Microsoft Chasing Smaller Providers

Microsoft is starting to go after the smaller Telcos in the U.S. It has licensed its software to be used with Calix access systems as well as Alcatel access systems. Calix's primary market is the Tier 2 and Tier 3 telcos in the U.S. The two companies are in a trial together but have announced where.

Since Microsft has (or had) relationships with Bell Canada, ATT, and Verizon, except for Qwest there are not too many large opportunities left. The only place for Microsoft to go in North America is to these small telcos. There are two or three of them that are fairly large, but even these are much smaller than ATT, Qwest, and Verizon. They are also much more fragmented, since they tend to be collections of small, discontiguous operations.

180Squared told me that its strategy is to provide applications and other services that will supplement Microsoft in these markets. This approach will require Microsoft to move closer to a shrink wrap approach and will require different approaches to product support.