IBM pledges $1 billion to unified communications

by Elizabeth Montalbano

March 11, 2008 —

IBM has committed to investing
US$1 billion in its unified communications strategy in the next three years
as it sharpens its sword to do battle with Microsoft
in a fast-growing market.

Speaking Monday at IBM's Somers, New York, campus, executives including Steve
Mills, the senior vice president of IBM's software group, said IBM is ramping
up its investment in products such as Lotus Sametime to provide unified communications
to the largest business customers, which the company defines as having 1,000
or more employees. This is also the sweet spot for IBM's Lotus Notes collaboration
software, the latest version of which includes the Sametime unified communications
client.

Unified communications refers to the combination of instant messaging, Web
presence, VoIP (voice over Internet Protocol), videoconferencing and other ways
workers can collaborate and communicate in real time through one user interface.
According to IDC, the market will grow to US$17 billion in annual revenue by
2011.

Microsoft recently unveiled its competitor to Sametime, Office Communications
Server, offering it as a hub for unified communications built on a Windows infrastructure.
That move has brought IBM out of the woodwork touting its competitive offerings.

IBM differentiates itself from Microsoft in several ways, including its 10-year
experience with the Sametime product and its ability to support heterogeneous
IT environments.

Sametime is historically a corporate instant-messaging client; IBM claims to
have 20 million standalone Sametime users. Two years ago it rearchitected the
software on the Eclipse open-source framework to make it easier for third parties
to build add-on applications. It also added VoIP and video functionality.

On Monday IBM demonstrated some new functionality that will be part of Sametime
by the end of the year. Called Unified Telephony, it helps users manage telephone
calls from within Sametime by routing calls to various devices and setting rules
on how to handle calls based on status. For example, a user can set Sametime
to direct calls to a mobile phone if they are working remotely.

IBM has built the basic functionality of Sametime into Lotus Notes to link
unified communications to its collaboration software, in a similar way that
Microsoft is linking Office Communications Server to its Office productivity
and Exchange Server messaging software. Executives Monday also linked collaboration
and unified communications in the messaging about their strategy.

Though Microsoft constantly touts customer wins for Outlook/Exchange over Lotus
Notes, in an interview Monday Mills said Lotus is gaining share in the "market
where we compete with Microsoft," which is among the largest business customers.
He acknowledged that Microsoft is winning market share among businesses in general,
but not in the target high-end business market.

"Microsoft makes a bunch of statements that are somewhat misleading in
terms of what is happening," he said.

Mills also said during the interview that IBM expects to increase its unified
communications revenue by 10 percent or more, year over year, for at least the
next five years.

In its quiver of arrows against Microsoft, which Mills acknowledged is the
company's chief competitor in this space, IBM also has the not-so-secret weapon
of its massive IBM Global Services (IGS) organization to bring its unified communications
infrastructure to customers.

Not only can IGS expose its customers to IBM's products, but it also will come
in handy for integrating IBM's software with offerings from third parties, which
executives said can be a complex task. IBM stressed the importance of third-party
applications as part of its overall unified communications strategy and its
competition with Microsoft.

IDG News Service