collaboration family of products will continue to be selectively disadvantaged relative to alternatives from IBM and Oracle. If, on the other hand, Microsoft is successful with its "integrated innovation" strategy and delivers a comprehensive communication/collaboration application model that marshals the full capabilities of its various systems (especially Office, Windows Server, and Visual Studio), Microsoft will be exceptionally well positioned to compete in the next generation of enterprise communication/collaboration.

Market Projections
I have the privilege of collaborating with enterprise architects from around the world, in my role as a senior analyst in Burton Group's Application Platform Strategies service. From my perspective, most enterprise planners are currently assuming something of a wait-and-see stance, as Microsoft, IBM, and Oracle are all in the midst of broad communication/collaboration product line changes.

Many enterprises are still using Exchange 5.5, for example, and are hesitant to commit to the full Microsoft stack required to exploit all of Microsoft's new communication/collaboration capabilities. Other enterprises are still content with Notes/Domino, especially those that have also deployed Sametime. While IBM-loyal enterprises are paying attention to Workplace as it evolves, none are rushing to migrate from Notes/Domino to Workplace. There's also still a significant installed base of Novell GroupWise, which represents, by some estimates, up to 15 percent of today's enterprise messaging installed base. One consequence of the not-quite-there-yet next-generation offerings and the large installed bases of earlier products is a rapidly growing need for integration and migration tools such as those offered by CASAHL. ecKnowledge, CASAHL's flagship product, is collaborative application middleware that makes it possible for both developers and users to continue working with their preferred tools while sharing collaborative applications and content.

With IBM, Microsoft, and Oracle all making significant investments in enterprise communication/collaboration, and with the general market convergence around channels, workspaces, contextual communication/collaboration, and broadly implemented industry standards, the next few years are going to include some great opportunities for enterprises that exploit the new capabilities effectively.

About the Author
Peter O'Kelly is a senior analyst with Burton Group's Application Platform Strategies service. Reach Peter by e-mail at , or view his blog at http://pbokelly.blogspot.com.