About this blog

News and analysis of developments in the enterprise communication industry and market with primary focus on Europe.

The author aims to tap into ideas, insights and thoughts of the readers to get varied perspectives.

Views expressed in this blog are solely the author's opinion and in no way reflect those of his employer.

Friday, November 16, 2007

I like Blackberry Curve

I had promised the AR team at RIM that I will write about my experience with Blackberry. First, I have to admit that I am no crazy about gadgets. The last device I had before my blackberry was a Nokia 6000 series basic phone, which I left with my parents since I got the blackberry.

When I first got the blackberry, a first look made me like it. It is of the right size-neither too long nor too short for the keypad. It fit my pocket. The device is light and I loved the look.

Our MIS at Frost & Sullivan took a day to set things up and then I realised what I had got into. I was getting my office mails on my phone. wow! This was incredible. However, it didn't take a week for the reaction to transform from wow! to jeez! Now I was working on the train, between meetings, almost everywhere. I could be reached by e-mail and phone anytime anywhere unless I switched my phone off. Inevitablely, I was working harder and smarter. My response time has increased significantly. This blackberry is a power tool.

The best part of the experience is certainly the e-mail and qwerty keyboard. Together they just do it for me. Not seen anything better yet.

The blackberry curve that I have does almost everything for me. The other day I was travelling and didnot have a place to connect my laptop to the Internet. Phew! who needs a laptop unless one is using office applications and specialised software. Blackberry devices don't support native downloading and editing of office files unlike Palm and Windows Mobile which does. However, it is true that presentations do open on the curve, but one can hardly read what is written even after full zoom.

Integration of calender with my office system is just brilliant. However I am not sure why I don't get reminders. Nonetheless, what I can do now with this device is no less feat.

On the phone side of things, the experience isn't that great. The number of features clearly don't compare anywhere near the office phone (it isn't supposed to, yet!), it doesn't compare very favourably against what other phones can do. Especially around the conferencing and call wait side of things. However, what sets Blackberry apart is the fact that it supports Wi-Fi. Can you think of the potential when you can make VoIP calls at flat data rates.

The IM tool is just awesome. Blackberry Curve supports Yahoo!, ICQ, AOL, Windows Live, Google Talk and Blackberry Messenger. The best part of this capability is the ability to log-in to multiple IMs and toggle across them. One is notified when a new message is received. The engineers have been just great with this.

Having used it for four months, I must admit business life without it would seem a bit dull. Great job RIM. Hats off to the engineers..........

Thursday, November 01, 2007

Complete communication without distraction

Yes, thats the phrase I got from the VP of a Bank in the U.S. He stressed that all different technologies are good in their own right. Examples: Telephone solves the need to have face to face communication. IM solves the need to phone to have a quick word. Video conferencing solves the need to travel (similar to face to face communication). Mobile phones allows telephone conversation while 'on the move'. All these are great tools. However left on their own, they can be bothersome in a work environment. Hardly does one not get distracted these days by these tools. How often have we not been distracted by a telephone/mobile phone ring or an IM pop.

The VP of a Bank says, "what is needed is a housing system that can offer a complete communication experience without the menace of distraction". Is he suggesting 'Unified Communication'? I don't know if UC can solve the issue of distraction. I heard Gurdeep Singh Pall from Microsoft suggest, that in the future, a telephone call without a subject line will be considered rude. Interesting and futuristic. I asked a few IT/Telecom Managers what they thought and guess what? They thought I am going 'nuts'.

Is it possible to imagine a world where we are contacted only when we need to be, that is distracted with reason?

Friday, October 26, 2007

Exchange UM vs Call Pilot

Sometimes I wonder how business decisions are made! One of those that baffle me is the choice between Call Pilot and Exchange UM. A little background on this - Nortel and Microsoft announced an alliance in July 0f 2006 agreeing amongst other things to do joint R&D and synergise their go-to-market program in the area of UC. Nortel has a very strong background in the areas of telephony, contact centre, messaging (including Unified Messaging, a market where Frost & Sullivan ranks them second in North America). Microsoft on the other hand has very high market share in e-mail and collaboration space. One of the areas of product overlaps for the Microsoft-Nortel alliance is Unified Messaging. Nortel's offer, the CallPilot has been in the market for at least 10 years. I know, one of my peers used CallPilot in his lab way back in 1997. Microsoft on the other hand introduced Unified Messaging capabilities in Exchange 2007.

Unified Messaging seems to have never taken off as expected. In these years, the industry evolved to offer Unified Communications with very little installed base on Unified Messaging. So, despite the long history and relative product maturity, CallPilot and its product peers didn't create the adoption curve, the markeeters so hoped to achieve. On the other hand, UM in Exchange 2007 seems to have caught the fancy of many. In the numerous discussions that I have had in recent months with user organisations and channel, there is a unanimous voice to try and test UM within Exchange. That said, the numbers are far lower than what CallPilot commands. Now I am sure if I had spoken to the market when CallPilot was launched, I might have encountered similar euphemism. So when I hear the buzz in the industry suggesting Nortel might reduce R&D activities on CallPilot, I wonder how such decisions are made!

Unified Messaging and Microsoft Exchange

If you talk to people who have been part of the Unified Messaging (UM) evolution, you may notice a taste of bitterness towards Microsoft. The Redmond based company introduced Unified Messaging in their Microsoft Exchange 2007. This development comes almost 10 years into the life of UM. Yet all you hear in the market these days is Microsoft Exchange UM.

A few weeks ago, I was asked if there was any traction for Microsoft's UM in the market and how it affected competition. Based on my discussions with user organisations and having seen some fresh shipment figures of the main players, I could say with some confidence that I didn't see any effect on competition. To the question on traction, I begged for time.

Since then I spoke with a number of people in the channel community across the world. Plus I interacted with a number of user organisations. For instance, the other day the IT Director of a borough in England clearly indicated that he will be considering UM once he installs Exchange 2007. I met up with a country manager of a software vendor who said that a growing number of his clients are talking about UM in conjunction to Exchange 2007.

This begs a question--what is it about Microsoft UM that leads to such a traction compared to competition's products that has been in the market for over 10 years? I can offer you my thoughts but first let me find out what you think.

Tuesday, October 16, 2007

Challenges for Microsoft in the UC world

Microsoft released a number of UC products with a lot of fanfare in SanFrancisco. It was great to watch Bill Gates deliver the keynote. As always he offered a great vision; this time for office communication.

Microsoft released a few products today that include Office Communication Server 2007, Microsoft Office Communicator 2007, Microsoft RoundTable, Microsoft Exchange Server 2007 (new release), Live Meeting 7.

You may view the webcast http://www.microsoft.com/uc/default.mspx to get a grip of what they are saying if you haven't already done so. In this post I am going to focus on the challenges ahead for Microsoft UCG.

Challenge 1- Negotiating the installed communication technologies: The communication technology market (enterprise telephony; conferencing including audio, video and web; collaboration) are mature. In some cases (ex: enterprise telephony) the solutions are pervasive.

Microsoft has taken a bold approach that it will build a new communication paradigm. Its newly released products won't work with almost any PBX (probably except Nortel CS1000 perhaps), conferencing equipments, or phones that are already deployed. To address this, they are build a industry partner ecosystem. For example- In the PBX world, Nortel is developing a out-of-box integration capability with OCS. Similarly Ericsson has a mobility server in mind and Mitel is releasing a communication server built around OCS for the SMB.

Challenge 2- Unleashing the full set of capabilities: What Microsoft can offer in ideal conditions is no doubt powerful and very useful. There is no doubt in my mind that it offers significant advantages over present technologies. However to be able to enjoy the capabilities, users must not only deploy Microsoft UC products but also integrate them with their installed base. At this point in time this is a near impossibility. The success for Microsoft and the user depends on whether the users decides to replace their 'sunk-in investments' in favour of Microsoft certified products.

The assumption that users will deploy 'Microsoft or Microsoft certified products everywhere' is like a dream that every man on earth will one day walk on the moon. Nonetheless there will be deployments in pockets. Users will buy parts of the technology to fill gaps. However, they will resist discussions of replacements unless they are sweetened enough.

