Free(ish) Ain't Free(ish): The True Cost of Microsoft Lync
One of the lessons I've been trying to teach my kids is that nothing in this life comes free. Parental rewards must be earned (via good grades, behavior, etc.), yes. But everything in life comes with a price. Which is why 'free' games on the iPad also come with constant annoying ads for paid upgrades. Or why the true cost of that Samsung Galaxy smartphone they see on TV isn't its $199 price, but the resulting $1,000 annual phone and data plan. Etc.
At its Lync Conference 2013 this week, Microsoft made some big
announcements about where it plans to go in Unified Communications. The most
important was that Lync and Skype, while kept separate for now, would be increasingly connected,products will slowly be merged together,
starting with the ability by this June for corporate workers running Lync to
directly call someone running the free Skype client. Microsoft also announced new
voice, video and mobile capabilities for Lync.
Unlike
some UC players that have gone on a major offensive against Microsoft, we aren't
troubled by this boost to Lync. Not everyone knows this, but Avaya offers a
Lync plug-in called Avaya Client Applications for Microsoft Lync. This enables Lync users to connect to an Avaya
Aura collaboration server for voice, video (up to 7,500 simultaneous
voice/video/web users and 150,000 total provisioned users) and other real-time
communications (watch a Youtube
video demo here). Companies that
want to make sure their telephone calls and video conferences are echo- and
jitter-free are choosing
Avaya Aura.
"Avaya's ACA 6.2 plug-in is an ideal solution for customers who want to use Microsoft Lync for presence and instant messaging, but prefer the field-proven Avaya back-end infrastructure for telephony and collaboration," explains Ira M. Weinstein, senior analyst and partner, Wainhouse Research. "Using the ACA plug-in, users place voice and video calls via the Lync user interface. Once initiated, the calls are automatically handled by the Avaya Aura solution. This solution lets customers choose the experience they want, without increasing complexity."
As a leader in real-time collaboration, we're not unduly wowed
by Microsoft's claim to have sold 5 million Lync voice licenses. With our UC
product for SMEs, IP Office, alone Avaya has sold more
than 10 million licenses. While Lync sales 'grew' 35% year over year, IP
Office sales have grown 50% over the past two years. This doesn't include the
millions of other enterprise workers using Avaya for VoIP and telephony.
And remember what I was talking about at the top? Based on
the halo effect of the free Skype and Lync's coming integration with low-cost
cloud services such as Office 365, you might think that Microsoft is the
low-cost choice for UC.
And...you would be wrong. A soon-to-be-released report from
Nemertes Research analyst Robin Gareiss entitled "Operational Cost Drives
Stark Differences in First-Year Telephony, UC Costs" examined the
important question: what vendors' VoIP and UC solutions offer the best bang
for the buck?
Nemertes' study is admirably detailed. To obtain real-world
cost data on IP telephony and UC, Nemertes conducted detailed interviews with
IT pros from 31 companies. In addition,
it surveyed several hundred additional IT professionals online, which, after
running strict data validation and integrity checks, resulted in 180 valid
responses.
The results? The total median first-year cost for IP
telephony was $1,305 per endpoint. Avaya and Cisco were both about $1,100.
Microsoft Lync, on the other hand, was the most expensive of the seven vendors
by far, costing an average $2,482, or nearly DOUBLE the median calculated by
Nemertes.
While the capital and implementation cost of Microsoft-based enterprise telephony were fairly competitive, Lync's median operational cost ($1,912) was nearly 3x higher than the median ($704).
Customers of Microsoft attributed the higher cost "to challenges related to integration and sound quality," according to Nemertes. "Often, Microsoft users start with Lync (and in some cases, OCS), using instant messaging and presence. But when they add voice and/or video, that adds complexity they often did not anticipate."
By contrast, Cisco's first-year operational cost was $505. Avaya and Shoretel, meanwhile, were virtually tied for the lowest operational cost for telephony, at $322 and $305 in the first year, respectively.
