This document was revised on 28 January 2010. For more information, see the Corrections page.

Unified communications (UC) offers businesses the ability to significantly improve how individuals, groups and companies interact and perform. The majority of UC deployments to date have been premises-based solutions. However, with the advent of cloud computing and new business models, providers now have the ability to offer unified communications as a service (UCaaS).

With UCaaS, the provider owns, manages and hosts the UC infrastructure in its facilities. Users then pay subscription fees for UC services as opposed to making capital investments for premises-based infrastructure. The economic downturn has also fueled user interest in UCaaS, as businesses have fewer IT capital expenditure dollars.

UCaaS offerings support the same types of services as premises-based UC implementations. Only the delivery model is altered. Gartner therefore applies the same six broad communications areas used to describe premises-based UC for characterizing UCaaS. They are as follows:

• Voice and telephony.
• Conferencing.
• Messaging.
• Presence and instant messaging (IM).
• Clients.
• Communication applications/communication-enabled business processes (CEBP).

Most of the UCaaS participants in Gartner's UCaaS Magic Quadrant are well-known, multibillion dollar carriers and technology vendors. However, there are also a significant number of smaller and less-well-known specialists with strong offerings from a feature/functionality perspective. This is typical of a still maturing market. Gartner therefore expects "a lot of movement" in the UCaaS Magic Quadrant in subsequent years as the market matures and suppliers evolve their offerings. In addition, Gartner's inclusion requirements will increase in future years relative to technical capabilities, revenues, customer base and market positioning.

The most notable feature of the Magic Quadrant is that none of the participants are in the Leaders quadrant. This is because no vendor possesses a mature and deep functionality across all four of the UC modalities (voice, messaging, presence and conferencing) that is readily available to North American enterprises. Rather, possesses a core set of strengths and is evolving its product portfolio to fill in its weaknesses.

The UCaaS market has gained momentum throughout 2009 as an alternative to premises-based UC solutions, as vendors, service providers and applications specialists continue to invest in the market. Gartner presently estimates that there is a 15 to 18 month technology gap, whereby UCaaS features and functionality are 15 to 18 months behind similar premises-based UC solutions. Discussions with the technology platform vendors like Cisco, IBM and Microsoft indicate that they are looking to narrow this gap to six to nine months during the next two years. However, there will almost always be some technology gap between the premises-based and cloud-based offerings, in part for the time it takes for UCaaS providers to transform new technology into services, specifically into the "as a service" model.

Throughout the course of this research, Gartner has identified that both small or midsize businesses (SMBs) and enterprises are prepared to embrace UCaaS. Many SMBs believe that UCaaS is the only viable means of achieving UC functionality given the costs, complexity and risks of the technology. On the other hand, larger enterprises have a choice. While some enterprises opt for traditional premises-based solutions, others take the UCaaS route with the belief that UCaaS specialists can deliver the services more efficiently than the enterprise can on its own.

Both providers and users (more so on the larger enterprise side) now promote hybrid implementations. This calls for some UC applications to be delivered via the cloud (that is, UCaaS), while other applications are premises-based. As a general trend, a number of users prefer to keep their voice over IP (VoIP) and e-mail functionality premises-based, with the newer functionality (such as presence, video and conferencing) delivered in the cloud. There are two reasons for this environment: 1) Users have made substantial investments in premises-based IP-PBXs and e-mail platforms, and 2) There is a cultural issue, as the internal IT departments have long run their own e-mail and voice systems.

UCaaS providers are entering the market from a number of different perspectives (see Note 1). They include the following:

• Telephony-centric UC
• E-mail and collaboration-centric
• UC portfolio
• Tightly bundled UC

The telephony-centric UCaaS players enter from a carrier voice background. This is led by the telecom carrier companies like AT&T, Bell Canada, BT, Orange, Telus and Verizon. Many of these carriers have their own wireless assets, which provides them with a competitive advantage supplying fixed-mobile convergence (FMC). But what really distinguishes the telephony-centric UCaaS suppliers is how well they are able to leave their comfort zone. Specifically, how they are able to supply such newer services (newer from a carrier perspective) as cloud-based e-mail, presence, conferencing and collaboration.

The e-mail and collaboration-centric suppliers include Google, IBM and Microsoft. These are all technology vendors with various degrees of strength in e-mail, collaboration and conferencing. Many businesses are building their UCaaS strategy around e-mail, which provides a strong competitive advantage to Microsoft. Google is attractive to those enterprises seeking to lower costs, albeit with solutions that still focus on consumer services and have not been fully validated as enterprise-grade. Meanwhile, IBM still has a notable e-mail presence, and was one of the early deployers of premises-based UC (Sametime).

The UC portfolio supplier opts for a best-of-breed UCaaS solution. This enables the UCaaS provider to pick and choose its preferred platforms by each application and then integrate them. One common approach is to use BroadSoft or Cisco platforms for VoIP, with Microsoft supplying presence, conferencing and messaging. LightEdge, Cypress and CallTower fit into this category.

The tightly bundled UC providers focus on a core vendor to promote ease of deployment. Partnerships can then be deployed in cases where additional functionality is required. Examples of this model include Cisco, Nortel, PanTerra and Skype. Cisco fits this model based on its WebEx conferencing and Unified Communications Manager VoIP functionality.

