Microsoft forecasts explosion in business telephony

Microsoft is forecasting that more than a billion people will use software that combines voice-over-IP (VoIP) calls with messaging and video within three years. The computer giant predicts that, over the same period, three-quarters of new business apps will have communications built into them. Microsoft claims it already has in excess of 100m customers making calls using Office software, and says sales of its office communications increased by more than 50% last year.

"Communications centred solely on the desk phone and built on hardware-based systems are quickly becoming a relic of the past," says Gurdeep Singh Pall, Microsoft's VP of unified communications. "In fact, many of today's private branch exchanges belong in a museum."

The business telephony market is expected to grow fives times over to USD14.5bn by 2015, according to figures from Forrester Research. Microsoft faces stiff competition from the likes of Cisco and Avaya, which together account for about half the market. Avaya is now the biggest maker of corporate phone equipment while Cisco recently bought conferencing firm Tandberg.

However, Microsoft it believes it has the upper hand as the market increasingly moves towards collaboration. The company is also set to release the next version of its Office Communications Server product in the second half of the year. The update will include new features such as enhanced voice recognition capabilities, deeper integration with Microsoft Office, Sharepoint and Exchange and better search functions. The firm says it has also inked a number of partnerships with the likes of Aastra, HP and Viacom to boost its position.

"No one company can do everything, we are comfortable playing our role in the software and experience side," Pall tells BusinessWeek. "But Cisco is talking a lot more about collaboration, and that is a conversation we love too. We see a future where communication is more open, costs less, and is easier to use."