Operational cost is key, of course. As Nemertes puts it:
"IT professionals rightly argue that they can get almost any vendor to
come down on initial capital costs and often include assistance with the
implementation. The big unknown, though, is how much the system will cost to
operate on an ongoing basis." That's because when factors such as internal
staff salaries and training, equipment maintenance and 3rd-party tools are
thrown in, you get the clear TCO picture. And that picture ain't pretty for
some solutions.
Another reason why the relatively-youthful Lync telephony
may be costlier to support, as our vice-president of marketing Enzo Signore
pointed
out to the Wall Street Journal: the probable "troubleshooting"
that IT will need to do to ensure the Quality-of-Service workers expect.
For full Unified Communications including voice, video,
etc., Nemertes found Avaya to have the lowest first-year TCO, at $406.45, a
full 20% cheaper than Microsoft ($509.07)and 40% less than Cisco ($665.29).
It's not just Nemertes. Constellation Research also recently
conducted a study
comparing the TCO of five vendors' desktop video solutions: Avaya Flare
Experience, Cisco Jabber and WebEx, Polycom RealPresence, Microsoft Lync
2010/2013 and Vidyo Desktop/Mobile. Due to video's heavy bandwidth requirements
(and the resulting high cost), analyst Dr. E. Brent Kelly focused on which
vendor supported the most users with equivalent video and audio quality in
different bandwidth/cost scenarios.
The result, again, was that the Avaya's TCO was among the lowest for almost every scenario (and was second lowest overall). Microsoft was consistently higher than us, while Cisco was the most expensive by far in almost all scenarios - even factoring in a 60% street discount for Cisco.
Avaya was especially cost-competitive when businesses deployed our Multipoint Control Units (MCUs, aka video routers) in remote locations to slash bandwidth costs, as you see below:
Source:
Constellation Research (click to see a larger version)
My point is: what Microsoft is doing with Lync is interesting. But it's still playing catch-up on the technical side, adding features that players like us and others have had for years.
And what
might at first glance seem less expensive, especially to a Microsoft-centric IT
shop, isn't always true, when you take a good look at the numbers. Check out
the analyst reports above. And then come over and try out our Avaya solutions - Avaya Aura
on the conferencing side, IP Office for SMEs, Flare Experience and Avaya One-X for
mobile and desktop, Radvision Scopia for video and more. If you don't have
money or time to waste, and want the proven reliability of the long-time leader
in real-time collaboration, you owe it to your organization to take us out for
a spin.
Comments
Great article Eric. I wonder if Nemertes took into consideration the cost of E911 functionality in these systems. Although this is often delivered through 3rd party DevConnect products, the Hooks that the Avaya platforms have usually make an E911 solution, much simpler that the other guys.
Fletch
Posted 22 Feb 2013 at 01:26 PMHttp://avaya.com/Fletcher.
Thanks Eric. We recently had a large customer ask if they could leverage their Avaya investment to manage presence for a sales group that was using Lync. We pointed them to Avaya's ACA which should meet their needs perfectly. Not only that, but we told them how Avaya has also seamlessly integrated video across the portfolio with products like the Scopia Video Gateway and with third party clients like Lync. What a great solution!
Posted 22 Feb 2013 at 06:31 PMHi Eric,
Posted 24 Feb 2013 at 11:15 AMAs a parent of two - you touched a nerve with the free games on the iPad and Galaxy costs.... No such thing as free lunches... The TCO being more than $250 less than Cisco including video and voice is very significant. Great article..
Regards,
Matt
Totally agree, Matt! A bit of a tangent, but I believe that math education needs to re-orient itself towards practical topics such as: consumer statistics (so people understand surveys better), the effect of compound interest over time (for building savings accounts, true cost of loans/mortgages), and more personal finance scenarios such as Total Cost of Ownership over time.
Posted 24 Feb 2013 at 12:53 PMGlad to hear our ecosystem is getting the word out. Microsoft's partner army may be vast, but Avaya's is scrappier and, on a per-person-basis, way more effective.