A notable characteristic of the evolving UCaaS market is the interdependency between partners and competitors; the proverbial co-opetition. The carriers and UCaaS specialists integrate their telecom services, system integration capabilities and wireless skills around the core vendor platforms (highlighted by Microsoft and Cisco) that they operate. Simultaneously, these same vendors — Cisco, IBM and Microsoft — offer competing UCaaS solutions that rely on the carriers' telecom services to reach their customers via Session Initiation Protocol (SIP) trunks and wireless services. This conflicting environment has the potential to curtail UCaaS deployment should the competing partners/players choose not to work together.

Most of the UCaaS participants in Gartner's UCaaS Magic Quadrant are well-known, multibillion dollar carriers and technology vendors. However, there are also a significant number of smaller and less-well-known specialists with strong offerings from a feature/functionality perspective (such as CallTower, Cypress Communications, LightEdge, and PanTerra). This is typical of a still maturing market. Gartner therefore expects "a lot of movement" in the UCaaS Magic Quadrant in subsequent years as the market matures and suppliers evolve their offerings. In addition, Gartner's inclusion requirements will increase in future years relative to technical capabilities, revenues, customer base and market positioning.

The most notable feature of the Magic Quadrant is that none of the participants are in the Leaders quadrant. This is because no vendor possesses a mature and deep functionality across all four of the UC modalities (voice, messaging, presence and conferencing) that is readily available to North American enterprises. Rather, each possesses a core set of strengths and is evolving its product portfolio to fill in its weaknesses.

Initial UC deployments have been premises-based solutions. However, with the advent of cloud computing and new business models, providers now have the ability to offer unified communications as a service. With UCaaS, the provider owns, manages and hosts the UC infrastructure in its facilities. Users then pay subscription fees for UC services as opposed to making capital investments for premises-based infrastructure.

Most UCaaS deployments are multitenant, whereby a single UC infrastructure supports multiple businesses. However, dedicated platforms devoted to a single business can still be part of a UCaaS solution so long as the end users pay a monthly subscription fee. Such dedicated platforms are typically deployed for large customers with 5,000 or more subscribers.

UCaaS offerings support the same types of services as premises-based UC implementations. Only the delivery model is altered. Gartner therefore uses the same six broad communications areas used to describe premises-based UC for characterizing UCaaS. They are as follows:

1. Voice and telephony. This area includes fixed, mobile and soft telephony, as well as the evolution of PBX and IP-PBX functionality (provided virtually). This also includes some additional live communications, such as video telephony.
2. Conferencing. This area includes separate voice, video and Web conferencing capabilities, as well as converged unified conferencing capabilities.
3. Messaging. This area includes e-mail (which has become an indispensable business tool), voice mail and unified messaging in various forms.
4. Presence and IM. These play an increasingly central role in the next generation of communications. Presence services in particular are expanding to allow aggregation and publication of presence and location information from and to multiple sources. This enhanced functionality is sometimes called rich presence.
5. Clients. Unified clients allow access to multiple communication functions from a consistent interface. These may have different forms, including thick desktop clients, thin browser clients, mobile PDA clients, as well as specialized clients embedded within business applications.
6. Communication applications. This is a broad group of applications that have directly integrated communication functions. Key application areas include consolidated administration tools, collaboration applications, contact center applications and notification applications. But over time, other applications will be communication enabled. When business applications are integrated with communication applications, Gartner refers to them as CEBP. UCaaS offerings will provide the tools to enable the enterprise or third parties to develop such communications applications/CEBP.

This Magic Quadrant focuses on the UCaaS delivery model.

To be included in this Magic Quadrant a vendor must support the UCaaS delivery model, with the UC infrastructure owned, maintained and hosted by the provider. Users pay a monthly per employee subscription fee. While the infrastructure is typically multitenant, dedicated platforms will be considered so long as the monthly subscription fee payment model is offered. Further, vendors must meet the following criteria:

• An enterprise-grade offering must be provided, designed for wide-scale deployment across the full corporation (or a large business unit).
• The market offering must include a 1) voice capability, complemented by support for 2) conferencing, 3) messaging and 4) presence/IM. The offering must have significant market presence in at least two of the above areas, in addition to voice. Market presence can be demonstrated either through market share or differentiating innovation.
• The majority of UCaaS functionality is delivered via hosting (that is, cloud-based). Limited functionality may be delivered as a hybrid premises-based service solution, so long as it is integrated with the overall UCaaS solution.
• There must be support for and commitment to the North American market.
• Vendors must have UCaaS revenue of at least $3 million or possess significant UCaaS brand name recognition (demonstrable via Gartner client inquiries) with North American enterprise clients.

Not applicable. New Magic Quadrant.

Not applicable. New Magic Quadrant.

Gartner analysts evaluate UCaaS service providers based on the breadth, quality and overall maturity of their applications, processes, tools and procedures that enhance individual, group and enterprise communications. Ultimately, UCaaS providers are judged on their ability and success in capitalizing on their vision (see Table 1).

Gartner analysts evaluate UCaaS service providers based on their ability to convincingly articulate logical statements about current and future market directions, innovations, customer needs and competitive forces, and how well these map to Gartner's overall understanding of the marketplace. Ultimately, UCaaS product providers are rated on their understanding of how market forces can be exploited to create opportunities for providers and their clients (see Table 2).

