March 10, 2008 9:15 AM PDT

IBM muscles into Microsoft unified communications turf

Posted by Martin LaMonica

IBM said that it will invest more than a $1 billion over the next three years in the unified communications market, setting up another race between the computing giant and its rival Microsoft.

At a conference at it Somers, N.Y., headquarters on Monday, executives outlined the company's strategy to garner more revenue from communication and collaboration products, including its Sametime instant messaging and Lotus collaboration suite.

The $1 billion over the next three years represents "substantial growth" over current investment levels and represents the rapid growth of the market overall, said Bruce Morse, vice president of unified communications at IBM. It will be spent on product development and building out IBM's related consulting service offerings.

The focus of its strategy is business, particularly large corporations, where purchases and margins are larger, said Steve Mills, senior vice president of IBM's software group.

Microsoft, meanwhile, has been heavily investing in unified communications in its Office Communications Server 2007 and its acquisition of voice-recognition software company TellMe.

The driving idea behind the term unified communication is that people can access information from different devices, like mobile phones, and can communication with other people online through instant messaging or voice.

Businesses are investing in unified communications to streamline their operations, IBM executives said. For example, a bank is using IBM software to help tellers more quickly connect with other bank employees who are experts on products through instant messaging or voice over Internet Protocal.

IBM said that it now has 20 million stand-alone installations of Sametime, its instant-messaging product which it has expanded with video conferencing, voice over IP, and third-party applications.

But Morse said the number of individual seats is not overly significant because IBM sees more potential by embedding the tools in Sametime, such as messaging and connections to back-end data sources, into existing business applications.