Microsoft's Chairman Bill Gates has unveiled plans for the Redmond company to take over yet another business sector: business voice communications. Mr. Gates demonstrated Office Communications Server 2007 allows people using Microsoft Office to manage voice calling from their personal computers and in combination with email, instant messaging and other communications.

Microsoft says their new software can also work with traditional phone systems -- using the PC to control a desktop phone, for example. This enables, for example, that when someone picks up the phone, the on-screen indication of their presence can automatically change so their co-workers know they're temporarily busy.

The Microsoft software is built around the "unified communications" concept, which seeks the integration of different ways to communicate in a single, unified, solution. Of course, at the center of the software there will be the voice-over-IP communications. In fact, about 40 percent of all U.S. phone systems in use are already IP-based, according to estimates.

"We've seen this before. This is just like the computer industry before the personal computer came along," said Gates. "This has been its own world, untouched by the power of software."

Microsoft is encouraging its partners (including Dell, SAP, Ericsson, and even Nortel) to create their own compatible software and sell installation services for the new products, dubbed Microsoft Office Communications Server and Office Communicator. Overall, Microsoft claims it has lined up 50 partners.

Microsoft is also selling a $3,000 videoconferencing device called RoundTable that can capture in a panoramic view participants sitting around a table. Office Communications Server 2007 is also available as a trial download on Microsoft's website.

Quite clearly, Microsoft is bound to clash with Cisco Systems in the business of "unified communications". They have been racing to gain an edge over the other, especially this year. Cisco, the undisputed leader in Internet routers and switches, upped the ante in March when it paid $3.2 billion to acquire WebEx Communications, the maker of a popular online application for video conferencing. The same month, Microsoft reportedly paid $800 million for Tellme Networks, a provider of voice-recognition systems.

It remains to be seen which one will get the upper hand in this. While Cisco is the hardware leader in communications, Microsoft is the software leader. Overall, business customers will benefit from the fierce competition ahead.