The Leaders quadrant contains vendors selling comprehensive and integrated UCaaS solutions that directly, or with well-defined partnerships, address the full range of market needs. These vendors have defined migration and evolution plans for their products in core UCaaS areas, and are using their solution sets to enter new clients into their client rosters and to expand their footprints in their client bases in new function areas.

Vendors in the Challengers quadrant offer solutions that are poised to move into the Leaders quadrant but have not yet done so. They haven't yet bridged this gap because their solution set may be 1) capable of delivering most but not all UCaaS functions, 2) full but not yet mature, 3) not yet being delivered to a new client base or 4) sold primarily as an add-on to the installed client base.

Vendors in the Visionaries quadrant demonstrate a clear understanding of the UCaaS market and offer a strong and differentiating approach to one or more core areas. However, these vendors have limited ability to execute across the entire set of UCaaS requirements, or have marketing and distribution limits to their ability to challenge established Leaders.

Vendors in the Niche Players quadrant offer stand-alone components in several UC areas but do not have a comprehensive product; or they have a solution that has limited market reach. Although these solutions often perform specific functions well, they do not represent a complete solution for the broader UCaaS market.

AT&T has a two-pronged approach to UCaaS. First, large enterprises are given dedicated, hosted solutions that are priced as per the software-as-a-service (SaaS) model. These will be based on branded products from such suppliers as Cisco, Microsoft and Avaya. Second, AT&T will promote its AT&T Connect UCaaS offering to SMBs, which is based on the Interwise acquisition integrated with the BroadSoft VoIP feature server. AT&T's FMC solution benefits from its U.S. wireless asset ownership, which is leveraged to business customers of all sizes.

• AT&T has a strong global brand name and network reach, with wireless competencies acquired via its U.S. assets. The company also possesses a strong commitment to the UCaaS market along with some existing, high-profile customers with over 50,000 employees.
• AT&T has the flexibility to provide hosted, dedicated platforms to large customers who are then charged as per the SaaS model. This is currently done with integrated Microsoft and Cisco platforms.
• AT&T has an integrated wireline and wireless product group that is well positioned to provide services like FMC, a wide base of smartphones and, in the future, premises-based femtocells and location-based service (LBS), complete with service-level agreements (SLAs). AT&T actively supports end-user adoption of wireless only customers prepared to terminate their wireline phones.
• The UCaaS group has synergies with AT&T's Applications group, which is focused on data centers, storage and application management. This includes a separate sales force that is positioned to sell more complex services with longer sales cycles.
• Consider AT&T if you are a large enterprise with some U.S. presence (this includes global enterprises so long as some portion of their business is U.S.-based) interested in UCaaS based on Cisco and Microsoft technology.

• Historically, long product development cycles may hinder AT&T's competitiveness against new entrants with greater agility.
• AT&T's multitenant voice platform for UCaaS integration will not be available until 2011 as the company transitions from the current Sylantro platform to the forthcoming BroadSoft platform.
• AT&T is offering two different and distinct UCaaS platforms: 1) Larger enterprises will focus on well-branded solutions from Microsoft, Cisco and Avaya; 2) SMBs will be served through an alternative multitenant AT&T Connect platform (acquired from the Interwise purchase). While there may be business benefits to this dual-platform approach, AT&T must still invest resources in two platforms and properly position each offering to avoid confusing marketing messages.
• While AT&T has a strong record with large multinational corporations (MNCs), execution to midsize corporations has not been consistent.

Bell Canada is the incumbent telephony provider in eastern Canada, which includes the larger population centers in Ontario and Quebec provinces. Its wireless service covers all of Canada. As a general rule, Bell Canada has been cautious and therefore late to market with hosted VoIP and UCaaS solutions. Gartner believes that this is in part due to a two-year Bell Canada privatization effort that was never finalized due to the unstable 2008 and 2009 financial markets (Bell Canada is now a stable, public company). The current UCaaS offering is VoIP-centric with unified messaging (UM) and limited wireless integration.

• Bell Canada is solidifying its hosted VoIP and UM offerings on the BroadSoft platform. This offering is now available in Bell Canada's core Canadian markets (the eastern half of country).
• Bell Canada continues to benefit from brand name recognition across Canada, with presence in the major markets such as Toronto, Montreal and Ottawa.
• Solid wireless assets could provide a valuable foundation for integration with forthcoming UCaaS offerings. Bell Canada now has the ability to integrate wireless handsets into the BroadSoft platform.
• Bell Canada has a number of related applications such as hosted contact centers and conferencing, though they are not yet integrated into the broader UCaaS architecture.
• Consider Bell Canada if you are a Canadian-based business that is adopting UCaaS based on a foundation of VoIP, messaging and wireless.

• Bell Canada's product development cycle for new offerings like UCaaS has been hampered because of two years of unclear ownership. Gartner believes that this has slowed down UCaaS investment and strategic planning. The ownership position is now stable and resolved, allowing management to focus on product planning.
• UCaaS deployment has been delayed as Bell Canada transitioned away from the Nortel 5200 UCaaS platform, in part due to Nortel's financial position. Bell Canada is now evaluating additional UCaaS vendors to complement its BroadSoft-based solution.
• Support primarily focuses on Bell Canada's incumbent local-exchange carrier (ILEC) footprint (the eastern part of Canada), with expected 2010 expansion to other large Canadian markets (the western half of the country).
• Bell Canada has seen limited, large-scale deployment with hosted VoIP and UC to date. Current deployments are with smaller user groups.
• Bell Canada management has yet to commit to funding a comprehensive UCaaS portfolio.