Posted 24 Feb 2013 at 12:56 PMHiya Fletch. It's a great question. I don't think Nemertes went into that level of detail on E911 functionality. Their study focused on the real-world costs experienced by customers using different vendors. While it's not strictly apples to apples, I'd argue that it's even more valuable than price-list/feature comparisons due to the degree of difficulty in obtaining (and also how it nicely accounts for the actual IT labor and operational costs that enterprises will experience).
This is a question YOU need to answer for us...
Posted 24 Feb 2013 at 01:01 PMQuoting research that compares just the first year isn't really helpful without understanding the subsequent years (a full 5 years being reasonable for a Total Cost of Ownership). I guess the challenge is Lync hasn't been around long enough, but obviously the learning curve costs attributed to year 1 will not apply to the years that follow. I suspect the result will be significantly different if a full picture was considered.
Posted 24 Feb 2013 at 05:30 PM@Richard - your point about long-term TCO is a good one, which I didn't address as well as I could have in my post.
Here's another excerpt from the Nemertes report addressing your very question: "We have found during our interviews both in this project and in previous years of conducting TCO research that operational costs tend to be highest during the first two years of usage, not surprisingly, as IT staffs gain expertise. Once that two-‐year mark has passed, staff operational costs drop by about 20%. If the company deploys third-‐party, specialty management and monitoring tools, the staff and third-‐party management costs can drop by as much as 50%"
Posted 24 Feb 2013 at 06:32 PMIf you not troubled by Lync's growth as your articles states why bother to write the article in the first place?
BTW its 5 million Lync voice seats deployed.
Posted 25 Feb 2013 at 05:58 PM@Chris You might want to let TechCrunch and PCWorld also know that it is 5 million Lync seats deployed, not sold.
http://techcrunch.com/2013/02/19/microsoft-brings-its-lync-enterprise-communications-platform-and-skype-closer-together-announces-lync-2013-mobile-apps/
http://www.pcworld.com/article/2028725/microsoft-to-deliver-lync-skype-integration-in-june.html
I believe that as veteran market watchers, they are taking with a grain of salt a vendor-supplied stat for # of actual users. As an experienced tech pro, I'm surprised that you aren't also. After all, consider the difficulty of reliably verifying that number for so many client/server users who would not primarily be installed by Microsoft, but by partners. And there's also the obvious incentive for vendors to bundle licenses and conflate licenses with users in order to paint a picture of market momentum.
Like any vendor, Avaya isn't perfect, but I believe we tend to err on the cautious side and list the # of licenses sold, esp. for a new/growing product, as we did with IP Office and its 10 million licenses SOLD.
Posted 25 Feb 2013 at 07:02 PMYou didnt answer my orignal question, if Avaya isnt worried why post this story to begin with?
BTW its verified deployed seats not sold. Yep they got it wrong to. Also how many seats do you require for it to be considered Enterprise class. Same could be said for Avaya Flare if going by that method of thinking. How many Flare customers are there with over 20K seats deployed? Not softphones like one-x or other software but Flare?
Posted 25 Feb 2013 at 07:32 PMSome answers to your trio of questions:
1) I have to justify my existence, somehow.
2) If Microsoft would care to share the data/methodology behind their 5 mln Lync users assertion, I might change my wording.
3) I didn't say that Lync wasn't enterprise-class (cost-wise, it sure is). I do assert that Avaya's counterparts are more mature and technically solid, but I'm biased. And I do question Lync's value based on TCO research by two leading independent market analysts.
Posted 25 Feb 2013 at 07:51 PMSo what your saying is that Lync voice is enterprise class voice then, which means if deployed according to guidelines just like Avaya can be jitter and echo free?
Posted 26 Feb 2013 at 08:15 PMSeats sold although important to revenue is not indicative to usage, which is why Microsoft is publicly talking about deployed and not sold. You can sell 10 million seats but as you pointed out with bundling etc it really doesn’t mean anything. I am sure Avaya has bundled Flare with every seat but I have yet to hear of a 50K seat deployment of it but I am sure they could market the seats sold as a story. As for verifying partner deployments, hosters etc your are right it is hard to collect all that data which probably would make 5 million deployed seats on the low side of reality. As to the method of collection of data that’s not my place to comment.
