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Skype for Business Celebrates Year Two

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A look back, and ahead, at challenges and opportunities for the UC leader

After rebranding (from Lync) and relaunching just two short years ago, Microsoft’s Skype for Business has swiftly propelled itself into a leadership position. As the new Unified Communications (UC) market share leader with 37%+ of the total share, Skype for Business is riding the Office365 wave and quickly vectoring towards the 250M enterprise seat mark next year. This Skype for Business leadership (coupled with a still ongoing market battle with Cisco) has paved the way for an emboldened UC market movement with well-funded new market entrants like Fuze, Zoom, and millennial favorite, Slack, emerging onto the scene. We also now have other software giants Amazon (Chime and Connect) and Google (Meet) expanding their enterprise offering to capitalize on the UC market opportunity. The UC industry is getting crowded, with Microsoft to credit for spearheading the resurgence in innovation and mainstreaming of enterprise unified communications technology and infrastructure.

On Skype for Business’ two-year anniversary (April 14), the UC leader shows no signs of slowing. In fact, it continues to drive the industry forward as workforces increasingly become more dispersed, and a seamless functioning UC system becomes paramount. Despite the new, and rapidly growing, competitive landscape, Skype for Business is expected to continue its reign as one of the leaders in a market poised to reach $144 billion by 2024.

Approaching its next phase of growth, we offer a look back at the key decisions/actions that have led to a 2-year UC success streak:

  1. Building on Skype’s brand recognition: One of the key barriers preventing enterprises from achieving Unified Communications ROI is building trust in a brand to ensure end-user adoption. Capitalizing on Skype’s consumer recognition, Microsoft has leveraged the brand to realize its potential in the enterprise.
  2. Office 365 bundled offering: Long before Skype for Business, Microsoft dominated the enterprise market. With key productivity applications, and software heavily used across the enterprise, integrating Skype for Business within its office productivity application system was a smart choice that led to increased adoption and acceptance.
  3. Expansive partner ecosystem: Microsoft leans heavily on its robust partner ecosystem to help customers get Skype for Business up and running. Over the last two years, Microsoft has continued to grow and foster the partner network surrounding Skype for Business, to provide software and consulting services that ensure successful deployments, and happier customers.
  4. Enterprise Voice: In the early OCS and Lync days, the knock on Microsoft was that Skype for Business wasn’t yet ready for prime-time with voice. Those days are long over. While Cisco may still own a few ‘check-box’ feature advantages on the voice side, there is a growing set of large enterprise customers who have successfully undergone a full PBX replacement transformation.

It was the above core strategic decisions that enabled Microsoft to create an expansive runway, and continue propelling its offerings ahead of the new and mainstay competitors over the last two years. To continue this forward momentum, we expect Microsoft to make headway on the following key focus areas throughout the next year:

  1. Advancing UCaaS with Skype for Business Online: Even though organizations seem content to take a slower pace towards complete UC cloud migrations, Microsoft’s UC cloud offering is still attracting a lot of attention as a hybrid platform. As Microsoft enhances the stability of their Cloud PBX platform and enables better operations and performance monitoring of the cloud from its partner ecosystem, the number of successful hybrid and full-cloud deployments should continue to see an increase.
  2. Enhancing the Mobile UC Experience: As the proliferation and diversity of mobile devices in the enterprise continues, the Skype for Business Mobile experience has fallen well short of being a practical solution for the enterprise. We expect to see continued focus on improving the end-user mobile experience to help further legitimize the Skype for Business platform, especially for millennial users.
  3. Workchat App Acceleration: The cult-like rise of Slack and now the introduction of the new Microsoft Teams product showcases a new and growing ‘branch’ of UC which is not fully addressed by Skype for Business and which potentially threatens the long term aggressive growth of the platform.  Microsoft’s strategy of combining enterprise-grade security, bundled ‘free’ (as part of Office365) pricing, and robust Office365 application integration may be enough to appeal to an ever growing millennial market segment which prefers this more ad hoc approach to UC. A strong Teams product, assuming a good Skype for Business integration story may also be the ticket to lending an aura of “cool” a Skype for Business platform, which suddenly feels like it, may have perhaps “grown up” too quickly.
  4. UC Device Interop: In spite of the heavy-handedness (cost and single sourcing) of the Cisco hardware story, Microsoft’s UC nemesis still enjoys a better interop story, especially with video systems. As Microsoft continues to mature their story using the various “Room Systems,’ “Project Rigel,” and Skype for Business IP Phone and headset hardware certification initiatives there is a growing feeling that the Skype platform has finally mastered the juggling act of a multiple partner system for UC devices…..but is it enough?
  5. User Transformation: While there continues to be an overall strong investment in end-user oriented UI and features, the UC marketplace overall seems to still suffer from a lack of sufficient investment by all vendors (and enterprise organizations) on the user transformation aspect (e.g. training, self-help, etc.) of UC systems.   Unfortunately, the “magic fairy dust” of the cloud seems to interject a belief that suddenly the end user issues get easier, but the reality is that nothing changes. Microsoft has the opportunity to create a game-changing Skype for Business approach to help capture increased market share, and, perhaps most importantly, to limit market share erosion from discontented users.

Looking back on the last two years, its clear Skype for Business, and its partner ecosystem, have had strong, upward momentum. With an influx of entrants in the UC space, along with the big players competing for market share, the next year may prove to be the UC industry’s most active (and interesting) yet.

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