BT is a U.K.-based, global telecom provider capable of supporting business customers in Europe, North America, Asia/Pacific and Latin America. The actual unit supporting these services is BT Global Services, though the general BT name is applied here for brevity. BT has enhanced its U.S. presence through a number of acquisitions including INS, Ribbit, Counterpane and Radianz. A lack of industrialization in the product development process led BT Global Services to accrue numerous unprofitable accounts through the early part of 2009. BT has since increased focus on the SaaS model in pursuit of securing a more reusable product and thereby improved profitability.

• BT has a focused UCaaS strategy based on Cisco Hosted Unified Communications Services (HUCS) VoIP and Microsoft Business Productivity Online Standard Suite (BPOS) for UC (see Note 2), both of which are multitenant platforms. Note that BT actually wholesales Microsoft BPOS, and then repackages a valued-added capability in such areas as Cisco VoIP, long-distance VoIP and professional integration services.
• BT has significant experience in integrating Cisco and Microsoft technology. This includes the Cisco UC Integration for Microsoft Office Communicator (CUCiMOC) client, where the Microsoft Office Communications Server (OCS) client leverages a subtending Cisco client for IP-PBX presence. Complementary products include SIP trunks, IP Multiprotocol Label Switching (MPLS) WAN and corporate voice (Onevoice).
• BT has had numerous premises-based and hosted UCaaS implementations with dedicated Cisco and Microsoft infrastructure. However, the Microsoft BPOS offering is just starting to be offered to enterprises as of 4Q09.
• Consider BT for your UCaaS requirements if you are an MNC 1) with operations in North America and Europe, and 2) are open to the Microsoft BPOS value-added partnership model.

• Following poor financial performance, BT Global Services has undergone management changes, a workforce reduction and an exit from selected IT services. Both BT employees and its customers are adjusting to this new model.
• Even though BT is a public carrier, it does not own any wireless assets in either Europe or the U.S., which may hinder its FMC capabilities.
• BT is in the process of transforming from customized solutions to repeatable processes to both reduce costs and improve delivery. While this is a good strategy, some customers may be impacted during this transition period.
• The constrained financial position of BT Global Services is forcing BT to rely on financing and support from some of its biggest vendor partners, which may reduce BT's ability to deliver innovative solutions.

CallTower is a privately held, California-based UCaaS provider. Most of its customers are headquartered in California, with regional offices in other markets in the western half of the U.S. The firm does, however, have staff available to support other North American offices as well. CallTower has focused on hosted VoIP since its 2001 founding, and has gone on to extend its offerings to include presence, e-mail, messaging, video and collaboration, primarily based on Microsoft technology. Recently, the company has developed a UCaaS wholesale program to extend its market opportunity. CallTower's focus on cloud-based delivery of Cisco and Microsoft technology enables it to provide a rich set of UCaaS applications, though at a price too high for some price-sensitive customers.

• Customers cite positive experiences with the CallTower customer service and project management teams. New locations and applications are usually delivered on schedule.
• CallTower provides a full suite of UCaaS applications including VoIP, unified messaging, presence, wireless integration and conferencing, largely based on Microsoft and Cisco technology. CallTower has an internal provisioning tool to enable multitenant deployments.
• CallTower provides users with an administrative portal so that they can perform their own moves, adds and changes (MACs). In addition, CallTower partners with inContact to provide hosted contact center functionality.
• Consider CallTower if you are a west-coast (U.S.)-based enterprise with 100 to 2,000 employees. CallTower can, however, support locations outside the west coast.

• Some customers feel that CallTower's pricing is on the high side.
• Enterprises with over 2,000 employees are the upper range for proven CallTower UCaaS deployment.
• CallTower's service delivery is stronger in the U.S. west coast and than the east coast. Most customers are based in California, with regional sites in other U.S. and Canadian markets.

The Cisco UCaaS offering is based on extending its core WebEx conferencing service. Cisco has many UCaaS components, but they are often separate and not well integrated. This includes the Cisco HUCS multitenant VoIP platform, Cisco Unified Communications Manager (IP-PBX), immersive telepresence, PostPath e-mail, Jabber presence and Unity Voice Mail (note that some of these individual products, such as HUCS and Unified Communications Manager, are critical components to competing UCaaS solutions). The Cisco UCaaS vision supports the hybrid model, where enterprises can secure some applications on premises with others in the cloud. Cisco is also open to interoperating with other third-party platforms such as Microsoft Exchange.

• Cisco has a strong brand name recognition along with a well-known SaaS-based WebEx conferencing application that supports conferencing, video, presence, collaboration and smartphone integration. Cisco WebEx includes additional tools for such specialized needs as training, help-desk support and virtual corporate meetings.
• Cisco's UCaaS offering is designed to operate in a multivendor environment that can include Apple Macs, Linux operating systems (OSs), multiple videoconferencing platforms, and a variety of smartphone and e-mail platforms (not just MS Exchange).
• Cisco supports the hybrid delivery model, where UCaaS cloud infrastructure is integrated with premises-based infrastructure.
• Full UCaaS VoIP functionality is attained with Cisco WebEX integration with premises-based Cisco IP-PBXs via SIP trunks. Gartner expects Cisco to extend support to third-party premises-based IP-PBXs as it seeks Microsoft differentiation.
• Consider Cisco if you seek to build your UCaaS strategy off of the WebEx portfolio and will commit to VoIP delivery via premises-based Cisco Call Manager integration.

