At Microsoft's launch event for new-and-improved Real-Time Collaboration solutions earlier this month, master of (virtual) ceremonies Bill Gates made it clear that real-time collaboration is a top priority for him and for Microsoft. That's not surprising—the notion of PCs bringing people together around the globe fits well with his ongoing vision of what computing can do. I like where he's headed, but Microsoft—already late to the table—always has the potential to fly or flail with equal force.

In this case, I'm betting they get it right. IT executives want what Microsoft is offering—my most recent benchmark for Nemertes Research shows that 77% of companies currently use real-time collaborative communications, including instant messaging, Web conferencing, and presence-based applications. Although they might not need the technology from Redmond, Microsoft's muscle should be enough to succeed where others (IBM, anyone?) have so far failed.

The launch itself was not a total success: Bending over backward to make it virtual by strategically placing Microsoft execs around the country so that they could participate in the event remotely (using Microsoft's Live Meeting conferencing application, of course) just served to showcase the technology's limitations. The Internet audio broadcast went poorly (as evidenced by the many "how come I can't hear this?" questions). And doesn't dispersing execs who would otherwise all be in the same place kind of defeat the point? (We won't even discuss the inclusion of so-called "stars" from TV's The Apprentice using Live Meeting to brainstorm new ideas for the show; suffice it to say that Mark Burnett should stick to TV.)

That said, the news is fundamentally good for IT executives eager to enable collaboration among virtual workers. That's not a small group: The number of employees who work in locations separate from their managers and/or regular co-workers has grown by 800% over the past five years, according to research I've conducted at Nemertes. Fully 58% of IT executives describe their companies as a "virtual workplace"; another 9% say they're "almost there."

Those same companies will welcome the new features in Microsoft's Live Meeting, Live Communications Server and the Communicator client (formerly code-named Istanbul). Among them: The ability to launch Live Meeting conferencing sessions from within Office applications; Internet audio broadcasting in Live Meetings; full voice support for one-click dialing, call management, and conferencing within LCS/Communicator (i.e. from the user's PC); built-in federation with other enterprises; and support for IM from AOL, MSN, and Yahoo.

The announcements pit Redmond against a variety of new opponents by bringing Microsoft's offerings closer to what telephony vendors such as Avaya, Nortel and Siemens provide today—real-time communications dashboards that let users call, conference, and message each other seamlessly, all while monitoring each other's online and telephone presence from a single desktop application. Our research shows that only 7% of participating companies use a real-time communications dashboard today, but 77% say they would be interested in doing so.

The Microsoft option is groundbreaking, thanks to its tight integration with the Office applications employees use everyday (especially Outlook), and the fact that it's the only such product to offer any kind of presence/IM interoperability, via its deals with AOL, MSN and Yahoo. That's important for companies that need to be able to message partners, customers and suppliers. It also makes intrinsic sense that IT executives would look to Microsoft for new productivity and communications apps. And Office integration could drive collaboration deeper into the enterprise (frankly, where it needs to be if it's to become pervasive).

It's all good business for Microsoft, too. With Office sales and upgrades relatively stagnant, the company sees real-time collaboration as its best shot at protecting its dominance of the desktop and driving revenues for years to come by offering customers an attractive reason to upgrade. Office is mature; LCS and Live Meeting are not, so new features will be significant, and therefore seen as worth buying by many existing customers. By making LCS the foundation for companies' real-time collaboration strategies, Microsoft remains the applications vendor of choice in the enterprise; it will partner with the telephony vendors and carriers to offer more robust and reliable voice and video capabilities, but it will not be usurped by them.

Still, in many ways Microsoft is playing catch-up. Other vendors—including messaging rival IBM—have had a complete set of collaborative capabilities for years. And the new features aren't cheap. The AOL/MSN/Yahoo support costs $13-$16 per user annually—significantly more than "free," which is what most IT executives say they expect to pay for instant messaging. Furthermore, Live Meeting is available only as a hosted service, which could get costly if users are regularly launching meetings from within their Office applications; each click of the button—admittedly attractive from an ease-of-use point of view—could contribute to thousands of dollars a year per user in service costs alone. (Microsoft does have plans for an in-house model in 2006; it will be a welcome change, and is the wave of the future for collaboration software pricing.)