Sunday, October 14, 2007

Forum Discussion- Unified Messaging: Buying Behavior

Dear Readers,

Apologies for not updating this space for over a month. It has been a crazy time. I am meaning to become regular again. You can help me by participating in this discussion. I am working on a report on the Unified Messaging market for which I am looking to tap into your insights. For starters, what has been your experience with Unified Messaging? If you have not yet deployed then why not?

Lets get this started. Please write-in your perspetives in the comments section.


Thursday, August 23, 2007

Software titans march continues

I am referring to IBM and Microsoft. Both announced a roadmap for their UC portfolio. IBM's Lotus Sametime Unified Telephony is expected to be GA by mid 2008. This launch will be preceded by the release of Lotus Sametime "Standard" in Q4, 2007, Lotus Sametime "Entry" 8.0 and Lotus Sametime "Advanced" 8.0 in Q1, 2008.

IBM's unified communication strategy is centred on its sametime offering. It aims to tie-in all elements of communication and collaboration to its sametime offer which is expected to evolve to support unified telephony. IBM signed a OEM agreement with Siemens Enterprise Communication to license elements of Siemens' Openscape.

Siemens has been one of the early adopters of open communication. Support for standards-based communication facilitating interoperability has been the cornerstone of its OpenPath mantra. Maintaining the central elements of its vision, Siemens has consistently believed in open communication since 'LifeWorks' was coined. In fact, their Openscape is probably one of the best fully-baked unified communication portals available in the market today.

Siemens had a very engaging relationship with Microsoft. Way back in 2005, Siemens had launched HiPath openscape telephony control link (TCL), a separate server that sits between LCS and PBX (supports Alcatel, Avaya, Cisco, Nortel in addition to Siemens) to facilitate exchange of presence and notification across platforms. Their relationship suffered since Microsoft formed an alliance (ICA) with Nortel. ICA recently celebrated its first anniversary. It is believed that they have sold in excess of 500,000 licenses (Nortel telephony licenses and LCS CALs) in their first year. ICA product portfolio is expected to be strengthened by the general availability of OCS/MOC.

Microsoft announced the 'release to manufacturing' of OCS/MOC and Round Table on July 26th. Eric Swift, Senior Director, Unified Communication Group at Microsoft said that OCS/MOC is due to be available from Oct 16th 2007. The price list will be made available on September 1. He said that Live Meeting 7 will be released this fall. Microsoft Exchange 2007 SP1 beta is released. At a keynote at VoiceCon, Gurdeep Singh Pall announced Quality of Experience monitoring server, a product developed by Psytechnics. He announced the licensing of Microsoft's RT audio codec about which I have commented in a previous post.

Microsoft's UCG seems confident of OCS/MOC. It has built a strong ecosystem, its alliance with Nortel is delivering results. Recent agreement of cooperation with Cisco is a great step towards creating a traction in the communication technology space. In the past one year, Microsoft has taken concrete steps to shape themselves as a player in the voice market.

Understanding Cisco-Microsoft cooperation

My last post has been quite a while back. Have been busy trying to wrap up a mobile application report. In the meanwhile there has been significant developments in our space. I'll try to comment on them in the coming days.

Recently, John Chambers and Steve Ballmer shared the podium at an event in New York that was moderated by Charlie Rose. They announced that both companies would drive interoperability between their products. There is an interesting blog by NY times summarising the event. In my opinion, the discussion at the event bore a clear indication of a transition to 'best-of-breed' infrastructure sourcing amongst large customers. This came out loud and clear in two of my conversations yesterday. Earlier in the day, in a conversation with a good friend at Siemens, the success story of HiPath 8000 with Global Crossing came up. Later that evening, Eric Swift from Microsoft highlighted ICA's success with Global Crossing. Now thats a coincidence! It is well known that both ICA and Siemens have capabilities to have pitched for both of those RFPs with Global Crossing.

Another aspect of the announcement is the recognition of the market transition to convergence and collaboration. I remember listening to a Digital 2.0 panel discussion conducted by Jeffrey Moore, where Bill Gates evangelised the scope of digitisation. He urged us to think as if computing and storage were free. The scope of digitisation is indeed far reaching enabled by software. He mentioned communication, collaboration and group productivity as the areas where innovation will concentrate. Similar thoughts ware put forward by fellow panelist John Chambers who argued the next transition to be from transaction to interaction caused by innovation in the realm of collboration and convergence.

With both Microsoft and Cisco looking at the same market transition through their individual lenses, customers have started demanding that their products interoperate. This according to me is the fundamental underlining for their cooperation. The best-of-breed strategy that this alliance endorses will help unleash intellectual capital for innovation in the enterprise space that hasn't yet seen the success that consumer market continues to enjoy.

Tuesday, August 07, 2007

Software PBX maker Sphere Communication to become a part of NEC Corporation

Software based PBX maker Sphere Communication has agreed to become a part of NEC Corporation. The Japanese manufacturer of electronics goods NEC Corporation is to acquire all shares, intellectual property and patents of Sphere for an estimated $ 42.1 million.

Sphere Communication is a tier-2 supplier of software based communication services available primarily in North America. One of the key assets of Sphere is its development platform (Sphere Communication Services Engine) that remains an object of envy for many. Its user-based pricing approach is its competitive advantage. This underlies its best-of-breed approach. Based on open technology, its PBX can work with a multitude of third party phones including Aastra, Grandstream and Polycom. They inter-work with third party voice media gateway from the likes of Allied Telesys and AudioCodes.

NEC on the other hand has a wide breadth of portfolio that ranges from TDM to IP. Frost & Sullivan analysis by Kriti Rao suggests NEC is ranked fourth in terms of market share in N.A. One of the main challenges facing the company is related to transformation and this is exactly where Sphere comes in. Sphere has a small team of talented people who have a forward-looking vision.

NEC Corporation has been focussing on growing their office equipment business for over two years now. They have a JV with Philips in Europe. In addition, they have something called NEC Infrontia. In the U.S the operating business is NEC United Solutions. With the acquisition, Sphere will be absorbed as a operating unit in NEC United solutions. We are yet uncertain of the autonomy of Sphere in the future. Todd Landry, Senior Vice President, Sphere Communication said "this announcement will help Sphere scale and expand its reach".

I am told that channel partners have nothing to fear. Most of them will be happy to include NEC's portfolio. I am not sure. The utility of Sphere's business with their distribution networks is very different from NEC's. Moreover, it will be interesting to see how Sphere's technology partners take this announcement. Overall, I think this is a good deal.

Monday, August 06, 2007

Inter-Tel shareholders accept Mitel's offer

So, the marriage is complete. The merger of Mitel and Inter-Tel will lead to the joint entity to become the market leader in SMB VoIP in the U.S. It will be interesting to see how this announcement affects their international strategies, a market that is three times the size of NA and where Mitel and Inter-tel have very limited and localised presence.

Friday, August 03, 2007

Follow-up on Mitel's patent infringement lawsuit

ShoreTel has come back strong behind a successful IPO. Not only has it launched a counter claim alleging that Mitel has infringed its patents, but also has filed claims of damages up to $10 million and injunction on Mitel for making false or misleading statement during ShoreTel's run up to an IPO.

ShoreTel claims that Mitel's ICP 3300 infringes on its patent on VoIP traffic through a firewall. I have noted in the past that Mitel's actions were in poor taste.

Friday, July 27, 2007

Update on OCS 2007

The press from yesterday read that Gurdeep Singh Pall is happy with the progress made by his technical team. OCS 2007 is now code complete and will release to manufacturing. This means that the product will be GA before the end of September, 2007.

The PR offered some pricing information. I have been betting on $100 list price for CAL. I was close. Gurdeep announced that OCS client access license (CAL) would come in two flavours: Standard and Enterprise.

Standard CAL: The standard CAL would have IM and presence capabilities. List price- $21.
Enterprise CAL: This would offer all of the conferencing and VoIP call management features and will be list priced at $97.

It has to be noted that in addition to the CALs, organisations need to buy the server(s). Customers using LCS need not worry. Microsoft has released documentation to help migrate from LCS to OCS. Its service assurance agreement takes care of the CALs. However, the enterprise needs to purchase the additional server.

The market opportunity is quite large. There has been in excess of 50,000 downloads of Microsoft OCS beta release software from the web in addition to the distribution of over 50,000 beta kits. If we look at the installed base of exchange systems & LCS globally, OCS in its first year can rake business of around $1 billion.