• Cisco has been slow in articulating how its various communications applications will be integrated into a holistic UCaaS offering.
• The Cisco cloud-based e-mail offering, based on the PostPath product, is joining a crowded market. This puts Cisco at a disadvantage in comparison to such vendors as Microsoft, IBM and Google. However, Cisco's product does support an Outlook client which will enable Exchange users to maintain the front-end that they are familiar with.
• Early Cisco UCaaS implementations may encounter typical new offering delivery bugs as Cisco and its partners integrate the various UC applications.
• Cisco WebEx does not include a 100% cloud-based UCaaS delivery. VoIP functionality is achieved through integration with premises-based IP-PBXs (limited to Cisco for now). Users requiring 100% cloud-based UCaaS can rely on third-party channels such as Verizon for cloud-based VoIP.

Cypress Communications is a privately held UCaaS supplier based out of Atlanta, Georgia. It does, however, possess the ability to provide support across the whole of the U.S., as well as to selected global offices of its larger U.S.-based accounts. The company has focused on cloud-based communications delivery since 2006, primarily based on Nortel and Movius infrastructure. It is now expanding its base of technology suppliers to include Microsoft and BroadSoft. Cypress prefers to be a full communications outsourced provider, providing WAN and LAN services in addition to UCaaS. There has been a recent focus on third-party distribution channels to accelerate sales and complement the existing internal sales team.

• Cypress Communications now delivers a multitenant offering that spans VoIP, UM, click-to-dial, conferencing, video, desktop sharing and presence. Its broad base of related offerings covers LAN management, WAN services, Wi-Fi and contact centers. Cypress is committed to a solid near-term UCaaS road map, including expanded FMC functionality.
• Cypress possesses a proactive customer service team complemented by automated provisioning tools. Cypress focuses on selected verticals such as legal, healthcare, finance and real estate.
• Cypress has experience with some advanced UCaaS services like FMC. The company's legal customers focus on advanced UCaaS functionality and applications rather than price, which pushes Cypress to be technologically progressive.
• There are plans to expand in 2010 to support North America-based clients with European and Middle Eastern facilities. Cypress is flexible in meeting the requirements of its larger customers.
• Consider Cypress if you are a U.S.-based professional services provider with 500 to 3,000 employees that seeks full communications outsourcing and UCaaS.

• Some customers may be reluctant to adopt Cypress's Nortel infrastructure — the CS2K (VoIP) and MCS 5200 (UC) — due to Nortel's financial troubles. Cypress Communications is now complementing these platforms with Microsoft Hosted Messaging and Collaboration (HMC, see Note 3) and BroadSoft-hosted VoIP.
• Cypress has limited brand name recognition, as it is a private company with a fixed set of resources. It therefore cannot expand beyond being a solid, niche player in this current environment.
• Cypress's product is unproven for accounts beyond 3,000 employees. Its focus on customization makes it difficult to scale.
• While Cypress can presently deliver a broad set of UCaaS applications, Gartner believes that its customer portal should be further developed to provide more functionality and information to its customers.

Google focuses solely on cloud delivery and does not have any parallel premises-based solution. Contrary to market perception, Google has a number of large enterprise accounts (though its core business is dominated by advertising-based consumer services). Google's core strength lies in its massive data centers and server farms, which yields scalable low-cost UCaaS delivery. Many enterprises initially start with Google UCaaS for hosted e-mail, and then add on the other UCaaS applications. A number of public sector clients are exploring Google UCaaS to reduce costs in the continued economic downturn. Many organizations have cultural, regulatory and policy issues that serve as barriers to Google UCaaS adoption.

• The Google UCaaS offerings based on Google Apps and Google Voice are priced extremely competitively. Pricing is based on annual rates that are just slightly higher than many other providers' monthly fees.
• Google possesses strong brand name recognition, and its base of customers (via Gartner references and inquiries) reveal that they are impressed with the pace at which new products and functions are added to the UCaaS offering.
• The Google Voice product allows users to secure a single number for all wireline and wireless phones. This allows users to place free in-country calls and reduced-fee international calls. Related functions include unified messaging (with text to speech), call hand-off between wireline and wireless devices, and find-me ringing (set ringing rules across multiple devices).
• Google's UCaaS offerings are now deployed by a number of enterprises with over 5,000 employees. Google UCaaS is not just for SMBs.
• Google UCaaS customers typically embrace the offering for low-cost e-mail services. They then experiment and adopt the other UCaaS applications, including Google Voice, collaboration, conferencing, presence and documents (similar to Microsoft Office).

• Many enterprises believe that Google UCaaS is not a resilient offering, in part because the Google platform relies on the same architecture used for consumer services. This bias can only be overcome as additional enterprises successfully adopt Google Apps and Google Voice. Google should also be more aggressive from a marketing perspective in changing this perception.
• Google Voice is not yet a productized offering that can be purchased via a contract (however, Google now supports tens of thousands of business subscribers as a free offering). Many corporations are therefore reluctant to embrace Google Voice until they fully understand how much it will cost and the future product road map.
• While Gartner expects that the Google Android operating system will be the lead wireless OS (relative to available features/functionalities), Google does support the major third-party OSs including those of the BlackBerry, iPhone and Windows Mobile.
• Organizations adopting Google UCaaS will have to internally lead the transformation from their legacy environment. Such a transformation requires a skill set beyond the comfort level of many IT organizations.
• Google has a very limited set of professional service, system integration, customer service and external partnership capabilities required by many enterprise customers.

