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:

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.

Related Articles:

What Smart Analysts Think About Microsoft's Lync Telephony Claims

black telephone handset disconnected.jpg

The big brains at UCStrategies had a very relevant podcast last week. Ten of the Unified Communication industry’s leading independent analysts weighed in on Microsoft’s recent claim that its Lync unified communications suite was “leading” in shipments of enterprise voice/telephony software.

Microsoft appears to be basing its claim on shipments of Lync voice, but doesn’t say much more. As a result, “there’s a lot of debate and discussion” about what Lync voice shipments actually mean, says UCStrategies analyst and podcast moderator Blair Pleasant. “Are they paid licenses, free licenses that customers get from enterprise CALs (client access licenses), (voice) seats actually being used and deployed, or (numbers) just out there because companies have Lync [suite]?”

One thing’s for sure: when you go by the tried-and-tested methodology of tracking the number of phone lines actually being deployed to users today, Microsoft isn’t on top according to any of the analyst firms. Indeed, according to one of the most respected market watchers, analyst Alan Weckel of the Dell ‘Oro Group, Avaya is actually number one in enterprise voice. My colleague Enzo Signore pointed this out in a blog several weeks ago – before the UCStrategies podcast.

There were too many opinions in UCStrategies’ 38-minute podcast to neatly summarize. Not all of them agreed with each other, of course. But here are the quotes that particularly stood out for me:

Blair Pleasant: “I personally have some issues with these numbers and what they mean…I don’t think it’s fair to say that Microsoft is a leader in enterprise voice at this point. Again, they’re doing gangbusters, but they’re still a niche player. And the companies I speak with aren’t rushing out to deploy Lync voice.

Marty Parker: “I think [Blair] you’re exactly right, that any claim like this should be greeted initially with some serious skepticism…Microsoft, pretty uniquely among the leaders, sells licenses far ahead of deployments. The number of licenses can be 2x or more what is actually being deployed. The deployment reports we’ve seen from a number of sources put Microsoft in the 5% range in terms of actual deployments for FY12. If you extrapolate from that 6-7% for FY13, and then double that, you get 13%…That is a number that wouldn’t stand up when someone goes out to use a rigorous approach to market share data. Maybe for shipments, but it doesn’t reflect reality on the ground.

Dave Michels: “I see a lot of firms deploying Lync. I don’t see a lot of firms deploying Lync voice…I also know from other observations that Microsoft is pretty shady about their numbers. A lot of other firms are very open. Microsoft is very secretive about this stuff. They don’t put a lot of detail behind this…It’s a whole different level of open-ness you don’t see with Microsoft.

Jim Burton: “When I was in debate in school, my Bible was a book called ‘Lying with Facts and Figures.’ I don’t think he [Microsoft blogger] lied, but the way he presented it was a bit of a misrepresentation, if you understood all of the facts.”

Roberta Fox: “It really wasn’t til late 2012 where Microsoft was considered for telephony or even desktop video. They really were not seen as reliable or credible telecom solutions from enterprise clients as replacements for their PBXes, due to concerns about reliability, availability and the feature set. Another interesting thought: there was very little interest in Lync for desktop video applications.”

I encourage you all to take a listen to this podcast.

How Mediocre Customer Service Is Driving Your Customers Away

Some companies drive away loads of customers with one big move. Like that department store chain that got rid of coupons and sales promotions. Its base of cost-sensitive mom shoppers quickly fled to other stores

For most companies, losing customers is a slow, inexorable process, that looks more like this:

kitchen faucet dripping water.jpg

What’s the cause? In many cases, it’s weak customer service. Most companies over-spend on customer acquisition and under-invest on keeping existing customers happy. The result is statistics like this from Forrester Research:

There are many reasons why your customer service may be leaving customers less than thrilled. Customers are more diverse than before, for one:
Technology has also made customers more independent – and demanding. They want to be served right here, right now. 
Problem is that most companies, even if they talk the multi-channel talk, fail to walk the walk. Beyond voice, they may have deployed 1-2 additional ways for their agents to deal with customers. Turns out, there are a dozen channels besides voice that your customer may want – nay, demand – to be able to reach you on. Also, companies trying to deploy new contact center channels will, how can I be polite about this, often do it BADLY.
Do these problems sound familiar at all? Are they ones you want to solve? If so, you might consider attending the next Avaya Customer Experience webinar, ‘Where Did All of my Customers Go (and How Do I Win Them Back?)’
Broadcasting this Thursday Nov. 7 at 11 am PT (2 pm ET), it features a mix of experts in this area, including:
– Sheila McGee-Smith, independent customer experience analyst;
– Tony Bridgewater, Executive General Manager, Technology & Products, for Australian system integrator, Salmat;
– Mark Wilson, CMO for Avaya;
– Jeanne Bliss, our moderator, who writes and consults on customer experience and is a former Chief Customer Officer at multiple companies; 
Attendees to the webinar get a print copy of the book, Managing the Customer Experience, mailed to them.