Finally, to be benefits. This is where I was a bit dissapointed. Well for two reasons. One that I wasn't commissioned to write the white paper that Art Rosenberg wrote. Nothing against Art. He is a veteran in this space with a lot of experience and I respect his views. However, the paper failed to come up with compelling reasons to deploy UC. It talks of

a) reducing internal technology TCO costs, including procurement, support and administration
b) reducing costs for user communication services particularly for mobile devices
c) increasing individual end user time productivity associated with communication activity
d) increased business processs performance by providing greater flexibility in making contact with different people more quickly and in different ways.

which to me looks like the solution to be cheaper and offer time-cost-productivity benefits. What about value destruction. How many of you turn-off your corporate IM clients to save yourself from distraction?

In the end, I believe that Microsoft's UC is a neat concept. Art very accurately talks of contexual communication. To me, thats the value-add of Microsoft's UC, whose ROI is subjective to user's business. To be clear, I am not a skeptic. I endorse the product. I fact, I think OCS and office communicator 2007 launch will drive away competition from telephony vendors in the presence and user interface market. One of the secret treasures in Microsoft's arsenal is its voice management capability. I reckon that the story of their real time audio codecs have not been well covered.

Wednesday, July 25, 2007

Web services model gain traction

I spoke with Fabien Maisl, Head of Marketing in Cirpack last week. I am told that he is the best person in Cirpack to discuss IP centrex. He outlined the success stories of IP centrex in residential and business environments. Recent reports suggest a 50 percent rise in their installed base that has swelled to more than 6 million active users.

In a related story, Jeff Pulver's VON magazine attracted my attention to a news item from CommuniGate. Aurora, a Ontario based ASP has selected CommuniGate pro to offer messaging and groupware solutions to SMB customers (20-200 users).

It is interesting to see news items talking of the success stories of IP centrex, web services model amongst others. Telcos have undertaken massive restructuring of their infrastructures to facilitate these kinds of service delivery. At this point in time, user base is concentrated in the small business segment (sub 50 users). It will be interesting to see if operators can come up with value propositions to entice a mainstream.

Aastra Technologies grows 6.9% in Europe

Aastra Technologies released its second quarter results recently. Sales grew at 6.9% y-o-y in Q2 thanks to increased momentum in Germany. The completion of restructuring DeTeWe has helped it focus on the German market that I estimate to be growing at over 5.5%.

One of the fascinating items in the report has been the increase in its gross margins in Europe. Defying the market trend (well almost if you exclude Cisco), Aastra Technologies saw an improvement in its gross margin that grew to 43.1% of sales from 40.7% in the same period last year. This has been despite an increase in SG&A as the report suggests. My opinion is that currency fluctuation has a role to play in this. This is because the fixed costs overall including salaries has remained more or less stable and variable costs (read marketing) saw a modest increase in the past year. Honestly, this is a good result as I don't see price decline eroding gross margins.

In the previous quarter, Aastra Technologies completed the acquisition of Elocom, a Portugese distributor that promotes NeXspan family of products.

Friday, July 20, 2007

Mobile IP Centrex?

Yes indeed. Mobile IP Centrex arms the mobile operators to offer primary business telephony functions to very small businesses. Several mobile operators including Vodafone have been trialing such solutions for some time now.

I spoke with Thomson's Cirpack today who said that their platforms support in excess of 6 million active IP centrex subscribers. The number includes residential as well as business users. I believe that at a connection fee of around €15/user/month, the market size for business customers in sub 20 segment in Europe would be approximately €429 million in OPEX.

Mobile IP centrex is a platform that mobile operators can explore and target the small business segment of the market. The best advantage for a mobile operator is in the future proofing of their investment. As IMS mature, some of these softswitches can be turned into CSCF in the IMS core network.

Aastra joins the FMC bandwagon

In its next major release, Aastra's NeXspan IP PBX can support Nokia E60 and Aastra i2052 softphone. The interesting bit is that customers don't have to install any additional software on Nokia devices - a marked difference from the path Avaya and Cisco has taken.

For the customer, the lack of need for additional software reduces the barriers of entry into the FMC world. This also allows Aastra to form partnerships to be formed with the likes of private network providers as well as low power GSM license winners. As this trend hits mainstream, I reckon that mobile operators will find it hard to stop their subsidised handsets from being used against them.

Tuesday, July 17, 2007

Court injuction in Truphone vs T-Mobile (UK) to set a precedent

First the regulator, then the European Commission and now the judiciary. It seems like mobile operators are out of luck these days. Their comparative higher tariff for basic services is not helping them win any new friends. The days of their unique value proposition is over. Today, alternate technologies such as IEEE 802.x and other Internet based services are challenging the dominant position of GSM/GPRS/EDGE/UMTS etc.

Recently, in a case between Truphone and T-Mobile (UK), a judge granted mandatory injunction forcing T-Mobile (UK) to interconnect with Truphone. Truphone uses the Internet to route mobile calls thus reducing the mobile operator to a last mile mobile network provider.

This and others are creating a momentum. Mobile operators are facing similar situation as that the incumbent telcos faced with local loop unbundling and other aspects of deregulation. At the end of the day, increased competition is always better for a whole lot of people than not. Businesses and consumers are likely to benefit in the long run. It is an encouraging sign for the enterprise mobility industry especially for players such as Private Mobile Networks and BT Mobile.

Another feather in the cap of Internet service providers came from across the atlantic. FCC is planning to aution 30MHz in the upper and 30MHz in the lower 700MHz bands early next year. These frequencies became available as analog broadcasters using TV's UHF channels 52-69 are switching from analog to digital in 2009. The commission Chairman Kevin Martin appears to have circulated a draft order to have open access rules for two 11 MHz blocks of the total 60 MHz in the 700 MHz band that is to be autioned. This is a good news for players such as Truephone and others including Google who seem to have shown interest in bidding.

Monday, July 16, 2007

Clever Microsoft technology for voice quality

Microsoft is not always associated with quality. However, the forthcoming OCS 2007 which is expected to be in the market by September 2007 has managed to pull a punch. Microsoft has been boldly professing the future of telephony for sometime now. First at VoiceCon SanFrancisco 2007, it was Jeff Raikes who sent the PBX manufacturers into panic mode by predicting that there will be 100 million softphone users by 2009 and that the cost of per line telephony would decline by 50% then from its present price levels.

Later, Gurdeep Singh Pall mentioned at CeBIT in March 2007 that Psytechnics has credited Microsoft OCS to provide better quality of service for voice call when compared to Cisco Call Manager.

Until today like Matt McGillen, I believed it to be a marketing gimmick to move away the communication conversation from the home turf of Cisco. I had read what Matt had found out, but could understand the ramifications when Mike Hollier, the CTO and founder of Psytechnics explained to me how it works.

Microsoft has built interesting technology that rapidly changes the buffer size resulting in improved performance. Their real time audio codec makes use of variable bit rate transmission that along with varying buffer size improves the performance. Moreover, the technology uses the silence mode more effectively than competition. Also, Microsoft is making use of Forward Error Correction (FEC). Overall, Microsoft has been clever in their usage of software technology to score points over competitors hardware technology. I wonder if the industry will conspire to prove Jeff Raikes right!

Friday, July 13, 2007

ICA to celebrate its first anniversary

Next Monday (July 16th), ICA will complete one year of existence. The alliance has made great strides in joint-development although they still lag the advances made by Siemens, Alcatel amongst others in their depth of integration with Microsoft's UC portfolio.

Their recent PR noted that they have sold over 430,000 licenses worldwide. This is definitely impressive when we compare it to the LCS 2005 installed base of just of 2 million licenses worldwide.

It is interesting to see how quickly telephony, collaboration and messaging vendors moved past UC once Microsoft announced their ICA with Nortel. Today, most of these businesses emphasise on business process integration, web services amongst other things. I believe that Microsoft will enjoy strong adoption of OCS in 2008-09. It will interesting to see the attach rate of Nortel to those deployments.

Siemens Enterprise Communication as a service provider

I received a PR from Siemens Enterprise Communications (SEN) which I think is interesting. It says that SEN will operate as a service provider to run internet services for Accor Hotel group in Germany.

In this 5 year pilot project, SEN will act as a project developer, investor and operator. This project envisages a change in the way guests are billed for the services they use. Instead of buying quotas of time, guests will be able to pay for the time they use. SEN will bear the project costs, maintenance charges, operation and customer service. All usage fees collected by the hotel will go to SEN.