IBM LotusLive was released in April 2009. It is still at an early development stage and is based on the WebDialog and Outblaze acquisitions. IBM's value proposition includes its social networking and collaboration capabilities, in addition to the core UC functions. The product's strength lies in its appeal to users who wish to work beyond the boundaries of their organization. The current base of users is primarily smaller organizations.

• A core strength is support of smaller workgroups looking for internal and external communications with partners and customers. Early adopters are smaller organizations.
• Leading applications include conferencing, social networking, presence, instant messaging, e-mail and project management.
• IBM has plans (for 1Q10) to host a cloud version of IBM's Sametime Unified Telephony (SUT) for trials of UC functionality including click-to-call, click-to-conference, telephony presence, softphone and rule-based single number service.

• There is little market brand awareness of Lotus Live, particularly with larger businesses.
• LotusLive will need a stronger base of channel partners so that it can compete against the likes of Google Apps, Microsoft BPOS and Cisco WebEx.
• The only current VoIP capability is provided via connection to a Skype-attached application programming interface (API), which brings with it Skype's low-cost VoIP, wireless and wireline costs.
• No internal video capability is provided with the present offering, though this will be available with the 1Q10 releases with the Web-based client.

LightEdge is a privately held company headquartered in Iowa that is owned by a single investor — the Anschutz Investment Company. This single ownership position provides LightEdge with the flexibility to make additional telecom/IT acquisitions for expanding its geographical coverage. LightEdge's customers are primarily based in Iowa and the surrounding states (in the U.S.-Midwest). The company's roots are from a 1990s foundation as an ISP, from which it has expanded into IT applications like UCaaS, hosted e-mail and storage. Gartner believes that LightEdge faces few competitors that are able to offer the breadth of UCaaS services in the Midwest markets in LightEdge's core footprint.

• LightEdge offers a deep UCaaS solution based on hosted Microsoft HMC and hosted BroadSoft VoIP. Both platforms are multitenant, providing users with VoIP, conferencing, video, messaging and presence.
• LightEdge possesses a strong wireless integration, especially considering the company is not a wireless provider. Wireless features supported include find-me, follow-me (roll-over ringing), call transfers, voice mail integration and calendaring (support is focused on BlackBerry and Windows Mobile devices).
• LightEdge scores high marks for UCaaS services from its customer base, many of whom view LightEdge as more of a partner than a business supplier. LightEdge also provides ancillary telecom/IT capabilities that include network services, storage, disaster recovery and security.
• Consider LightEdge if you are an SMB customer located in the U.S. Midwestern market. LightEdge primarily supports customers in those regions where it has a local employee presence.

• LightEdge has a limited footprint focused on the U.S. Midwestern states.
• The company's strength is in the SMB market. LightEdge has few UCaaS customers with over 500 employees.
• The LightEdge UCaaS Web portal is still maturing, with the company instead relying on the manual processes of its internal service team (note that automated portals are not as critical for the SMB market as they are for the enterprise sector).

Microsoft's UCaaS offering is based on its BPOS solution, which includes e-mail, conferencing, IM/presence and collaboration. Gartner expects a hosted VoIP capability via carrier-based SIP trunks to be available in 1H10. It also includes a desktop video capability. The Microsoft BPOS strategy represents a new direction for Microsoft as it proactively responds to new threats, business models and market requirements.

• Microsoft has world-class brand name recognition. The company provides a path from premises-based applications to cloud-based UCaaS, supports BPOS data centers across the globe and exhibits commitment to cloud-based/premises-based feature parity.
• Microsoft is investing heavily in the BPOS platforms, including VoIP functionality (similar to a Centrex-like feature set) via SIP trunks. The SIP trunks will be secured via third-party carriers. Hybrid models now allow Microsoft to support VoIP functionality, with selected OCS R2 premises-based servers to communicate with the BPOS cloud-based applications.
• The current BPOS pricing and licensing model is very competitive. Many organizations will find BPOS delivery cheaper than internal support when factoring in their operational expenses.
• Microsoft offers unified messaging support across BlackBerry, iPhone and Windows Mobile platforms. Microsoft is a strong proponent of wireline replacement, with users instead relying on softphones and smartphones. This environment will gain acceptance as enterprises embrace the more stable and secure Windows 7 OS.
• Consider Microsoft BPOS if you seek a single-supplier, cloud-based UC delivery model.

• Many organizations, both public and private, will be loath to rely on out-of-country data centers. Meanwhile, regional data centers (as opposed to in-country data centers) will not suffice in many environments, particularly with e-mail services (see Note 4).
• Organizations that require a heterogeneous IT platform, for Apple Macs, Linux OSs and IBM e-mail for example, may not be strong BPOS candidates. Microsoft prefers to emphasize its own applications in those areas where it has a strong market presence.
• Users may be confused by the multiple vehicles through which they will be able to secure Microsoft-based UC. The options include Microsoft BPOS direct, Microsoft BPOS through third-party channels, Microsoft UCaaS hosted by channel partners (HMC), and premises-based Microsoft solutions like Exhange and OCS R2.
• The Microsoft licensing contract models can be complex, so users will have to analyze and evaluate their costs as they move to the hosted model.
• Corporations run the risk of becoming overly dependent on a single IT vendor.

