Cisco and Microsoft hold hands while kicking each other under the table

Jan Dawson, VP, US Enterprise Practice

Cisco and Microsoft have held a webcast and issued a press release re-emphasising the importance of the alliance between their two companies. Specifically, the two companies stated that they recognised they had not done as good a job as they might have done in detailing all the collaborative work going on between them behind the scenes, while their competition on new fronts has arguably been much more high profile. Jan Dawson says that while watching the webcast it was hard to avoid the sense that they were holding hands while kicking each other under the table.

Steve Ballmer and John Chambers announced seven key 'areas of collaboration' across the various markets they serve: IT Architecture, Security, Management, Wireless & Mobile, Unified Communications, Connected Entertainment and Small & Medium-Sized Business (SMB). They listed specific initiatives and examples of their collaboration in these areas, much of which is at the tactical level or in the early planning stages.

Along with others, we have suggested that a war between Microsoft and Cisco is breaking out, especially in the Unified Communications market. Cisco's purchase of WebEx was the latest major salvo in this war, but the two companies are increasingly shaping up as the two major competitive forces in this market. Both of the companies' legendarily aggressive salesforces have been feeding this notion as they seek to sell their Unified Communications solutions in the market.

However, customers generally want to mix IP telephony infrastructure from Cisco (or its competitors) and messaging software from Microsoft (or its competitors), and don't want to be forced into an all-or-nothing approach from either vendor. Value-added resellers (VARs) and systems integrators who are selling Unified Communications solutions to customers today are already seeing the need for interoperability between these solutions, and are no doubt putting significant pressure on Microsoft and Cisco in this department.

This announcement is therefore driven by the fact that, even though both companies are absolutely committed to winning in this space, 'customers won't buy from either one of us unless we interoperate,' as Charlie Giancarlo of Cisco said during the webcast. Interoperability also means following and driving industry standards, which will present an interesting challenge for these companies, both of whom have reputations as builders of proprietary systems first and foremost.

The announcements were useful as a statement of intent from both companies about their plans to interoperate, but don't go much further than that. The behaviour of Cisco's and Microsoft's salespeople on the front lines, and their engineers in the backrooms at both companies will be what really drives market perception of their ability to work together. The tension between seeking competitive advantage through proprietary technology and establishing interoperability through open standards will remain, and both companies will have to make tough decisions about where to draw the line between the two. Hopefully they will both move a little further in the direction of interoperability, but they will both also continue to do their best to create a world where the other isn't needed.

Jan Dawson leads Ovum's research on enterprise network services in North America. As well as conducting research and authoring reports, he works directly with clients to help them implement the strategies recommended in Ovum's research.