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Microsoft demos new Office Communications Server

The latest version in Microsoft's years-long effort to crack the business telephony market is due out before the end of the year.

Microsoft on Wednesday fired the latest salvo in its multiyear battle to crack the business telephony market.

At the VoiceCon event in Orlando, Fla., Microsoft demonstrated for the first time the next version of its Office Communications Server product.

Among the new features in Office Communications Server "14" is the ability to search by keyword for a co-worker with particular skills. Microsoft

Code-named Office Communications Server "14," the new version is part of the Office 2010 wave of products and is due out before the end of the year.

As it has for years, Microsoft is predicting the convergence of communications. At VoiceCon, Gurdeep Singh Pall, the Microsoft VP in charge of OCS, predicted that within three years, over half of voice over Internet Protocol (VoIP) calls will include more than just voice. Pall also said, over the same time frame, three-quarters of new business applications will have communications built into them.

"Communications centered solely around the desk phone and built on hardware-based systems are quickly becoming a relic of the past," Pall said in a blog posting. "In fact, many of today's PBXs [private branch exchanges] belong in a museum; they are already artifacts of the past."

If this sounds familiar, it's because Microsoft has been making this case since 2006, when it announced its plans to tackle telephony.

Microsoft has since transitioned its text-messaging centered Live Communications Server product into Office Communications Server, a product that combines corporate instant messaging and presence with telephony.

The company insists the effort is going well, saying that OCS is one of its fastest growing server products, having seen sales increase by double-digit percentages in each of the last three years. The company says more than 70 percent of the Fortune 100 use the product.

Many companies, however, use OCS more for IM and presence than as their primary means of delivering phone service to workers.

Update 11 a.m. PDT: In an interview after his keynote, Pall said thousands of companies are using the voice features of OCS in some significant way.

With the next version of the software, Pall said Microsoft is finally ready to compete for the broader set of businesses that are looking to upgrade from either a traditional PBX or their first-generation IP-based PBX system.

"This product is now ready to basically be your enterprise telephony solution," Pall said. The new product adds things like branch resilience and e911 abilities. "For the general customer base, they wanted to make sure we had these features before they considered moving off of their PBXs."

Pall also said the company continues to compete against phone heavyweights like Avaya as well as networking leader Cisco.

"Cisco remains prob our No. 1 competitor in the space," Pall said. However, the conversation is shifting more into Microsoft's traditional strengths.

"Cisco is talking a lot more about collaboration, which is a conversation we love to have," he said.