This is an interesting proposition. I am surprised that Accor hotel group didn't include telephony in this business model. we all know how much of phone calls we make from our hotel rooms.

Beside that this is an interesting development from a few angles. First, it helps Accor group to focus on its core competence. Second, it allows SEN to develop propositions that lead to increase in the usage of its services. These two together offer better services in both hospitality and communication.

There are certain issues that need consideration. On one side, Guests might take notice of the difference in customer service wrt communications. Furthermore, there is the larger question of the trade-off between profitability and customer experience for SEN.

Thursday, July 12, 2007

The imperfection of P&G (Postini & Google)

I am sure most of the readers know that Google acquired Postini for $625 million. The blogosphere is full of comments on how aggressive and passionate Scott's team has been and what Dave Giroud mentioned in the press.

It is encouraging to see Google invest a PE multiple of 10 to invest in complimentary security product. This bolsters the security SaaS movement. However, we need to understand some crucial mismatches. Google Apps customer base is largely the 1-2 user segment while Postini's market is in the 100+ user segment.

Google Enterprise team have experienced the benefits of partnering with Postini. However, Postini continues with its channel recruitment and enablement strategy which is very different from Google Apps partnership strategy. Currently, Postini has a healthy team of 1600 resellers serving 35000 businesses and over 10 million customers. It will be interesting to read Google Enterprise communique to Postini's channel once the acquisition is completed (which is expected to happen by Sept, 2007).

I would also like to highlight the difference in business model. Google's enjoys a leadership position in the ads market which is something they would like to take into the corporate space. Its a difficult sale however Google being a innovator, I am sure the clever techies will come up with an non-intrusive way. However, thats not the point. The difference in the business model is what I want to highlight. Google-Postini and Postini-reseller network have different business models which are not sustainable in the long run. And in fact, Google's track record in this space isn't encouraging. Yes, I am thinking of Feedrunner, GreenBorder etc.

Finally, lets look at the big opportunity ahead. Postini has an interesting portfolio of products around security compliance. Though its not the biggest selling app yet for Postini, Google can scale it to provide an attractive and valuable portfolio of complaint communication services using Positini's policy enforced TLS amongst others. I think that there is a great possibility for Google to embed some of Postini's intellectual property into its product suite. This can justify the PE multiple that Google agreed to pay.

Friday, June 29, 2007

Shoretel's IPO and Mitel's lawsuit

On the sidelines of its analyst conference in Las Vegas, Mitel announced that it sued ShoreTel over four patent infringements. ShoreTel on the other hand was busy preparing for its IPO. Shares were expected to have started trading on wednesday. This is a sad news as it couldn't have happened at a more inopportune time for ShoreTel.

Ironically, Mitel has been having a rough ride for a couple of years. Last year, it was forced to shelve its plans for an IPO when Vonage's public offering failed to hit the right notes following a patent infringement lawsuit issued by a carrier. Moreover, Mitel's attempts to acquire InterTel has been facing rough waters following Mihalyo's private equity backed counter offer. For a company that have been in corners, the executives must well know how much pain it causes.

Cisco to change 'right to use' license model

It has been a nightmare for businesses to understand how much a Cisco solution costs, what with its complicated pricing structures. For instance- to buy a basic 7906G phone, one needs to not only buy the phone for $175 list price but also pay another $100 for something Cisco terms as 'right to use' license. It is with this license that things get complicated.

While each 'right to use' license cost $50, different devices require different numbers to run them. While 7906G requires just 2 such licenses, the high end 7985 G requires 7 of them. Think of the confusion it creates when a user buys a desktop, mobile communicator and a soft client that run on the same Cisco Call Manager.

I understand that Cisco is moving away from the device user license regime to a user license regime. This I believe will significantly reduce the complexity of costing and promote Cisco's high-end portfolio.

Monday, June 25, 2007

Mobile challenge

I read an interesting observation is Vihaan's brochure that went-

Why does mobile have only 20% market share of phone calls, even though penetration is above 90% ?

I think this question emphasises the market opportunity and the challenge for a mobile operator. Of course, there are solutions in the market that can be used to tap the opportunity. Lets look at them-

1. Mobile operator deploys micro/nano/pico cells within enterprise premises. Enterprises get a private numbering plan, pricing scheme.
2. Mobile operator deploys mobile PBX that runs on the operators network and offers enterprise grade telephony features.
3. Mobile operators enter into a definitive agreement to handoff traffic to private wireless in-building networks

Each of these solutions have opportunities and threats associated with them. At this point in time, I am hearing of the use of option 1 at most.

Going green with communication

Climate change is everybody's concern these days. The weather systems are changing and the effect on our ecological balance is becoming starkly visible.

Environmental sustainability and its pressures are generally concentrated around the industries that generate the green house gases, toxic wastes and the like. More often than not, we forget the role played by industries such as the IT and communications, and the financial services.

Recently, I listened to a podcast by Andrew Winston, author of 'Green to Gold'. He outlined the effect of the decisions of the finance industry on environment which I thought was interesting. He went on to cite that evangelists will have to look for business case to drive environment friendly initiatives and those aren't difficult to find.

British Petroleum for instance saved in excess of $1 billion by closely watching its carbon emissions from oil exploration. Walmart of all companies initiated a close watch on their energy emissions and ended saving up to 20% in electricity by moving to more environment friendly initiatives. I think similar value propositions can be found in the communication industry to contribute to the environment. Conferencing and collaboration is a great example. Shift from hardware to software is another contribution.

The Wi-Fi challenge

The wire read - "Boingo today announced a new flat-rate Wi-Fi service that eliminates roaming fees common in Europe and Asia. For €29 per month, global business travelers can access all of Boingo’s 100,000 hot spots worldwide. "

Boingo Wireless is partnering with France’s Hub Télécom and Norway’s Oslo Lufthavn Tele & Data AS (OLTD) - two of Europe’s leading Wi-Fi providers - to bring Boingo Global to market in Europe. Later this year, customers will be able to sign up for the service at more European locations including hot spots in Germany, Italy and the UK.

The strange thing is - How can a hot spot provider charge roaming fees? In a typical hub and spoke network, the hot spots are rarely interconnected directly. Anyways, for now the question is not applicable.

Customers must have the right expectations set for this kind of Wi-Fi service. Having over 100000 hot spot does not guarantee coverage wherever you need it. However when you need it and have it, Boingo is a definite bliss. I cannot begin to explain the horrors of Wi-Fi charging in Western Europe.

Friday, June 22, 2007

Thanks to WiMaX

Siemens Enterprise Communications were demonstrating the capabilities of its new range of products at the Mariott Marble Arch Hotel near Oxford Street in London. I was curious to watch them demonstrate their new Open size video infrastructure and their Openscape unified communication capabilities amongst others. Needless to say, Siemens had put in a lot of effort to make sure it works. For the Opensize product, they had a guy use the system at his office in Munich. In another case, they had placed a softswitch some where in US to do multi-modal communication.

I didn't have too much time at my disposal as I had to take a call from my colleagues in San Antonio, Texas. As I enterted the demo area, I looked at my mobile and to my horror I found that my cell didn't have coverage. But to my dismay I saw an awed audience look at the demos run by expert staff of Siemens brought from various parts of Europe. I thought that maybe Siemens is using some high speed wired connection. I was informed that all last mile connectivity in that area was handled by WiMAX. I knew that Urban WiMAX had established a network in London last year. The exhibitors told me that the WiMAX service provider didn't take more than 24 hours to set up a tower and offer the connectivity to Siemens. And the engineers on the floor seemed happy. The Opensize video instrument was constantly using 1Mbps link to transmit and receive. There were only 2 packets lost in the 10 minutes I spent at the booth - my eyes glued to the scan report.

Tuesday, June 05, 2007

Bell Labs Laptop Guardian turned into a product by Alcatel-Lucent

Omniaccess 3500 Laptop Guardian is a external card that interfaces laptops. These devices offer plug-n-play corporate VPN client service. In addition, the device can be used for remote laptop management for performance and against theft.