Who's the Real Number One in Business Telephony?

The telephone is far from dead. You know who still loves to call people? Family members, close friends and…the Pope. No joke: 76-year-old Pope Francis has startled a quite a few strangers with a call from a Vatican landline in which he simply announces, “It’s the Pope.” It’s happened to enough people that the Corriere della Sera, a leading newspaper in my native Italy, published a front-page article offering tips on how to make small talk if His Holiness calls (tip #1: talk about soccer).

You know who else loves the telephone? Businesspeople. Unified Communications may be a diverse, ever-growing set of tools and technologies, but the channel that started it all still plays a central role. It’s why there’s a never-ending stream of articles advising how to schmooze colleagues on the phone, how to run your phone meetings, how to close sales deals on the phone, how to ace telephone job interviews, etc. The stakes are high, which is why telephony remains such a hotly-contested market.

Last week, Microsoft put out a blog claiming it is “now shipping more enterprise telephone lines than any other technology company in the world.” It was a bold claim. So bold that longtime industry expert, Eric Krapf of No Jitter, felt compelled to investigate. One respected market watcher, Infonetics’ Diane Myers, told Krapf that her own research – which shows Cisco and Avaya neck-and-neck far above other rivals in telephony – made her “struggle” with Microsoft’s claims. When Krapf confronted Microsoft’s spokespeople, they admitted that Redmond’s claim to have shipped the most telephony lines was based on different data, revenue. As anyone familiar with software bundling knows, revenue alone can paint a deceptive picture.

However, revenue COMBINED with other data CAN be illuminating. While Microsoft and Cisco bicker, they are ignoring what’s really going on in the voice market. According to the well-known telecom market research firm, the Dell’Oro Group, Avaya passed Cisco in Q2 this year in telephony according to two key metrics. First, powered by growth in our small and midsized UC solution, IP Office, the number of telephone lines Avaya shipped grew 10% quarter/quarter to 1.8 million, while Cisco’s slipped for the 3rd-straight quarter, according to Dell’Oro:

dell oro total pbx shipments.JPG

Source: Dell’Oro Group

As a result, Avaya had a commanding lead of the global enterprise telephony market by revenue, both for Q2 2013:

Dell'Oro Global Enterprise Telephony Systems Q213 Rev Share.JPG


Actually, Avaya led Cisco by the same margin for all of calendar year 2012, too:


Dell'Oro Global Enterprise Telephony CY12 Rev Share.JPG


How come Microsoft’s nowhere to be found? We asked Alan Weckel, Vice President, Enterprise Telephony & Ethernet Switch Market Research at Dell’Oro and author of the report, who “confirmed that Dell’Oro Group does track Microsoft in the report. While Dell’Oro group does not break out Microsoft call control directly, based on the size of the remaining market, Microsoft would not be amongst the largest vendors on the charts.”

Why is Avaya gaining telephone users and increasing sales revenue? For a number of reasons:

1)The rock-solid quality of our flagship Avaya Aura platform (read how billion-dollar real estate firm Forest City Enterprises virtualized Avaya Aura software onto VMware and cut costs and increased reliability);

2)The cutting-edge advances in the Aura platform, including the new Collaboration Environment platform to enable developers to quickly build communications apps, and the Avaya Messaging Service that finally brings texting into the enterprise world (and supports any vendor’s system, even Cisco);

3)The quality and cost-competitiveness of Avaya IP Office;

4)The increasing attractiveness of IP Office 9.0 to the fast-growing mid-market segment;

Importantly, we see many customers that use the Microsoft Lync solution for IM and presence turning to Avaya for voice. Rather than deploying Lync software all the way or integrating with Cisco, hundreds of enterprises are trusting the Avaya Client Applications (ACA) plug-in, which offers scalability, ‘Five 9s’ of high-availability, technical features such as open call control, protection for your other communication investments, and tight integration with our contact center solution, which happens to be number one in the market according to Gartner.

Related article: Avaya’s New Wireless LAN 9100 Mutes the Sucking Sound of Network Downtime

ACA is not a tactical solution, either. Providing a comprehensive, open alternative for customers who wish to avoid vendor lock-in is part of the Avaya long-term strategy. Simply put, we want to be the best Lync integrator in the industry.

Lync software undoubtedly excels at IM and presence. But as Cisco Collaboration chief Rowan Trollope pointed out last week, IM and presence are last decade’s news. The future is things like enterprise-friendly text messaging (like Avaya Messaging Service) and open collaboration platforms that let businesses pick the best technologies for their needs.

So when you’re thinking about your UC solution, don’t think it’s only about Lync software vs. Cisco vs. Avaya. The telephone isn’t going away anytime soon. And if telephony is important to your business, the right solution might very well be a combination of a Lync client and Avaya.