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Untangling Microsoft's communication and collaboration strategy

Paul Rubens | April 11, 2013
Microsoft announced at its Lync Conference in February that Lync and Skype are connected for IM, presence and voice communication.

Microsoft announced at its Lync Conference in February that Lync and Skype are connected for IM, presence and voice communication.

That's big news in itself, but it's just the first of a raft of likely developments as Microsoft finally begins to reveal its comprehensive long-term strategy for communications and collaboration.

Once fully articulated, the strategy may make sense of the bewildering jumble of consumer and enterprise tools for communication and collaboration that the company has developed or acquired over the years, including Skype, Lync, Yammer, SharePoint and Outlook.

What Lync and Skype Bring to Microsoft

Microsoft says that the Lync-Skype announcement puts the company in the unique position of being able to "deliver communications solutions from the living room to the boardroom and all points in between." But to understand the rationale for connecting Lync and Skype you have to consider what Microsoft has learned from its $8.5 billion acquisition of Skype in 2011, and last year's $1.2 billion acquisition of Yammer.

"Microsoft wants to take the business models of Skype and Yammer, and adapt them to Lync and SharePoint," says Rob Helm, and analyst at Seattle-based based Directions on Microsoft. "Both are spread virally, and both have a free tier of service to build up the user base, as well as paid services."

Microsoft has generally required companies to pay for Lync clients in the past, but late last year the company released Lync Basic 2013, a free client for Lync 2013. This includes voice calling, instant messaging and presence; but lacks advanced features like call forwarding, voicemail, and OneNote sharing. These features can be accessed by upgrading to a paid for version. There are about 5 million Lync users, Microsoft claims.

By connecting Skype to Lync, Microsoft will effectively turn the hundreds of millions of installed Skype clients into free Lync clients as well. The company is counting on getting some of those Skype users converted into paid Lync clients. Paying for Lync makes more sense when more people are connected, Helm points out. "The key thing here is the network effect: the value of the network grows faster than the number of people in it. The freemium model, and adding Skype to Lync, builds the value of Lync.

If you can't help thinking that this strategy is not quite coherent, you're not alone. That's because Skype is a consumer product, while Lync belongs firmly in the enterprise. And it's for that reason that Helm says he believes that the two products will be merged into a single Lync client in the next version or two, using the best technology from each.

"I can see Microsoft taking Skype ideas like a peer-to-peer directory and using it to make Lync more robust," Helm says. Where would that lead Skype? It's certainly a valuable brand, so it's not inconceivable that it could live on, perhaps as a communication feature built in to a future version of Internet Explorer.


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