Cisco Or Microsoft? Partners Place Bets On Collaboration Domination

"Should I buy Cisco, Microsoft or both?" That's the question many solution providers are asked by businesses seeking the ideal collaboration solution.

Rival market leaders Cisco and Microsoft have drastically different approaches to winning the collaboration arena as massive market consolidation in the unified communications (UC) space is expected to continue. As Cisco bought its fourth UC company in the last 18 months -- it purchased software specialist Worklife -- channel partners are placing their bets on who will reign as leader.

"Cisco will very quickly have a platform that becomes untouchable from a collaboration perspective," said Chris Bottger, chief technology officer at IVCi, a Hauppauge, New York-based solution provider who partners with Cisco and Polycom. "It's because of the fact that they're the only company that has both the hardware ... together with the platform, with the cloud services, with hybrid solutions as well. That hybrid is absolutely key for scalability."

[Related: Microsoft Narrows Leadership Gap Against Cisco In $9.2B Collaboration Market]

Cisco is buying smaller best-of-breed collaboration companies to natively integrate into the company's flagship UC solution Cisco Spark, which Bottger says will solve interoperability issues facing customers.

"Cisco is serious because their putting money on the table – six companies that they've acquired specifically around collaboration," said Bottger. "Then you have Microsoft who does not commit on the hardware and they can't really because the Nokia [acqusition] was such a debacle, that they're now gun-shy from making a serious investment, which means they'll never get the interoperability and the ultimate experience that is going to drive it and scale it."

However, Gary Berzack, CTO and COO of New York-based eTribeca, is placing his bets on Microsoft to come out on top.

"It's got a good chance of being Microsoft because they're addressing the professional consumer – which is Office 365 -- and the enterprise," said Berzack. "Cisco doesn't have a path as clear as that. It's very hardware-specific and revenue focused."

Berzack said Microsoft's already established enterprise foothold and ability to bundle solutions like Skype for Business, SharePoint and Office 365, outweighs Cisco's solutions such as WebEx.

"Cisco WebEx is a good product, but it's not always rock solid," said Berzack. "It does seem to go through iterations of versions updates and I don’t like the rebuild every time when you go from one WebEx version to another."

Cisco and Microsoft declined to comment on the matter.

The two collaboration rivals, who have a strategy partnership in the data center, have been neck-and-neck for first place supremacy in the unified communication market for years. By the end of 2015, Cisco had widened its gap against Microsoft – owning 16 percent of the total market, while Microsoft trailed in second at 13 percent, according to Synergy Research Group.

For the second quarter of 2016, Microsoft closed the gap with Cisco, with the networking leader owning 14 percent share and Microsoft right behind at 13 percent, according to Synergy. Cisco captured $1.3 billion in revenues for the second quarter, representing a decrease of 1.3 percent year over year. Microsoft's $1.22 billion in UC sales for the quarter was an increase of 1 percent compared to a year ago.

Joe Berger, collaboration practice manager for World Wide Technology, a $7 billion-plus solution provider who partners with Cisco and Microsoft ranked No. 12 on the 2016 CRN Solution Provider 500 list, said the majority of his conversations with customers revolve around whether to buy Cisco or Microsoft, or both.

Berger said both companies have their selling points, such as Microsoft bundles, but only Cisco can offer an entire portfolio in-house.

"If you look at the entire portfolio from Cisco, nobody can really beat them right now just because they've got the hardware, software, they're doing the integrations -- they're building out the APIs and SDKs to do a lot of the integration pieces," said Berger. "The challenge with Microsoft, is Microsoft [needs] an ecosystem of partners to achieve this."

Although Microsoft has the software and Surface Hub piece, it needs to rely on other vendor's products for solutions such as Polycom for video.

"It's a lot of management around different OEMs and services, where Cisco is sort of all in one," said Berger. "But what makes Microsoft very compelling is they bundle in Office, Skype, SharePoint and everything in Office 365. So you get a lot at that price point."

On the 2016 Gartner Magic Quadrant for Unified Communications, the research firm ranked Cisco as the leader in both execution and vision, followed by Microsoft.

Gartner touted new strengths in Cisco's portfolio including its UC-as-a-Service offering, Spark, that provides business messaging, meeting and call capabilities; the company's acquisition of cloud API platform provider Tropo for embedded communications and customization; and the integration of its Cisco Meeting Rooms (CMR) cloud-hosted, video bridging service with WebEx.

The research firm said Microsoft strengths were its new enhancements to Skype for Business and the ability to bundle that product with its broad range of established business, collaboration and Office productivity products. Additionally, Gartner touted Microsoft's "strong partner network" that addresses a diverse range of enterprise requirements.

Gardner said both Microsoft and Cisco have a strong financial position.

IVCi's Bottger said a big turning point to sway the lead for Cisco over Microsoft, in the long run, will come when people and businesses stop relying so heavily on emails. He said millennials just don't rely on email anymore compared to other sources of faster, real-time messaging and communications.

"What Cisco is enabling to happen is that people who live in Spark have so much less reliance on email and that devalues the Microsoft proposition from an email Exchange perspective. They still have Office products – the Excel, the Word -- but from a collaboration perspective, that's a key Trojan horse," said Bottger.

Looking at innovation, Microsoft announced this year it was building Skype Teams, the company's solution for messaging apps for teams. The software giant also hopes to upgrade all Surface Hubs by early November, according to the company.

Within the past 18 months, Cisco has acquired Worklife for virtual meetings, search technology specialist Synata, Acano for gateways and bridging technology, and cloud API platform provider Tropo. With all the new technology gained, Cisco appears to be preparing to revamp Spark once again.

"Cisco's taking the best piece of smaller businesses and applying it to the Spark platform," said WWT's Berger. "It's going to get them to a final product faster than trying to develop it in-house … Microsoft is building Skype Teams, which is sort of their response to Slack and Spark, but I don't know how long that's going to take Microsoft to get that out into the market."