The last few days have kept me quite busy at VON.  It has been the most attended VON event that I have ever been at, and there has been some electricity in the air (perhaps due to the rosier prospects of VoIP or maybe because the Red Sox have come back in dramatic fashion on a couple of occasions to force a deciding game 7 today against the Yankees).

Due to the great attendance at the show, the enterprise panel session in which I participated had a big audience.  This was a bit of a pleasant surprise to yours truly, given the fact that concurrently, Anoop Gupta, the VP of the RTC (Real Time Collaboration) Business Group at Microsoft was delivering his keynote speech (I heard that in Anoop's session, there was standing room only, and that auditorium was much bigger than the room in which the analyst round table discussion was held). 

As suspected, Microsoft (Nasdaq:MSFT) unveiled its unified desktop client, dubbed Istanbul.  I was able to get the details from Ellen Muraskin, who wrote an article in eWeek about that session.  Istanbul, which runs in concert with the new version of the LCS (Live Communications Server), is a client application offering integrated IM, desktop videoconferencing, and IP telephony capabilities.  The product is currently undergoing beta testing and should become generally available in the first semester of 2005.

The key question is: does this mean that Microsoft will finally make a foray into the IP PBX marketplace?  I suspect that the answer to that question is no, at least not in the short term future.  However, in the longer term future, anything is possible, particularly if the traditional PBX/IP PBX model, as we know it today, goes through some changes (particularly for small and medium enterprises - SMEs).  The crown jewel of the PBX is the call processing software: that is the highest margin piece of the product. 

It is conceivable that in the future, some vendors might adopt a software-based model for SME products, and offer platform vendor independence (i.e. standard hardware/servers from vendors such as Dell, IBM, HP, etc.).  In that case, instead of the single, monolithic PBX, we would have call processing functions plus some standards-based hardware.  With this Istanbul move, Microsoft definitely makes a push into trying to control some of these functions.  However, from there to developing a full blown IP PBX, there is a lot of room.  It is more likely that Microsoft will initially want to become a technology enabler for some of these services.  As Gupta said: "We need a sophisticated ecosystem surrounding this. We don't build PBXes".