Microsoft, Cisco face off over office comms

By Daisuke Wakabayashi and Ritsuko Ando

NEW YORK (Reuters) - Microsoft Corp. (MSFT.O: Quote, Profile, Research, Stock Buzz) and Cisco Systems Inc. (CSCO.O: Quote, Profile, Research, Stock Buzz) agree that work communications -- whether it's e-mail, messaging or phone calls -- will eventually come together and be delivered over Web networks.

The debate begins when the two deep-pocketed technology leaders -- Microsoft in software and Cisco in networking equipment -- argue over whose products will be the platform for the multibillion-dollar transformation of the office phone.

Microsoft is the newcomer, but it sees software playing the central role, while Cisco expects to cash in on years of experience making telecommunications equipment such as switches and routers. More recently, it has sold millions of Web-ready phones.

"It's going to become a battle," Gartner analyst Bob Hafner said, noting the competition between the two gets the most attention but that other companies like Alcatel-Lucent ALU.PA, Avaya AV.N and Siemens AG (SIEGn.DE: Quote, Profile, Research, Stock Buzz) are big companies with large investments in work communications.

Speaking at this week's Reuters Global Technology, Media and Telecoms Summit, executives from Cisco and Microsoft touted their own products to deliver "unified communications," which combines Voice over Internet Protocol phone calls, e-mail, instant messages and conferencing technology.

"Frankly we don't think anyone stands a chance competing with us in this space," Cisco Chief Development Officer Charles Giancarlo said. "We basically invented Voice over IP so we basically know better than anyone else where it's headed."

Cisco has been acquiring various small, niche technology companies to build up its unified communications product line. Over the past year, it agreed to buy online video conferencing company WebEx Communications, messaging security company IronPort Systems and mobile software company Orative.

It is already paying dividends. For its fiscal third quarter ended April 28, revenue at its main routing segment rose 16 percent from a year ago, while its unified communications revenue increased by nearly 40 percent.  Continued...