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Microsoft Is Keen on Moving up in Unified Communications Space

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Jan. 27 2016, Updated 8:07 a.m. ET

Microsoft increases focus on Skype

Previously in this series, we discussed Microsoft’s (MSFT) latest buyout, Event Zero. Event Zero’s offerings include free as well as paid tools. Microsoft bought UC Commander from Event Zero, which is a part of its Operations product family and is a paid tool.

Not long ago in late 2015, to boost its Skype for Business, Microsoft acquired Talko, a voice messaging startup. Microsoft’s recent acquisitions of Event Zero and Talko demonstrate the company’s aims to catch up with Cisco Systems (CSCO) in the UC (unified communications) space.

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Cisco Systems: Leader in unified communications

Cisco Systems led the UCC (unified communications and collaboration) market with a 16% share in 4Q14, as reported by Synergy Research Group. Microsoft followed closely behind with a ~14% share, while IBM (IBM) remained constant with a ~4% market share. UCC is an integration of enterprise and communication services such as enterprise content management, email, enterprise social networks, voice, video conferencing, telepresence, and cloud communications.

According to Synergy’s 2016 report, Cisco led the UCaaS (unified-communications-as-a-service) market alongside Citrix Systems (CTXS). The report further stated that the UCaaS market is growing by 16% on an annual basis, with annualized revenues of ~ $4 billion. Later in this series, we’ll discuss acquisitions in the UC space.

Investors who wish to gain exposure to Microsoft could consider investing in the SPDR S&P 500 ETF (SPY). While SPY invests ~2.4% of its holdings in Microsoft, it also has an exposure of ~8% to application software.

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