Actually, this update is from my flight home—there was too much happening for me to break away and blog, including: Great partner announcements on Monday and Tuesday, our announcement and first look at Communications Server “14” during Gurdeep Singh Pall’s keynote (you can watch a replay at http://tv.voicecon.com/), our disclosure of the “14” voice feature set via the annual IP PBX RFP session hosted by Allan Sulkin of the TEQConsult Group, and, of course, the unveiling of Telabacus, our first “phones to art” piece (see the bottom of this post for more information), which I hinted at in a blog post last week. I really want to blog about two things from VoiceCon—the VoiceCon RFP response and Telabacus.
VoiceCon RFP Response
I mentioned in my previous post that I would be Microsoft’s participant in Allan’s “Who Delivers the Goods?” IP PBX RFP session. Gurdeep mentioned Allan’s session in his keynote, and encouraged people to attend in order to see how Microsoft and our partners have delivered against Jeff Raikes’ 2007 prediction that, in 3 years, the cost of a business VoIP solution would be cut in half.
Allan literally wrote the book on IP telephony, and he did a great job in the session (as always). He described each vendor’s RFP response, and verbally indicated where vendors met or missed requirements. Describing Microsoft’s response, he pointed out that we did not satisfy every requirement of the RFP. For example, we don’t directly support “Automatic Callback,” but we enable the use of presence state tagging and instant messaging as a modern alternative.
“Automatic Callback” is one of many PBX features that are interesting to consider in the context of a modern communications platform. As Allan describes Automatic Callback on page 373 of his book, “This feature is used when a dialed station is busy.” An implication of Microsoft’s communications approach is that it is nearly impossible for an Office Communications Server station to be busy in the traditional PBX sense because we don’t limit users or endpoints to a set number of line appearances (this is why IP phones Optimized for Communicator don’t have lots of phone line buttons). A user may be “in a call”, or, frankly, have 20 active calls, but can still receive an indication of an incoming call and decide to answer it, divert it to voice mail, or respond with an instant message. A calling party can check the called party’s presence status prior to beginning a call, and, if the called party is already in a call, can choose to be notified via tagging when the call ends. As such, we have introduced a communications model that obviates the needs for some of the legacy capabilities called out in the RFP.
There are other traditional requirements that we don’t meet, but often because they don’t make sense in the context of a truly unified communications platform. For these cases, we note where we don’t meet the requirement directly and describe our alternative. Judge our compliance for yourself by reading our complete written response.
How did we do against Jeff’s prediction?
Allan included a pricing summary in his VoiceCon Orlando 2010 RFP workshop session. It is specific for the RFP configuration only, and reflects list and discounted prices provided by the vendors. Allan agreed to let us re-use it, and asked that we note that the performance capabilities (design attributes, features, phones, etc.) vary for each system proposed and do not necessarily satisfy all of the RFP requirements. The summary is below.
You’ll note that when we compare 2010 prices across the board, the Microsoft UC solution is cost effective, but more than half the price of the others in the discounted case. Allan noted during the session (as we did in our response) that we assumed that the customer already has Microsoft® Active Directory and Exchange. Keep that in mind, particularly if you don’t use Active Directory and Exchange.
Jeff predicted that our 2010 price would be half of the other vendors’ 2007 VoIP prices, not half of their 2010 prices. Still, this event provides an apples-to-apples comparison opportunity and readers have the option to compare full responses from different vendors. As such, I used my five minutes in the panel to describe why we believe we offer a 50% advantage even when compared to 2010 pricing.
The average per user price quoted by the other 9 vendors, based on Allan’s RFP session PDF, is $783. The per user solution price for the Microsoft-based solution is $569 (dividing $911,705 [discounted price on page 179 of our response] by 1600 [number of users]). This is a compelling price, but still not half the average cost of the other VoIP solutions (which would be $391).
But, as I pointed out in the panel, $569 is misleading as our solution delivers not only VoIP, but also IM, presence, federation, and audio, video, and web conferencing. It extends these capabilities over the Internet to all users at no additional charge. It also supports new features such as the Microsoft® SharePoint-powered Skill Search that Jamie Stark and I demoed during Gurdeep’s keynote. To do an apples-to-apples comparison with a VoIP only solution price, we need to back some of this value out of the quoted price.
Web conferencing is probably the easiest, as Office Communications Server 2007 R2 already provides the ability to host Live Meeting web conferences and Live Meeting is offered as a service with publicly available pricing (we could also use Cisco WebEx, but its publicly available pricing is higher and makes this a trivial exercise). Extending the Live Meeting Standard User price of $4.58 per month over 3 years (the typical length of a Microsoft Enterprise Agreement) yields a price of $165 per user. Subtracting this value from the $569 total price, and, at $404, we’ve all but met our $391 target without accounting for the value of our IM, presence, federation, and Skill Search. Of course, once a customer purchases Communications Server, they can use the web conferencing capabilities longer than 3 years, which only improves the economics.