I think that this product offers critical value to enterprises. It gives its IT staff control over staff laptops outside the offices. Remote control and management are the USPs of this card.
From the usage point of view, support for different wireless access technologies in addition to wireline will enhance the power of the offering.
Most current offerings address one challenge or the other. For instance, the external 3G card offered by a mobile service provider offers 3G transport links to its network and levies charge accordingly. Secure ID offers access management only. Omniaccess 3500 will offer both and more; in addition it will hopefully give IT staff the control of the resource.
Mobile service providers stand to gain the most out of this product, although the benefit for fixed-wireless/wireline is significant too. The laptop guardian has the potential to add multimedia traffic to mobile data channels.
I think this product is a useful piece of innovation. Saying so, I would rather like to see this card technology embedded in the motherboard of the laptop instead of being a add-on card.

Thursday, May 17, 2007


LG-Nortel offers a range of IP phones that work with Nortel's BCM and CS1000 series. Sold by Nortel's sales force, the JV has seen some strong traction for LIP6800 series phones over the past few quarters. Recently, LG-Nortel developed specific sets to work with Microsoft's SIP specifications. At their WinHEC conference earlier this week, Microsoft announced the availability of LG-Nortel phones for testing on OCS2007. LG-Nortel is relying on Microsoft's recommendation and sales success from Nortel's channel.

LG-Nortel is a dominant player in the small business market. It offers iPECS, ipLDK and NEXER product lines to the sub 150 segment. These products support LDP 7000 and LKD series digital handsets. In addition, the JV offers LIP 7000 series IP phones and two ranges of wireless sets.

Watch out Nortel!

I was reviewing Nortel Enterprise group's performance in Q1, 2007. The vendor registered a sequential growth of 18% on system deployments (47% y-o-y) in EMEA. Nortel enjoys continued success in emerging markets especially in Russia and the Middle East. Its growth in Q1, 2007 has been concentrated in the sub 200 segment. Its BCM series and KTS portfolio have been the most successful products.

One of the key challenges for Nortel is to grow its MLE installed base. While Meridian M1 continues to be successful, CS1000 series struggles to grow in comparison. Overall, Nortel's growth in this segment has been modest.

Overall, Nortel is in a great shape. Its Innovative Communication Alliance (ICA) with Microsoft is on track. The alliance has already launched a few solutions and announced several others to be launched later this year. Microsoft and Nortel are conducting joint roadshows in Dubai, Manchester, Johanesburg and Copanhagen in the next three weeks. Already, both companies have started working on listing tier 1 accounts to be targeted.

Recently Nortel enhanced their ethernet switching portfolio ERS 2500/4500 to support multimedia communication. This will help ICA provide unified communication over converged infrastructure in the SME - a very large and untapped market segment. In addition to premise based solutions, ICA has come up with a roadmap of hosted solutions involving CS2100, Microsoft HMS and Active Directory.

In addition to ICA, Nortel stands to leverage its JV with LG. At WinHEC earlier this week, Microsoft announced that LG-Nortel phones could successfully work with OCS 2007. Currently, LG-Nortel offers an extended portfolio of IP phones and IP based KTS systems (iPECS and ipLDK series).

My outlook for the vendor is positive. I expect Nortel to grow at 5-10% sequentially this year.

Wednesday, May 16, 2007

Cisco IP telephony grows in Q1, 2007

Cisco Unified Communication Group reported growth in Q1, 2007. Phone shipments that form their primary barometer grew sequentially by 3.2% and 66.9% y-o-y in EMEA. In the enterprise market, Cisco had a small growth sequentially and approximately 32% y-o-y. The large chunk of growth is in the SMB (25% decline sequentially and over 100% growth y-o-y).

Cisco launched Unified Communication 500 series for the sub-16 segment to cater to the new market demand. This product overlaps with the target segment of Linksys LVP 9000. In addition to the 500 series, Cisco launched Unified Communication Manager Business Edition for the 150-500 users. This software runs on a single rack unit server.

Over the past few quarters, Cisco is reaping the benefits of early wins. A large number of customers that have had deployed Cisco Call Manager are growing their footprint of Cisco IP telephony. Some of the large wins such as the Abbey National, Bank of America and State Bank of India require branch office connectivity; fuelling traction for Cisco Unified Communication Manager Express.

Cisco has seen a rise in the average selling price (ASP) of IP phones this quarter. I believe that this to be a one-off variation. Overall, Cisco faces a downward price pressure for hardphones. Also, there is a strong traction for SIP phones. R5.0 and R6.0 supports third party SIP phones that users can connect after buying a 'right to use license'. Growth in softphones have been comparitively lower than IP phone growth- softphone adoption is concentrated in larger deployments often complementing hard phones.

Cisco has invested in developing markets in Eastern Europe and Africa (both sub-saharan and North). Cisco continues to beat the average market growth rate. In the coming quarters, Cisco is expected to see increased competition from Nortel and Mitel in the enterprise segment. In the SMB market Avaya has been very active. They have launched a number of new products like Cisco.

Thursday, May 10, 2007

Interactive Intelligence embraces mobility

The value of extending enterprise apps on to mobile devices has been well articulated. It reduces decision time, improves efficiency and therefore contributes to overall productivity. This is well known, however its value in the contact centre industry goes far beyond that.

Although the contact centre industry has introduced new communication channels such as e-mail, self service, web chat etc, customer service is predominantly desk-based. Interactive Intelligence Interaction Client® Mobile Edition has the potential to change that.

The Interaction Client®, Mobile Edition is a graphical client interface that supports the Windows Mobile 5.0 and Smart Phone operating systems to make Interactive Intelligence IP telephony functionality accessible via mobile devices such as the Microsoft Windows-Powered Pocket PC and the Windows Mobile Smartphone.

In the enterprise space, the inclusion of the mobility dimension makes Interactive Intelligence' EIC more compelling. However, the major limitation of the mobile client is its reliance on HSDPA for synchronous multi-media communication- a vital element in contact centres. As an alternative the mobile client allow data transmission over WLAN and voice over cellular network.

Tuesday, May 01, 2007

Mitel acquires Inter-Tel: Its all about IPO

Last friday, there was news that Mitel announced definitive agreement to acquire Inter-Tel. I couldn't join the conference call that day. My curiosity was addressed yesterday when I went on a call with the senior management of Mitel Networks.

I wanted to know why Mitel bought Inter-Tel. Mitel is far bigger than Inter-tel. Both play in the SMB. Both are dominant players in the U.S. And Mitel has been dabbling with the prospect of an IPO for over a year now.

I asked Don Smith, CEO of Mitel as to why his company agreed to pay 57% more than Inter-Tel's net sales ($428 million) in 2006. The price-earning ratio of the deal is 27.8 which seem quite high when Inter-Tel has been growing by 3.6% y-o-y by sales and the U.S CPE market growing at 6.2% y-o-y.

Don said that Inter-tel was on Mitel's radar for some time now. He thought the timing to be right. Mitel had to face a proxy battle from Mihalyo for sometime-in the end Mitel walked off paying 10% over the last offer made and 8% premium to the last traded price of Inter-tel stock.

In addition to the acquisition of Inter-tel, Mitel announced its intent to withdraw from the IPO registration process. The timing of the withdrawl is interesting. InfoTech's research places Mitel+InterTel as the leader in the sub 100 segment market in the U.S and ranked two in the sub-500 market in U.S. I reckon this acquisition is all about the IPO. We shouldn't be surprised to see Mitel re-register for an IPO sometime next year. Whenever it does, it can value itself at Inter-Tel's price-earning ratio; that wouldn't be all too bad.

But then what does the acquisition mean to Mitel? During the call with Mitel, I learnt that there is low channel overlap. This allows to leverage existing relationships to promote products from both companies. It is believed that both brands will continue to co-exist. One of the significant advantages of Inter-tel is its real-estate (57 offices) in the U.S- something that will give enhanced direct touch capability to Mitel as it attempts to break into the MLE with its ICP 3300.

Is this the beginning of a trend?

There are several players in this market that are looking for partnership. Nortel managed an ICA with Microsoft. ShoreTel is taking the IPO route. Siemens Enterprise search for a partner continues. However, there is no reason to believe that Mitel's acquisition of Inter-tel will begin a trend. I think this to be a tactical move towards a successful IPO.