Meanwhile, Microsoft's plan to acquire Groove Networks and name Groove Chairman, CEO and founder Ray Ozzie as chief technical officer of Microsoft puts even more power behind Microsoft's desire to be the leader in the collaboration space. That announcement was made less than 48 hours after the well-hyped product launch. Coincidence? Not likely.

Terms of the deal weren't disclosed, and it remains to be seen what role Groove's peer-to-peer software - Virtual Office - will play in Microsoft's Office suite. But the technology—which lets employees collaborate from anywhere, online or off—complements Microsoft's software, which with its centralized architecture isn't designed to support the virtual workplace.

Groove Virtual Office.

On the other hand, Ozzie and the Groove team have a clear understanding of what it takes to enable virtual teams. The company's peer-to-peer software is like nothing else in Microsoft's quiver, and it ensures that users can work offline, then get their changes to all relevant teammates as soon as everyone logs back onto the system. Groove has worked closely with Microsoft on its collaboration technologies since its founding, and Microsoft is a key investor in the ISV.

What's more, the acquisition may position Microsoft to embed the underlying technology in other Microsoft applications, ultimately providing a complete suite of real-time and asynchronous collaboration tools by combining Live Meeting, Live Communications Server and the Communicator client, and Virtual Office. Gates has said he intends to make peer-to-peer capabilities a key part of the Windows Longhorn operating system, due out next year, to enable communications that span networks and time zones. If Microsoft ties the technology to future versions of Windows and Office, it could push the oft-maligned architecture into the enterprise mainstream. Certainly, the capabilities are in demand among IT executives: 92% of the enterprises that use them tell Nemertes they rely on real-time collaboration tools to manage virtual workers.

Of course, Microsoft might still face an uphill battle, especially around security. The threat of IM-borne viruses and spam, already growing, will be made larger with interoperability; Microsoft's acquisition of anti-spam/anti-virus vendor Sybari could prove useful so long as it uses Sybari's resources to drive protection for IM and other collaborative applications. Identity management also becomes paramount once presence is an embedded part of the infrastructure. Then there's the host of compliance-related issues, and the need for basic information stewardship as more people share more data in more ways.

Meanwhile, where are Microsoft's traditional competitors? When it comes to real-time communications and collaboration, the other guys are awfully quiet. You gotta figure the nice folks at IBM Lotus are at least a little shocked—if not downright peeved—that the creator of their flagship product will soon help steer the competition. IBM Lotus, which arguably created the collaboration market, has only a confusing array of old and new products to tout. Their embedded-presence story is non-existent, and they have no clear strategy to support interoperability now or down the road.

Novell, the also-ran messaging company, has no presence story; the vendor is still weighing its options in that area. (One potential bright spot for Novell is identity management, something it's quite good at.) And Oracle has been talking about collaboration for years but has yet to hit the market in any meaningful way; at this point its hard to see where they'll succeed, except perhaps in embedding someone else's presence into their own enterprise apps, or linking their presence engine with LCS and similar presence servers.

The smaller IM vendors—Antepo, Bantu, WiredRed, etc.—just got a shorter lease on life. Ditto the IM gateway vendors like IMlogic and FaceTime, although they and the ISVs might survive if they can find a niche (controls, security, compliance) and do it better than Microsoft can.

Finally, Microsoft's move does not bode well for AOL, which is currently the leading IM vendor in the enterprise. As IM becomes available on every employee desktop—and is federated across enterprises and interoperable with the consumer services—the need for people to use AOL at work (and, eventually, at home) goes away. Bye-bye eyeballs, bye-bye ad revenue.

Sr. Vice President and Founding Partner, Melanie Turek, is a reknowned expert in enterprise application integration software, collaboration technologies, and business intelligence at Nemertes Research. For the past 10 years, Ms. Turek has worked closely with hundreds of senior IT executives across a range of industries. She also has in-depth experience with business-process engineering, project management, and productivity and performance enhancement.