Microsoft and PlaceWare – A Puzzle Without a Picture

Microsoft’s attempts to purchase its own Web conferencing platform Tuesday sent shockwaves through the industry. But while the No. 1 software maker and the No. 2 Web conference hosting company hammer out the details, the competition is sharpening its own swords.

Within minutes of the acquisition announcement, rival WebEx and others denounced the plan as futile.

“In the multimedia space, you need to build a multimedia telecommunications network in order to deliver the communications services to customers, and with Sametime they try to build a software server as part of something you install in-house,” WebEx spokesman Praful Shah told reporters.

And as some analysts see it, attempts by Microsoft to dominate Web conferencing won’t impact the sector for at least 18 months.

“So far, Microsoft has not been able to articulate exactly what its strategy is and how well this would work with the server side?” Meta Group analyst Mike Gotta told “Right now, it’s questionable because of the compatibility issues. Its still looks like puzzle pieces without a picture.”

Gotta’s published analysis points to compatibility conflicts considering that PlaceWare’s backend is based on UNIX and Java – not .NET.

“Originally Microsoft began its Web conferencing path with NetMeeting, which developed into a conferencing service available through its Exchange servers,” Gotta said. “Now they are starting up a new Real Time Collaboration Group in which they are combining PlaceWare and its Greenwich instant messaging division. It’s a very astute mood and Microsoft picks up a good vendor base, but there is still going to be a battle.

That fact has not gone unnoticed by PlaceWare’s competition including IBM and Oracle . Both have business-class Web conferencing software.

“Microsoft’s PlaceWare acquisition clearly illustrates its failure to deliver effective real-time collaboration technologies for today’s enterprise. This approach adds yet
another variable to Microsoft’s already complex, disjointed approach to collaboration which includes different clients and numerous servers,” Oracle Collaboration Suite vice
president of marketing Steve Levine said.

In fact, one area of steady growth has been Web conferencing. With spending on business travel estimated to be over $150 billion a year, Gotta says the market is ripe for virtual communication to save companies money. Conference service providers (e.g., Genesys Conferencing, Placeware, Raindance, WebEx) and telecommunication carriers currently dominate the market today.

Gotta says that will change over time now that Microsoft has re-entered the fray and Web conferencing decisions, that are currently made at a departmental level become a corporate strategy.

“Companies want to go with one platform instead of several smaller ones,” Gotta said. “IBM has the advantage here because of its long-standing relationship with enterprise.”

The transaction is expected to be completed in the first quarter of 2003. Microsoft Information Worker Group lead program manager Dan Leach called the acquisition a “long-term investment” and predicted widespread consumer adoption by 2008.

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