Monday, April 16, 2007

ShoreTel-The world is Orange

One of the leading IP PBX players in the United States, ShoreTel, has been slowly developing a footprint in Europe. Armed with a strong team, interesting product, and granular pricing-the vendor has already established footprints in UK, Spain, Benelux, Sweden, Denmark, and Ireland.
I saw a demo done by Jerome Joanny, their International Product Manager. Honestly, from what I saw- their solution is very easy to use, simple and user friendly. Although, I didnot test the whole range of features it became obvious that the solution was designed keeping the user in mind. Jeremy showed us their new feature- ring back tone. He said their product development team is working very hard to bring in mobile phone type features and functionalities into the PBX.

ShoreTel solution fits the 100-200 user segment very nicely. Steve Timmerman, VP of Marketing believes that his product is a good fit for a wide segment of the market. Their a-la-carte pricing model allows customers to buy as they grow. With close to 56 partners in EMEA, ShoreTel is aiming to build a momentum. The vendor has successfully leveraged the reach of service providers such as British Telecom in Spain.

One of the USPs of ShoreTel is around customer satisfaction. Although, I haven't delved into the details of how they get it measured, the passion in their team to uphold the levels of customer satisfaction and beat it is quite incredible. In my numerous discussion over the last couple of years, I have consistently seen this message come across. I must say that overtime it has become powerful.

Although they are a strong player in the US, ShoreTel faces the same challenges as most small players in Europe. They are trying to consolidate their resources and gain traction, with customer satisfaction in mind. Ken Bailey their EMEA Marketing Manager pointed out the criticality of channel development. They are predominantly two-tiered except for Germany and their growth rate is dependent on the selection of the best-fit channel. In the last few months, ShoreTel has been active in the Nordics-led by Justine Cross. They have not only recruited two VADs but also have gained some customers.

I think that ShoreTel faces competition from BCM 50/200, Cisco ISR & Call Manager Express, Hipath 4000, Avaya IP office, Ericsson MD Evolution, Alcatel OmniPCX office, Inter-Tel 5000/7000 amongst others. Between them, shipments account for in excess of 2 million lines in the 100-200 user segment in Europe. From top of my head, the market size of 50-250 user segment in Europe is approximately 28 million lines. IP penetration in this segment is in low teens. If we buy ShoreTel's message that their TCO is lower than Cisco, Avaya and Nortel and that their customer satisfaction is the highest, their solution is a good bet. I recommend ShoreTel to greenfield sites and organisations that have a clear IP adoption strategy.

Thursday, April 12, 2007

Roaming 'rip-off'-Game over

Telecoms.com reported-"A committee of the European Parliament has backed proposals to cap roaming charges for mobile calls made abroad, voting in favour of a Eur40 cents (£0.27) per minute ceiling for an outgoing call and Eur15 cents (£0.10) per minute for an incoming call.
The proposal will be put in front of the full 785-seat EU assembly in May which will decide whether a cap on roaming charges should be automatic, or require customers to request it from their operators."
This news is good for some while bad for others. I am sure GSMA and the operator will agrue that this is a bad move and will affect the profitability of mobile carriers. However, bad mood is expected to reign with innovative players such as LGC Wireless and others, since the proposal diminishes the value of their offerings. It is to be noted that extortionate roaming bills and relatively higher access rates have help form an alternative industry- one that aimed to help consumers and enterprises beat these toll gates. I call the offer 'mobile toll-bypass' untility.
The good news is for the consumers. In advanced countries in Western Europe, the average mobile usage per person is just 4 minutes a day. Using the same infrastructure and services deployed in emerging countries, users talk for much longer- and pay far less-in charges adjusted to purchasing power parity. Good news is for non-mobile carriers, if this proposal becomes legislation they would be able to predict their costs with greater accuracy and price their products more appropriately.
Overall, I think this move will help the industry in predicting costs, and determining value in roaming. The purse of the consumers won't shrink-I believe, they will instead take more for the same money. Licensed mobile operators will remain in business for longer- as this move takes away some cream out of the value propositions of alternate solutions.

Monday, April 02, 2007

Carrier Hosted UC

In a move that could potentially shape the future infrastructure deployment scenario within SMBs, Innovative Communication Alliance (ICA) formed between Nortel and Microsoft has announced its intent to offer carrier hosted converged office solutions to small and medium businesses (SMBs) and enterprises.

It is believed that service providers will begin customer trials during H2, 2007 with GA released by end of 2007.

Hosted telephony solutions have gained some traction in the market. Forecasts suggests 15% of all enterprise telephony shipments in Europe could be non-premise by 2010. Despite the growth rate, non-premise deployments would still constitute a very small percentage in terms of installed base. The primary challenges associated with hosting have been credibility, reliability, richness of the solution and quality of service.

Nortel-Microsoft's entry into the market will alleviate the restraint around credibility. The new carrier hosted converged office solutions include e-mail, instant messaging, VoIP, click-to-call, video conferencing and other multimedia services. We have experienced mature network based E-mail, IM, video conferencing services. However, most of them are disparate and are consumer grade. Network based click-to-call is yet to be very popular. The case for network based VoIP is quite similar to hosted VoIP.

I reckon that with adquate security framework, asset management policies, flexible but robus process and binding SLAs, these services can add tremendous business value. Carriers on the other hand will be able to derive greater value from their existing network investments and resources.

Tuesday, March 27, 2007

Enterprise Telephony - Market Performance Card

This card is demonstrates the relative performance of tier 1 vendors by their PBX line shipments in Europe in 2006.

Enterprise Telephony shipments forecast

PSA initiative?

Sponsored by some of telecommunications biggest names, British Telecom, Cable & Wireless, TeliaSonera and QinetiQ, the Product and Service Assembly Initiative (PSA) is a collaboration of vendors and service providers who are looking to solve today’s largest operational problem: How to create an IT reference architecture which will:

- Streamline the NGN product/service lifecycle
- Bridge the service creation gap between OSS/BSS/Service Execution
- Reduce the cost of service/product production

The founding members of the ‘Product and Service Assembly’ (PSA) initiative today announced that Convergys, Microsoft, QinetiQ and TIBCO are to participate in the second phase of the Product and Service Assembly Initiative and associated TeleManagement Forum (TM Forum) Catalyst.

The aim of the PSA initiative is to develop a reference IT architecture that enable new telecommunications services to be easily assembled from existing or new service elements and to dynamically orchestrate the required changes that result within the appropriate OSS/BSS applications.

QinetiQ, one of the world's leading defense technology and security companies joins BT, Cable & Wireless and TeliaSonera as sponsors of the initiative, while Microsoft, TIBCO and Convergys join existing vendor and systems integrator participants Atos Origin, Axiom Systems, Huawei and Oracle.

The approach is based around a set of co-operating product and service catalogs that are designed to allow product management, service and network engineering and operational communities to easily collaborate. TM Forum standards are leveraged to provide off-the-shelf integration of the OSS/BSS elements, dramatically reducing the time in which this type of architecture, utilizing multiple vendors’ products can be created and demonstrated.
Phase 1 of the PSA Initiative’s Catalyst demonstration, which served as the initial ‘proving ground’ for the Initiative, was successfully showcased at TeleManagement World (TMW) Dallas in December 2006, through a scenario that showed how a VoIP-based product can be conceived, designed, assembled and delivered within a matter of minutes.

The second phase of the PSA initiative expands the scenario to a consumer oriented Triple Play bundle of high value broadband media services that includes broadband Internet connectivity, basic voice services based on VoIP and IPTV services including Video on Demand. This will allow the development of production ready standards and the creation of an ecosystem of PSA compliant COTS.

Ofcom and Enterprise Mobility

Ofcom has stepped in to regulate the mobile call termination charges, in what I think would lead to a depreciation in value of enterprise mobility offerings. Last year, Ofcom awarded 12 licenses from its guard band in the 1800-1900 MHz frequency range. It was believed that the licensee's will derive value by offering a bypass from high call termination charges, making the propsosition very attractive.

However, now that the termination charges are being regulated, alternate solutions stand to lose some shine. In addition, interconnect between these new players and mobile carriers are yet to be worked out, restricting the networks setup by these players into what would look like islands.

New metric for calculating productivity: Profit per employee

Several vendors ask me how we could evaluate the intangible benefits for a business. Increasingly, new applications such as Unified Communications offer intangible benefits such time-savings and ease of communication amongst others.

The key to the measurement is the metric-Profit per employee. If a company moves away from measuring capital intensive universal financial performance and focusses on the core business to measure profit per employee, there is a greater chance to measure the intangible benefits of the new applications of ICT.