The opportunity I didn’t cover in the panel is to improve the economics even further by replacing some of the IP phones provided to users with USB devices. We noted in the written RFP response that replacing just half of the IP desktop phones with optimized USB endpoints at an average price of $60 results in a $171,000 reduction in the total solution cost, or more than $100 per user. Combine this with the web conferencing approach above, and the per user VoIP price is now at $304, well below the $391 “half price” target. Also, note that $60 per USB endpoint can be considered conservative: for example, a quick Bing search yielded the optimized Plantronics .Audio 615M, offered for $37.70, quantity 1.
Of course, you can do different calculations, and the pricing is specific to the RFP configuration only. For example, you may believe that some of the other bids include a complete IM, presence, federation, and audio, video, and web conferencing solution, with Skill Search, like Communications Server. Or, on the flip side, you may want to enable all of your users to work and communicate remotely and therefore choose USB devices instead of IP phones for everyone. Either way, the key point is that the Communications Server capabilities and economics are too compelling to ignore.
Enough math though. Telabacus, our “phones to art” piece was a lot of fun. I only had a few minutes to spend on the show floor during the week, but I loved the reactions that people had as they walked by our booth, saw the piece, stopped, and read the associated museum cards. As you might imagine, it generated some questions…
Q: What IS that?
A: It is a giant sculpture in the form of an abacus. Telabacus is similar to the Japanese Soroban, which uses 5 beads instead of 7, and is oriented horizontally like the Russian abacus. The beads in Telabacus are IP PBX and PBX phones displaced by the Microsoft Unified Communications platform. (Those that didn’t attend VoiceCon can see “Telabacus” behind my colleague Jamie in this VoiceCon video or can see a still shot posted by a show attendee here.)
Q: Why do you have a giant abacus made out of phones in your booth?
A: We wanted to do something different than typical product displays, and thought that an art piece would be both fun and thought provoking. We used telephones as raw materials partly because we expected other booths on the floor to have phones on display.
Q: Who built the abacus? Was it a Microsoft employee?
A: No. Mike Magrath, a sculptor who lives in the Seattle area, built it. You can learn more about Mike’s work on the web, if you wish. Please note that Mike, in his own words, has “spent the last decade or so focused primarily on the human subject,” and his web site features several of his studies of the human form. (If you are, or others around you in a work environment or public place are uncomfortable with this, please do not visit his web site. If you decide to visit, I recommend you read his description of Lot’s Tribe, which he placed in Seattle’s Pioneer Square on September 11, 2006. The combination of his choice of material and the outdoor placement communicates a powerful message.)
Q: Where did you get the phones used in Telabacus?
A: They were donated by customers and partners who have deployed Office Communications Server, and represent a tiny portion of those displaced by Office Communications Server rollouts.
Q: Are you trying to say that PBX and IP PBX systems are obsolete, like the abacus?
A: No. The abacus is in wide use around the world today for calculation, and, in fact, we used sketches of the abacus at the show to highlight elements of customer case studies. Likewise, PBX and IP PBX systems are still in wide use. We interoperate with nearly all of them to enhance existing investments with Microsoft Unified Communications. That said, many customers, such as Sprint, choose to eliminate existing equipment in order to reap the significant cost savings – after all, why pay to maintain multiple systems if a single system can do the whole job better?
Q: Well, then what message are you trying to send?
A: The goal of the abacus is to engage people and give them a reason to stop and consider the benefits of the Microsoft communications platform. For example, one sketch showed how to represent 33% on Telabacus. Below the sketch was a copy of the Credit Agricole case study, which highlights the reduction of travel expenses made possible by their use of Office Communicator’s built-in audio, video, and web conferencing.
Q: You must have specified the abacus theme. What were you thinking when you came up with it?
A: Actually, no. Mike, the artist, came up with the abacus. We discussed our goals for Communications Server, and then he proposed several great ideas. The hardest part was choosing.
Q: In that case, why did you choose the abacus instead of one of the other options?
A: Several reasons. We believed that Telabacus would really engage people at VoiceCon because of its novel use of phones, its size and its color, and because people can interact with it. The phones make a nice satisfying clunk when you slide them back and forth. Another reason is that we liked the analogy that it suggested to us: the IP PBX is to Communications Server as the abacus is to the PC. (Let me explain the color note for those who didn’t attend: Mike chose the stain color to emphasize the message waiting indicators and hold buttons on all those phones. His attention to detail is unbelievable.)
Q: What were the other ideas?
A: We’d rather not share those. We may need them given the big and growing pile of unneeded phones.
A: Put simply, these new UC endpoints are too useful and valuable to use as abacus beads. They are Optimized for Office Communicator, and work both on their own as IP voice devices, or paired with Microsoft Communicator “14” to provide a tremendous experience that includes audio, video and application sharing. They are more than just phones and are built by partners to work with a broader unified communications solution.
Senior Product Manager, Communications Server