Last week Gartner came out with its latest Magic Quadrant for UC. So how do things look in the cutting edge field of unified communications?

Well, it appears that everyone is either a leader or niche player.

The vendors deemed worthy enough to float on the upper-right leaders quad: Microsoft, Cisco, Avaya, Alcatel-Lucent, and Siemens Enterprise Communications.

Most of the others, designated as niche players by the ever politically correct Gartner (as opposed to “non-leaders,” “losers,” or “followers”?) in the lower-left quad, include some usual suspects like ShoreTel, Interactive Intelligence, TeleWare, Toshiba, and Aastra Technologies; but there were a couple of newbies this time: Digium and Huawei Technologies.

Between quadrants challengers (NEC and IBM) and visionaries (Mitel) were only three companies. Notice that the newcomers Digium and Huawei went straight to the niche quad instead of arriving as challengers or visionaries…

And to me that is tragic. Has the UC market place finally settled and its landscape defined?

With Microsoft leading the pack it’s clear that UC is an enterprise software application. Microsoft’s dominance in enterprise software is paying dividends in the adolescent UC market. Plus, its leadership further strengthened with the acquisition of Skype.

I wouldn’t have thought networking giant Cisco to be a close second. My #2 pick would’ve been IBM but alas, Big Blue has never quite figured out “communications” throughout its history.

Interestingly, Mitel is the only visionary in the report. The company has been making waves recently by making its products VM-friendly and exclusive — a “game changer,” according to Dave Michels of Pin Drop Soup:

Today at VMworld in Las Vegas, we learned of a new capability: virtual softphones! Mitel’s US desktop suite, UC-Advanced, includes a softphone (and presence, and IM), and it is now supported on VMware’s View virtual desktop infrastructure (VDI). To my knowledge, this is the first time a softphone is truly being supported on a virtual desktop. This is a game changer.

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So far, this is a Mitel (MCD) and VMware (View 5) exclusive. The companies have not disclosed the secret sauce that makes it work, but it will no doubt be coming to other vendors. VDI is hot! It drives down support and hardware costs while improving mobility. Allowing a softphone to tag along has huge implications, particularly for organizations embracing cloud services. Virtual desktops have the potential to turn all kinds of form factors into legitimate, secure workstations including PCs, thin client desktops, iPads, and ChromeBooks.

Thanks to Eric Krapf over at the No Jitter blog, we learn a bit about the “secret sauce“:

“In the VDI space, the reason why the math works so well is you don’t have a PC for every person in the datacenter; you oversubscribe the resource,” because you don’t have everyone using all their resources all the time, [Mitel CTO Jim Davies] explained. So “even if you solve the latency problem, which is solvable, you still have the math problem.”

Rewriting the softphone application enabled Mitel to solve the latency problem; VMWare created an API for View that lets the Mitel softphone’s media streaming function plug into the thin client on the desktop, while the remaining functions move to the datacenter.

What will the next UC Magic Quadrant look like? I hope to see more dots in the top-left and bottom-right quadrants.

There has been a lot of discussion surrounding the Avaya-Nortel (Enterprise Solutions) acquisition and the recently released product roadmap. Major Avaya competitors have offered their cautionary view. From Aspect:

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Avaya has stated that it will be selectively choosing its best of breed capabilities based on the Avaya and Nortel product portfolio.  While we applaud this approach, we also question the impact it will have on its customers. With two product portfolios that are largely based on proprietary technology and competing product strategies, this means that in many cases there will not be an optimal migration path for customers that are not on the platform of choice for future development. This will require significant investments and forklift upgrades for the combined Avaya/Nortel customer base.

Based upon our company’s experience with large mergers and acquisitions, Aspect believes that Avaya has a monumental task in trying to maintain customer satisfaction while trying to build credibility in the unified communications (UC) market, integrating platforms, maintaining continuity in its contact center offerings, and making adjustments to its workforce under a newly-appointed management team; a challenge while having fewer people supporting a significantly expanded product portfolio.  Based upon our past experience and Avaya’s just-released roadmap, we have insight into some of the challenges they’ll face in the coming years:

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And also from Interactive Intelligence.

Their bottom line to Avaya-Nortel customers: brace yourselves because it’s going to be a bumpy ride!

The new Avaya is now the dominant force in contact center solutions, but it is also the most bloated at the moment. Announcing the product roadmap will ease some concerns from customers, but as we all know about eating a big meal — it’s about how to keep the food down. Avaya will need near perfect execution in absorbing the whole Nortel ES — products, services, headcount, and then some.

As others have opined, it won’t be easy. Nortel has fallen hard with a troubled past and poor management. Remember the Clarify deal in 1999? Looking to cash in on the dot-com craze Nortel offered $2 billion in stocks for CRM software maker Clarify, only to sell it two years later to Amdocs for $200 million in cash. Its executives was caught in a financial scandal involving $3 billion misstated revenue over 1998, 1999, and 2000. Tens and thousands of workers were let go in subsequent restructuring and reorganization efforts.

Nortel became a perfect case study for Harvard Business.

But Avaya has the backing of two reputable private equity firms, Silver Lake Partners and TPG Capital. These firms privatized the company for $8.2 billion in October 2007 and are no strangers to high-profile technology companies. Among their other investments include Skype, Seagate Technology, Freescale Semiconductor, and Alltel Wireless.

Obviously they did not consider Nortel assets to be toxic. But right now as Avaya is going through growing pains, competitors are readying their sales force to capitalize on Avaya-Nortel customers’ FUD (fear, uncertainty, and doubt) sentiments. Genesys and Cisco are the two companies which stand to lose significant IVR market share in light of a beefed up Avaya. I would not be surprised to see Genesys and Cisco — both known to have very aggressive sales programs in the industry — to start offering deep discounts and incentives to convert existing Avaya and Nortel customers during this time of transition.

For telecom and contact center customers, now is a great time to shop around.