Sunday, March 25, 2007

Media enterprises are losing the plot.....

Financial Times, London reported that NBC Universal and News Corporation have sealed plans to create an online site to distribute professionally produced film and television content- the biggest media industry effort yet to knock YouTube aside as the top online video destination.

The report goes on to say News Corp and NBC Universal, part of General Electric, will create a 50/50 JV, yet unnamed, based in LA and NY. Mr Chernin will sit on the new company's board with Jeff Zucker, NBC Universal president and Chief exec.

It is known that the proposed JV has the blessings of AOL, MSN, MySpace and Yahoo to disribute the videos, which will be free to internet users and funded by advertising. Video content is expected to be beyond news. The JV is aiming to license content from other media houses including Time Warner, Sony Corp, CBS and Viacom.

On looking at the big news, it seems like YouTube is sure to be threatened. However, minute inspection tells otherwise. In today's world, the content that is proposed to be distributed by the JV is already available through television, a service that is widely accessible across countries through a licensing agreement. The business model is based on advertising and license fee (applicable in only some places). The JV aims to put the content into another distribution channel, that it perhaps considers to be more far reaching. They hope that this will improve their overall top line at the cost of an insignificant increase in the bottom line. I would not agree to this general consensus without more data. I say so because, where ever advertisers stand to gain value or customers, existing distribution reach those parts. It includes politically difficult countries such as Iran, Russia, China amongst others. Moreover, the JV allows free access to its content, therefore depriving it of a natural source of revenue (license fee). Saying this, I am not disapproving the use of internet. I suggest looking beyond existing business model to derive value. I am in agreement on a fundamental position, that the centre of information, entertainment for consumers is fast changing from being a TV to being the Internet. Hence, there is a need to be present in this new medium. There is a potential to gain more eye-balls, however the chances of improving topline will need some out-of-the-box thinking like what Google did years back.

Talking of the shift in preferred media, I would like to point out to the shortsightedness of the media moguls of the JV. YouTube isn't what it is because it shares some pirated versions of news, TV shows and cinema. It is what it is because of a different paradigm. Its the concept of user generated content that give it the scale at such low costs, and also the popularity and visibility. The moment somebody tries to bring QoS of TV into the internet world, the costs would be too formidable to offer free services and just depend on advertisers. Further, leveraging the internet is one thing and partnering with stronger distribution channels another. Google Video, a service from Google will be a biggest contender. If Google Video joins the plan and become a distributor along with AOL, Yahoo and others, it will be a completely different ballgame. The JV in such circumstances will become restricted to content generation and marketing with distribution left to people who know the trade.

Friday, March 23, 2007

Nortel on track with management priorities

Life has not been easy for Nortel's CEO Mike Zafirovsky. He took the helm when Nortel was reeling. He communicated his vision and now he is executing them with perfection. Last year, Nortel divested its UMTS access business to Alcatel, now Alcatel-Lucent. Later, Nortel inked a major innovative communication alliance (ICA) with Microsoft around enterprise communication (unified communication). Steve Ballmer, CEO of Microsoft likes to compare ICA with their relationship with Intel and DEC (later Compaq and now HP).

Now, Nortel is getting ready to get rid of its GSM business. Rumour mills are abound with the news that Alcatel-Lucent has secured an agreement towards 'first option to buy' when the business goes on sale. Since I don't track the mobile market, can't offer much beyond the news. However, with all this Mike and Nortel are keeping their promise to be in business where they are the best.

Uptake of web 2.0 apps within enterprises

There is a rise in user activism these days. Leveraging the scale and reach of internet, user-driven applications and services have created a new paradigm, sometimes referred to as web 2.0. The success of MySpace, Wikipedia, YouTube, Facebook and Orkut are some examples. Most of these developments have been in the consumer space, something that the enterprise market have been keenly watching for sometime.

The technologies that power web 2.0 phenomenon have had traction in the enterprise market. Collaboration, including Web services, peer-to-peer networking, blogs, podcasts, RSS, social networking, mash-ups amongst others have been tried and deployed within enterprises. Saying that the strategic direction in general has been towards adoption of technologies that enable automation and networking.

In one of McKinsey's recently published surveys, 79.3% of early adopters of web 2.0 applications were satisfied with the financial ROI over the past 5 years. Only 10% of respondents said they were dissatisfied. However the situation changed with fast followers. Only 59.5% of respondents claimed to be satisfied and 17.4% were disappointed.

One of the key challenges for web 2.0 apps has been to demonstrate value and put a price tag to it. Fortunately for the users of the internet, it allowed for unique experiences that led to a movement. Most of these applications came free of cost. In one of his visionary presentations, Cisco's Chief Development Officer, Charlie Giancarlo very nicely explained the changing lifestyle of the new generation. He explained with amusement that his daughter uses e-mail only when she wants to connect with him. The Google model created a new form of doing business. Internet gave it the platform and the market. Still the fundamental question of assigning a value to an application remains central and unresolved.

Today enterprise investment in web 2.0 apps is around creating another channel to interface with their customers, suppliers and partners. The advantages of the channel is around costs, transparency and collaboration. Enterprises derive significant in-tangible value from the use of these apps in managing internal collaboration. Value is derived from time-savings, resource management, collective intelligence amongst others. Lifestyle improvement at work is another driver that is at time overlooked.

Friday, March 16, 2007

Italian province of Trento goes Wi-Fi

The province of Trento is the southern part of the historic Trentino region whose history dates back to the mid-stone age. Being an autonomous province, the local administration has to fend for itself. The terrain is mountaneous which doesnot offer a great scope for wired network deployment. Therefore, its no wonder that DSL penetration is lower in this area in comparison to the national average of Italy. The economy of this province depends on primarily on agriculture and tourism. Lower spending capability in communication services and a difficult terrain are probably the chief reasons for the lack of adequate communication infrastucture in this region.

Not any more. The public administration has decided to deploy wi-fi to provide municipalities, businesses and residential users access to internet and voice services with wireless broadband access. Alcatel-Lucent along with a consortium of sub contractors will deploy 1600o wi-fi access points in one of its largest deployments in Europe. If successful, voice over wi-fi will be rigorously tested in this province as some parts will have no alternative access route as DSL isn't widely deployed. The province has a optical backbone that the Wi-Fi network can leverage. However, the rollout of the solution will take time. Until then we'll have to wait for the outcome....

Is FMC on track?

I read a report that says that FMC is firmly on track. However, my understanding had been that FMC has suffered casualties, for instance Deutsche Telekom abandoning its T-one service and BT not getting enough uptake for its fusion offering.

To investigate further, I followed the trail of the report to FMC services elsewhere- UMA in the Netherlands, Denmark, USA, Italy, France, and the UK, and dual-mode WiFi-GSM services in France, Germany, Spain, Japan, and Scandinavian countries-these are examples cited in the report, which I think is missing a point. FMC services have got some takers for sure, but then these (some 400,000 subscribers globally by end of CY 2006 representing less than 3% triple-play subscribers) users are the hep crowd who get the latest to stand out. This number includes users who have bought the latest service package, and aren't necessarily users of FMC. What I mean by that is, someone buying the latest Nokia E-series phone doesnot necessarily become a 3G user, the consumer can be using the latest device to make simple voice calls. We will need to look at other statistics such as network usage or service usage to determine the uptake of FMC. Saying so, I agree that for operators and investors, what matters is sales of FMC service packages. Currently, the usage of FMC services is pitifully low and the sense of fashion parity is yet to kick-in with the mainstream. In the current state of the industry, its a very costly proposition to stand out in this market. With ever changing industry dynamics (what with all the consolidation), constantly revised marketing schemes, launch of new devices have left the consumers feel lost in this myriad of change. The sense of catching-up with the latest will happen for sure, but at a cost. The conumdrum will have to solved, allowing a set of simple and clear propositions emerge offering customers choice and value. Will FMC in its current form achieve this state, I don't know. I remain, the skeptic!

Thursday, March 15, 2007

Cisco acquires WebEx

Cisco announced the acquisition of Webex- a web based conferencing and collaboration service provider. In an all cash offer of $3.2 billion Cisco gains access to the SME market along with a new but growing subscription based business model.

