Mention Microsoft Corp. in telecom circles these days and the chances are people will start talking about the software giant's groundbreaking partnership with Nokia Corp. that was announced in February. (See Nokia: How Microsoft Deal Could Fail , MWC 2011: Microsoft & Nokia Court Carriers , Nokia Unveils Major Revamp and Nokia, Microsoft Team Up.)

But mobile device operating system (OS) developments comprise just one part of Microsoft's involvement in the communications services sector these days, and there's evidence that following a few years in some disarray, the vendor's Communications Sector division has managed to get its act together and is becoming an influential partner and supplier to the world's major service providers.

Reaching that position hasn't come easy, though. It's taken something of an upheaval to turn the division into a carrier-grade operation, one that can team up with, and satisfy the demands of, a major global carrier such as Telefónica SA. (See Microsoft Gives Telefónica an Apps Edge .)

Following several years of partnerships, a sustained IPTV platform strategy, and intense marketing of its Connected Services Framework (CSF) service delivery platform that formed the lynchpin of its efforts to bring telecom operators and applications developers together, the Communications Sector division lost some senior staff, lost focus and -- parts of it at least -- withered on the vine during 2008 and 2009. (See Microsoft Tweaks Its Carrier Strategy and Microsoft Exec Jumps Ship.)

The mobile OS developments continued apace, with varied results, while the IPTV platform business, which was given its own brand of Mediaroom, evolved into one of the market leaders with help from partner Alcatel-Lucent. Today it has 50 signed customers, of which more than 30 have deployed the platform and which are collectively serving more than 6 million customers, about 13 percent of the world's total user base. (See Europe to Lose Its IPTV Crown and Microsoft WP7 Shipments Start Slow.)

However, the broader relationships with carriers based around revenue-sharing hosted services (email, instant messaging) appeared to lack structure, with some operators reporting during 2009 that multiple Microsoft teams appeared to be trying to peddle the same business but without coordination, communication or conviction.

A shake-up was needed -- and that's what the Communications Sector got.

New faces, new drive
In July 2009, Austen Mulinder, already at the company about two years, was appointed corporate vice president of the Communications Sector and set about licking it, and in some cases kicking it, into shape. Mulinder admits that when he took charge there were issues to address, particularly the focus and strategy of the division.

Now, it seems, his team, which has added seasoned industry executives such as former Sylantro CEO Marco Limena, knows what it's doing and why. "A year ago this [telecom operator channel] business was more a hobby than a strategy for Microsoft, but no longer," Mulinder told Light Reading during a recent interview.

"The rest of the company has come on board with the ideas of the telco as a channel," adds the Brit, who says the Comms Sector's business-to-business strategy has evolved during the past year into a syndication model, wherein service providers bundle Microsoft-hosted (or cloud-based) applications (dubbed Office 365) into their enterprise packages. (See Microsoft Courting SPs as Cloudmates.)

During 2010, big names such as Telstra Corp. Ltd. and Vodafone Group plc signed up for this model, and Mulinder says "30 telcos, including six of the top eight," have now signed up. "We're going to make the market for off-premises applications, and the telcos can get in on this."

There are some partner-hosted relationships where the service provider builds its own hosted Exchange capabilities, but these, he says, are in the minority. (See T-Systems, Microsoft Team for Shell and Reliance Comm Gets Cloudy.)

Altogether, the syndicated and hosted services market is growing at more than 30 percent per year and makes more than US$1 billion a year, according to the Microsoft executive.

But Mulinder knows he faces a very tough task to maintain that sort of growth and remain a key partner to the telcos. "There are strong competitors -- there's no free lunch here. But the smart partners can see the opportunity" in the syndication model and use it as an opportunity to secure a foothold in the emerging cloud services market.

The shift to cloud services by companies of all sizes will "be a 10-to-15-year discontinuity," he says, and it's not just talk. "The move to the cloud is real," he believes, and it's a move that will be helped by the introduction of next-generation mobile services. "With the introduction of Long Term Evolution (LTE) it'll become easier for SMBs to shift to cloud services," Mulinder believes.

SPIT partnerships
Another part of the drive towards securing deeper and more meaningful relationships with telecom operators has been the strategy to team up with key Service Provider Information Technology (SPIT) vendors to provide integrated solutions. (See Convergys, Microsoft Team Up.)

For example, Ericsson AB (LHS), Convergys Corp., MetraTech Corp., Redknee Inc. and Tech Mahindra Ltd. are all offering Microsoft's Dynamics customer relationship management (CRM) product alongside their telecom billing systems.

The opportunities for such partner sales are "off the charts," says Mulinder, who is looking to compete against some of the bigger Service Provider Information Technology (SPIT) players that have used their M&A muscle to build in-house OSS and BSS packages for telcos. "Oracle Corp. has made a good fist of it [good old-fashioned British colloquialism] -- we're seeing a huge amount of interest from companies that didn't get swept up by Oracle" to combine their telecom software assets with Microsoft CRM and sales automation platforms. "Oracle is clearly very strong, but we see big opportunities." (See Oracle/Sun Expresses Telco Ambitions, Oracle's Higher Price Lands BEA, Oracle Buys More OSS With MetaSolv and Oracle Buying Into Service Delivery .)

And it's clear that Microsoft has at least the capability to make the most of those opportunities while it has a well-defined strategy, strong leadership and a renewed reputation. As Telefónica executive José Valles told Light Reading this week, Microsoft "has changed… [it] has lost the arrogance it used to have."

As it's shown before, though, things can change very quickly at the software giant.

— Ray Le Maistre, International Managing Editor, Light Reading