Nortel is a Canadian-based vendor that entered bankruptcy protection in January 2009. It has since auctioned all the assets of its global Enterprise Solutions and Nortel Government Solutions to Avaya for US$915 million (see Note 5). The sale is subject to various court, regulatory and post-closing purchase price adjustments. Closing is expected late in 4Q09, followed by an expected integrated product road map 30 days thereafter.

Nortel now has a defined business supporting three different communications applications that are hosted out of its Research Triangle Park facility in North Carolina — VoIP, UC and contact centers. The majority of Nortel's sales come through channel partners, though larger customers may be sold to directly.

• The Nortel team has done a commendable job in delivering UCaaS services despite the difficulties and stresses in operating in a bankruptcy environment. Nortel UCaaS references report good customer service and objectivity in the post bankruptcy environment.
• Nortel's hosted VoIP and contact center applications remain market-feature competitive. However, development of more advanced UC functionality (conferencing, for example) has not kept up with competing offerings.
• Nortel offers a solid UCaaS road map including third-party clients (OCS and Sametime), FMC development and expanded mobile device support. However, this is all conditional on Nortel's UCaaS business being acquired and funded.
• Consider Nortel UCaaS if you are an existing Nortel-hosted applications client looking to add new endpoints.

• Nortel's precarious financial position places its UCaaS user base at risk. There is no guarantee that the Nortel acquirer, Avaya or otherwise, will continue to support this business line.
• The pace of Nortel R&D for its hosted VoIP, UCaaS and, to a lesser extent, contact center applications has slowed down as the parent company's finances have deteriorated. Specific examples include the lack of a Web conferencing capability and a more limited user portal.
• Nortel's hosted UCaaS infrastructure is not replicated in multiple data centers for redundancy. It is all located in its Research Triangle Park, though the architecture does include multiple resiliency components (duplicated network access, for example).
• Many prospective Nortel UCaaS customers have opted for alternative solutions given the risk of Nortel's insolvency.

Orange is a France-based telecom provider whose core market is Europe. Orange has a North American presence, and supports multiple U.S.-headquartered MNCs with a significant European presence. The company has a global UCaaS strategy, though the offerings are more limited in North America than in its core European market. In North America, Orange focuses on larger UCaaS deployments for companies with 5,000-plus employees. This enables it to deliver dedicated UCaaS platforms that are hosted and priced with the SaaS model.

• Orange's lead platforms are Cisco for VoIP (followed by Avaya) integrated with Microsoft for the majority of other UC applications (e-mail, presence, messaging and collaboration). Orange has significant experience in hosting these platforms or managing them at the premises site. In addition, Orange also supports a hybrid model where VoIP is premises-based and the other UC applications (typically Microsoft) are hosted.
• Orange has significant experience in hosted e-mail (Exchange), where it supports over 100 businesses. Orange also possesses the professional services to port businesses from premises-based to hosted e-mail.
• Consider Orange if you are a larger enterprise (over 5,000 employees) with business facilities in North America, Europe and Asia/Pacific. Orange also has better than average support for Latin America.

• Orange has limited brand name recognition with some North American-headquartered MNCs. In addition, it does not typically pursue North America-only accounts.
• The current team of North America-based Orange personnel will make it difficult for Orange to become a UCaaS market leader in the North American market. However, Orange does possess the requisite personnel resources to sufficiently serve the North American customer base that it targets.
• Orange is still evolving its UCaaS Web portal tools for integration across multiple back-end platforms (for example, Cisco, Microsoft and Avaya). Portal availability is scheduled for 2010, with further enhancements rolled out through 2011.

PanTerra Networks is a privately held UCaaS supplier based in California that is focused on the SMB market. The UCaaS offering, marketed under the WorldSmart brand, includes a Web-based architecture in order to minimize the requirements on the customers' internal IT staff. Larger organizations may prefer larger UCaaS suppliers with solutions delivered on vendor-branded technology and interfaces.

• PanTerra offers a diversified array of UCaaS applications spanning messaging, VoIP, contact centers, wireless integration, presence and conferencing. These applications are based on an internally developed platform placed in redundant data centers.
• Customers provide positive feedback regarding PanTerra’s customer service, new feature development, ease of use and billing capabilities. This is complemented by live service reps along with automated provisioning and monitoring capabilities.
• Many of PanTerra's customers selected PanTerra for its low prices. Because the PanTerra UCaaS platform was developed internally, users do not have to pay for third-party licensing costs.
• Consider PanTerra if you are a cost-sensitive SMB distributed across multiple physical locations throughout North America.

• Some users may not opt for PanTerra UCaaS as it is based on a proprietary platform. PanTerra does, however, support common user interfaces such as Microsoft Outlook, Internet Explorer and Messenger (as well as selected non-Microsoft interfaces).
• PanTerra relies on a blend of internal and external sales channels. The UCaaS sale is complex given all the applications involved, which makes it difficult to execute via external channels.
• The core PanTerra target market has been SMBs with fewer than 250 employees, though PanTerra has recently demonstrated the ability to support larger accounts in the 500 employee range.

