Skype and Vonage have made most of
us aware of Voice over Internet Protocol (VoIP) phone services. Now VoIP
solutions aimed at businesses have evolved into "unified communications"
services that treat all communications--phone calls, faxes, voice mail, e-mail,
Web conferences and more--as discrete units that can all be delivered via any
means and to any handset, including cellphones. Two main sets of competitors are
fighting it out-- one set is focused on VoIP for medium to large enterprises,
while another is targeting the small-to-medium business (SMB) market.
In the latter group, Microsoft (nasdaq: MSFT
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introduced its Unified Communications line of Office Communicator servers and
software in October 2007, and among other competitors is fighting with Cisco
(nasdaq: CSCO
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whether VoIP will be based on a set of software applications or based on a
specific network. Meanwhile, good-enough services for SMBs have become quite
good, with RingCentral's Digital Line service leading this pack. We wonder--is
tiny start-up RingCentral better positioned for growth in the enterprise than
Microsoft, which historically has owned the enterprise?
Winner: RingCentral Digital Line Microsoft's Unified Communications offers
the ability to integrate a lot of features into existing Office software,
including Web conferencing. Microsoft's positioning seems a little murky--they
offer VoIP servers and software that will be interoperable with a company's
existing PBX system to customers who don't want to replace robust hardware-based
PBX services but want to extend those systems' capabilities. Microsoft also
offers VoIP-only solutions that require the installation of Communicator
servers.
Part of the murk around Microsoft's positioning is caused by the number of
features offered--in addition to the basic call-handling and routing functions,
Communicator also offers instant messaging with visual enhancements, e-mail, and
audio- or videoconferencing. This desire to be all things to all enterprises can
be partially attributed to the fact that Microsoft is fiercely competing to own
this space. It's most fierce competition is with Cisco, described in a 2007
article: "[Cisco and Microsoft] agree on a future vision of networked software
that will help users access information with the device of their choosing and
share it in ever more useful ways. Cisco thinks the key is to build most of
these smarts into the network. Microsoft executives believe the priority is
still the programs people use to actually get things done."
In contrast, what makes RingCentral so potentially disruptive is that it
offers an inexpensive ($99 per month per user), Web-only solution with no
hardware to be installed at all, except for handsets which the customer
supplies. Reportedly, with the right handset and a good enough Internet
connection, RingCentral offers excellent quality. RingCentral enables small and
midsize businesses to have what might otherwise be unaffordable smart-PBX
features, including call control, extensions, Outlook integration for dialing
and faxing, hold music, call logs, and rules-based call routing and answering.
RingCentral has actually seen its business grow in the recession--a Nov. 3
article reported record sales in October for the company. A company survey
indicated many of the sales were from SMBs cutting costs due to the economic
downturn--either getting rid of physical office
space and thus needing a unified phone system not dependent on physical
space, or SMBs discontinuing landline service and using RingCentral to send some
calls to cellphones.
If RingCentral is able to get enough of a toehold into the SMB market for
VoIP, it's possible the company could end up growing into the midsize enterprise
market as businesses that use it grow and decide not to change. At that point,
it would potentially be a threat to Microsoft, which runs a risk of overshooting
the market, by producing features that add complexity and cost without really
mattering to many companies.