As to cost I can’t comment on the integrity of the research you mention in your post but regardless of what this research shows deployments continue. If you compare how and why Lync is deployed versus other competing products I doubt that this cost analysis is a true comparison anyway. Are they just comparing voice, or do other components fall into the cost equations that haven't been for other competitors. What about the fact that the RIO on Lync audio/web conferencing is usually under 12 months making the whole discussion of cost a wash anyway. I don’t see that mentioned. But if you want to stay committed to the research as way help sell more seats that’s up to you.
Negative marketing drives like this are really a two sided sword, seems like a good idea but it doesn’t always work out that way. Avaya went to great lengths to market to customers they didn’t need all that Lync licensing and Avaya could do it all with the ACE plugin to Lync and as an Avaya Exec admitted that wasn’t true, see my blog post and comments.
http://voipnorm.blogspot.com/2011/11/what-avaya-arent-telling-you-about-ace.html
At the end of the day companies purchase solutions for a variety of reasons, cost just being one of them but more often than not, not the only one.
The Nemertes research paper will be made available in the next few days - you just have to ask for it. Nemertes gathered the data via in-depth interviews with 31 enterprise IT groups and then a further 180 enterprises via an extensive web-survey. Their research methodology is clearly explained in the paper. The net of it is that respondents were instructed to separate and report costs ONLY related to the acquisition, implementation and ongoing support of the IPT and/or UC features in-use. Admittedly it can be very difficult to extract the cost data of Lync UC&C features from a larger MS agreement, but that was the point here.
An additional source of un-biased TCO data showing Lync to be much higher than Avaya and several other vendor solutions is the result of the Enterprise Connect 2012 RFP competition. Again, the moderators had their work cut out for them in extracting the true Lync UC&C costs from the complete offering, but that is their area of expertise. The presentations detailing the results of the competition are here: http://www.enterpriseconnect.com/orlando/2012/presentations/
Interesting to note that Microsoft is NOT participating in the Enterprise Connect RFP competitions this year. WIth the purported enhancements of Lync2013 why wouldn't they want to showcase it and go head-to-head with competitor solutions ???
Posted 28 Feb 2013 at 01:13 PMI would challenge Avaya on their position with UCC. Also the comment about echo and jitter,really, it's all VoIP...no matter who's platform you are on and I don't see Avaya up for the challenge over the next two three years...Avaya might have been around for awhile but old dogs....well you know...
Posted 28 Feb 2013 at 03:39 PMSame of old fluff from Avaya attempting to catch-up and cover-up what they can’t deliver. Simply put Avaya missed the boat and isn’t able to deliver a complete UC experience forcing them to buy outdated solutions and/or try to piggyback onto Lync if they wish to succeed. The product offerings are overly complicated, lame and offer no benefit to the overall end-user experience. Worse yet, they manage to castrate everything that makes Lync so popular with end-users. Bold claims of integration which Avaya have yet to deliver. ACE is an obvious example. I assume ACA will follow the same suite shortly once exposed in the next few months.
What happens to Lync video if I utilize ACA? How many licenses do I need if I want to integrate via SIP rather than H.323? How many servers/applications do I need to purchase and administer individually in order to make the complete solution not work as described? There are some good starter questions if you’d like to provide your Avaya community accurate and honest information.
Posted 6 Mar 2013 at 04:17 PMFYI, enterprise IT analyst Josh Greenbaum calls Lync 2013 "a bloody nightmare" and "not worth the trouble"
http://www.eaconsult.com/2013/03/11/microsofts-lync-2013-flunks-the-unified-communications-opportunity/
Posted 11 Mar 2013 at 04:05 PMReferencing research he did with his single Office365 and Lync online account hosted in the cloud. Not sure that’s really in the same realm as voice in an enterprise environment but thanks for the accurate information and full disclosure.
Posted 14 Mar 2013 at 11:26 AM@DW Agree that Greenbaum's view was a subjective one, but he does have deep experience in this area.
Posted 14 Mar 2013 at 01:09 PM