Next year may get uncomfortable for the hodge-podge of business cloud voice providers scattered across the landscape. Microsoft is coming to town, and it’s going to make a lot of service providers cry if the company gets traction in the voice space.

The current landscape of business voice sizes up to be cable companies—Internet service providers, Internet Telephony Service Providers (ITSPs), traditional IP PBX providers turning into ITSPs, competitive telephone carriers (CLECs), and incumbent telephone carriers (ILECs). All of them are fighting for market share, because businesses pay more and there are more opportunities for upside recurring revenue once you get in the door.

Cable companies have a well known brand and typically good local infrastructure, but fall down when it comes to truly national reach. Still, companies such as Cox continue to rack up billions of dollars in revenue per year by continuing to bring in small to medium-sized businesses. 

Internet service providers, folks like Megapath, have been around forever offering voice as an adjunct to vanilla broadband connectivity and data center hosting. There's an established relationship with clients, but sometimes they struggle to deliver an effective "message" when it comes to voice sales. 

ITSPs, such as 8x8, once focused solely on voice, either via direct IP connections or in an over-the-top network. Now they offer value-added services such as videoconferencing and unified communications.

It's tempting to lump in the CLECs with Internet service providers, but CLECs (and isn't "local" exchange carrier such a last century term?) started out with voice up front in parallel with data. XO is the best example of the breed that comes to mind.

Incumbent carriers want to sell to everyone, but in reality they do better with larger enterprise customers than the SMB world.  In the enterprise space, size—specifically national and even international network footprint—matters, along with a dedicated organization that can cater to the needs of the Fortune 500 and government customers.

Enter Microsoft, with its mobile first/cloud first strategy, plus the continuing integration of Skype into the company.  Microsoft needs to fill up its shiny new global cloud infrastructure.  Skype for Business—formerly known as Lync—in the cloud provides a unique mixture of scalability, tested business-class features, and a platform that can deliver services starting at a one-phone/seat business up to a large multinational corporation distributed across continents.

Microsoft brings its brand and years of plugging away at unified communications software to the table, something not to be underestimated. But the big killer is in Microsoft's ability to bundle voice service as a subscription with cloud access to other software and services. 

Already Microsoft offers a work and home bundle that includes Office 365, Xbox time, Skype time and OneDrive online storage. A business cloud bundle including Office 365, Skype for Business with unlimited long distance minutes, and plenty of storage can't be that difficult or hard to create. The edge to Microsoft is when it starts throwing in "coupons" for free initial use of other Azure cloud services, such as Internet of Things (IoT) tracking and analysis.

Don't expect Microsoft to gain big market share overnight.  But I could see steady three year erosion away from other business cloud voice services to Redmond when Microsoft starts bundling Office 365 with Skype for Business so it can fill up Azure. I can see resellers without a big vested interest in other cloud services turning into a key sales channel for Microsoft, with the customization/value-added group potentially cashing in if is the "glue" to mix and match Skype for Business with other Azure cloud offerings.

If Microsoft gains big in cloud voice, there will be a number of companies that lose. You can expect a further acceleration away from dedicated IP PBX systems, with sales tanking in the SMB sector. Internet service and ITSPs are going to suffer losses in voice unless they can demonstrate clear advantages over Skype for Business. CLECs and cable companies may end up roughly even if they turn into Microsoft-certified resellers of Skype for Business and Bundles-for-Business (Office 365+ Skype for Business).

How incumbents fare is an interesting question. They still control the last mile, but you start getting into net neutrality questions if Microsoft wants quality of service guarantees for VoIP-based services.  Microsoft already is in a position to want faster broadband to more people as it builds it up its cloud customers and may take a pragmatic approach with splitting revenue with service providers if providers invest in faster, wider-reaching network infrastructure.