Luxembourg-based Skype's core attractiveness is its low-cost VoIP services over the public Internet, with some 180 million business endpoints (though not all active). This is complemented by decent desktop video (though not multiparty) and attractively priced VoIP-wireline-wireless integration capabilities. Skype was acquired by eBay in 2005. However, the eBay-Skype value proposition never fully materialized and Skype is once again a private company (privatization completed November 2009), with eBay remaining a minority investor along with multiple private investors. Skype also bundles many of its services, such a file transfer, for free. Consequently, these offerings do not include enterprise-grade resiliency and SLAs.

• Skype represents a popular choice for organizations seeking to secure selected, low-cost UCaaS applications with the understanding that delivery is not enterprise-grade. Its offering is often deployed for international communications within the enterprise as opposed to with customers.
• Users indicate that proprietary VoIP and video codecs provide higher-than-expected quality over the public Internet. The product also supports click-to-call (including Outlook and Lotus Notes) and multiparty VoIP conferencing.
• Skype VoIP users can connect for free directly over the Internet, or through the PSTN and wireless devices, at reduced rates. Users secure a single number that allows wireline/wireless integration, along with unified voice mail.
• Skype has numerous partnerships with third-party technology providers, such as InnerPass, for expanding UC functionality in such areas as conferencing and collaboration. It is also establishing partnerships with third-party system integrators to integrate Skype functionality with premises-based IP-PBXs (such as Cisco UC500 and ShoreTel) via Skype-supplied SIP trunks.
• Consider Skype if you seek a limited base of low-cost UCaaS functionality. In most cases, Skype will be a complementary offering to your existing communications environment.

• While Gartner believes that Skype's November 2009 privatization is a positive move that will accelerate the delivery of new features and functionality, the impact of this new business model remains to be seen.
• Most enterprises will not rely on Skype for full UC functionality. Rather, Skype will be a cost control tool for specific UC applications within the enterprise, and perhaps close partners.
• Skype does not offer an e-mail capability. In addition, many current UC capabilities, such as video, do not support three or more users. Gartner expects additional multiparty UC application support in forthcoming releases.
• A broad section of the enterprise community has the perception that Skype has unacceptable security risks. While Skype has taken technical measures to address security, it needs to convince corporate IT leadership that Skype services are sufficiently robust for the enterprise.

Vancouver-based Telus is the largest western Canadian telecommunications provider and the second largest provider in Canada. In addition to UCaaS, Telus provides a diversified set of telecom services spanning IP MPLS, VoIP, video, IT and 3G High-Speed Packet Access (HSPA) wireless. Telus' wireless coverage includes all of Canada and its UCaaS solutions are offered pan-Canada as well (for example, in Vancouver, Edmonton, Ottawa, Toronto, Montreal and Quebec). While Telus offers a complete UCaaS portfolio, most users are only implementing selected UCaaS components now, with plans for further integration in 2010.

• Telus has a comparatively advanced UCaaS offering based on Microsoft's UC platform. This is a multitenant platform located in Telus data centers. The voice functionality can be secured either via a premises-based IP-PBX (such as Cisco, Nortel or Avaya), hosted VoIP offering or wireless.
• The company has a Canadian-wide footprint with a solid FMC road map supported by 3G HSPA wireless. Telus provides a single number capability for integrating the wireless, wireline and softphone devices.
• Telus has 10 years' experience with hosted Microsoft Exchange for e-mail. This reduces its learning curve as it upgrades to hosting the additional Microsoft UC and support UC services (such as IP, wireless, BlackBerry support and security).
• Consider Telus UCaaS if you are based in Canada. Support is focused on SMBs, but Telus is able to handle midsize to large businesses as well.

• Service is primarily offered in Canada. This includes most of the major Canadian markets, including the out-of-region markets (where Telus is not the historical ILEC).
• Not that many of Telus' customers are implementing the full suite of UC applications. Telus is still ramping up its UCaaS offering, though it is now a productized offering.
• Telus does not have that much experience with UCaaS deployments for businesses with 1,000 employees or more.

Verizon is one of the global mega-carriers complemented by a strong U.S. wireless capability. Its core UCaaS offering is the Integrated Communications Platform (ICP), which has its origins in Verizon's hosted VoIP solution (based on the BroadSoft platform). Verizon's foundational UCaaS strength is in wireline and wireless voice-centric applications, with more recent expansion into IM, presence and conferencing. The Verizon UCaaS road map has not been as well articulated as that of many similarly sized competitors.

• Verizon's ICP offering includes a strong hosted VoIP offering that is available in the U.S. and Europe based on the BroadSoft platform. Gartner research estimates that Verizon has the greatest number of hosted VoIP customers worldwide. It has evolved to include a number of UC applications including unified messaging, click to dial, conferencing and contact center solutions.
• Verizon possesses strong wireless assets that are integrated with the ICP offering, which now includes find-me ringing (which sets ringing rules across multiple devices) and plans for expanded FMC functionality, including PBX functionality to wireless devices.
• Verizon UCaaS now includes conferencing integration with Cisco WebEx and Microsoft LCS functionality.
• Consider Verizon if your UCaaS requirements emanate from a hosted VoIP, messaging and wireless perspective. Verizon's offerings are available across the U.S. as well as in numerous European markets.

• Verizon's UCaaS experiences are voice-centric with far fewer deployments that include its newer capabilities related to presence, messaging and conferencing.
• The ICP offering is led by a Verizon client, though it does integrate with clients from Cisco, IBM and Microsoft.
• Verizon has a limited focus on video, with the first capabilities scheduled for 2010 delivery.
• Verizon's product development cycles are long and measured.