The offer of $57 per share for WebEx communications Inc is 23% premium over yesterday's closing price at Nasdaq. The buying price is almost double the January stock price of WebEx. WebEx made $380 million in net earnings in FY2006. It has around 2100 employees serving 28000 customers, approximately 2.2 million users across 85 countries. WebEx is the market leader in its space with around 65% market share followed by Microsoft and Citrix. Close to 80% of its business is in the non-enterprise segment. It has a considerable reputation in the SME space.

WebEx brings to Cisco market knowledge of SME, an area where Cisco hasn't been a player to be reckoned with. Also, WebEx offers Cisco with a unique business model. Subscription based services of unified communication and collaboration is in its nascent stage. As this model gains credibility, improves reliability the platform can offer an affordable channel for SME's to access the latest developments in unified communication and collaboration being disassociated with the technology risks.

The unified communication landscape is evolving. The game is on.

Wednesday, March 14, 2007

Telepo explores client-server architecture

Telepo caught my attention when I saw a PR highlighting an award that they won at 3GSM. On closer reading, I found that their solution targets the enterprises. I was curious. I requested for a briefing with them to which their CEO, Lars-Michael Paqvalen kindly obliged.

Lars-Michael outlined Telepo's focus on mobility that helps enterprises optimise their resources and predict cost. Now I have been talking to a lot of mobility players recently and many of them offer similar value propositions. It is already a crowded market. I was beginning to wonder if Telepo was one of the many newcomers in that space. But what Lars-Michael said next dispelled my apprehensions.

He said that Telepo is a technology provider that aims to leverage the service layer in a client-server architecture to offer new capabilities to enterprises. Now that is a start. Here is a company that understands the scope of opportunity in service oriented architecture in telecom industry. Therefore, Telepo is not only a mobility company- its much more than that or at least has the vision to go beyond mobility.

Telepo's current offering is a combination of Business Communication Server that comes with a routing engine, and a softclients to run on computers and mobile phones. Telepo's solution set works on both private wireless technologies such as IEEE802.11b/g and public mobile technologies. Its no surprise that Telepo has a close association with Ericsson who launched Enterprise Mobility gateway recently. I would like to hear more on their collaboration efforts.

FMC in deep shit

Over the past couple of years, several PTTs have dabbled with FMC. BT launched BT-fusion, a bluetooth variant in 2005. After a strong market push, stands at 3GSM and other events, communique from evangelists plus a subsidy to employees, the offer managed to attract around 13000 users. Feedback from users pointed to some disadvantages with the technology/service, something that the operator claimed to have addressed with its new offering- BT Openzone. However initial uptake has been conservative. Till date the service is used by some 10000 users.

In Europe, Deutsche Telekom launched T-one (their flagship FMC service) at CeBIT last year. And just before CeBIT starts this year, they announced to have dropped the service. It is understandable. The operator is facing a precarious financial health condition, a state that doesn't allow it to carry extra fat and non-functioning organs. It is said that the operator managed just a few thousand users inspite of aggressive marketing campaigns.

What does that tell of the future of FMC in Europe?

Microsoft acquires Tellme- Is it about mobile search?

The news of Microsoft acquisition of Tellme has being doing the rounds in the silicon valley for days. Now, its official. Tellme, founded in 1999, offers voice services for the phone, including its popular mobile search services on 1-800-555-TELL. Businesses use Tellme’s voice services and platform to provide customers with voice-access services ranging from banking to package tracking. According to Mike, CEO of Tellme, around one in every three americans use their platform once a year, pretty neat I say.

Industry veterans from the late 90s talk about the roller coaster story of Tellme, from a high profile voice portal company to becoming another victim of the crash, .......only to rise again. Kudos to the management who did a tremendous job of the difficult task of creating a business case and indeed a profitable revenue stream from an otherwise free portal. Today, amongst its customers, Tellme counts AT&T, FedEx,Merrill Lynch, E*TRADE and American Airlines amongst others who use its platform and services to answer millions of calls every day for information such as directory assistance, tracking mail/post, airline details, finding local businesses, driving directions, sports scores, stock quotes, weather, news, movie show times and more. The press release from Microsoft notes, Tellme powers billions of calls to hundreds of phone services used by more than 40 million people every month.

The company is privately held. Commentators have reported $230 million of funding. Mike, during the analyst call claimed that the company was profitable. Om Malik estimated the revenue to amount $100 million in 2006. It is widely speculated that Microsoft would be paying around $800 million -$1 billion for the acquisition. Once approved, all of the 320 employees of Tellme will become Microsoft employees joining Jeff Raikes team at MountainView, California.

Jeff mentioned four key areas that this acquisition will add value:

a) Software as a Service: Tellme's successful experience in hosted software platform will give Microsoft access to the competencies to launch SaaS a much bigger scale. Saying so, there were other means to acquire the expertise cheaper and with more flexibility and depth.

b) Unified communication: Jeff mentioned the use of hosted voice-enabled customer service solutions that complement Microsoft's existing unified communications offerings. The value proposition is compelling. I find it hard to understand the need to own a application developer when customised apps could have been OEMed. It doesn't make sense to me unless Microsoft launches voice-enabled UC products in 2007.

c) Roadmap for speech solutions: It is said that with this acquisition, developers and partners will be able to build new speech based solutions on a scalable, standards-based voice-enabled applications platform. This is plausible, yet I see areas of overlap with what Microsoft currently offers. Also, there might be a conflict of interest between Microsoft and its ISVs on the usage of this specific application platform.

d) Access to mobile search technology: Tellme technology will allow voice user interfaces in existing Microsoft products to search services on mobile phones that integrate with Live search on mobile offerings. This capability, if robust, could prove to be a jackpot for Microsoft. The key challenges for Microsoft will be to establish the key relationships with operators. It cannot be emphasised enough the lack of sustainable/growing revenue streams for operators, definitely in Europe. Most of network advancements is taking place on the back of future earnings potential or to be on par with competition. This is constantly raising the bar, also making the services costlier. Mobile search technology would offer another offering, that if successful could create a two-dimensional sustainable and growing revenue streams-

1. from the users-for paid search
2. from the advertisers

Use of speech technology to interface mobile search is, what I think is a brain-wave. Not suprising then that Google was rumoured to be in take-over talks, something that helped Tellme push the price, but also something that gave Microsoft an opportunity to beat them to the post. Overall, an interesting move, one that holds a future. But it needs a lot of hard work, right strategy and hope that customers will buy

Tuesday, March 13, 2007

Lotusphere, London

One of my colleagues suggested I register to IBM's Lotusphere show in London. Listening to him, together with my lovely manager (yes!), we attended the event on the banks of River Thames just by the Tower Bridge.

There were more than 500 people at the event. The spokesperson said this event saw 50% rise in the number of registrants. Saying so, IBM has a tall order. Over the past three years, ever since Exchange 2003 gained market acceptance, e-mail business has been a losing battle for the big blue. Now they say, they have had enough. According to them 2006 was the best year ever for Lotus (it wasn't bad for Microsoft either!). Leveraging their market leadership in corporate collboration suite and triggering the e-mail replacement cycle with the latest version release, they registered a whopping 30% growth and increased traction. They boasted of a deal with the Government of India, whom they are selling a Lotus Portal that the government plans to use to offer information services to its citizens. Its a project of a massive scale, thanks to the population of the country and increased sense of empowerment. Saying so, I am compelled to write about IBM's contribution to the rise of the Indian IT and software industry. It is well known that today's economic boom in India is based on its IT and software industry. However few people are aware that IBM is responsible for that. Had IBM not felt the lack of any business opportunity in India and moved out in the late 70's, the industry that commands the world's attention and respect wouldn't have been born. Thanks to their actions, today India houses several multi-billion dollar IT/software/BPO companies that gives the big blue a run for their money on global outsourcing deals. And Microsoft? Had IBM bound Bill Gates by an exclusive agreement, we would be living in a different world today.

Okay, now back to Lotusphere. Lotus 7.5 was released last year. Nice products, some enhancements. It has helped them create traction. Now that Microsoft is coming up with Exchange 2007, it seems that the e-mail replacement cycle (forced) is in vouge. Sametime, the Lotus IM client has undergone some serious changes. Apart from adding the much needed voice, video and presence capabilities; Sametime has gone open. It can be integrated to non-lotus platforms such as Outlook. Sametime can federate with public IM clouds. It can interconnect with Google talk, AIM and Yahoo. Sametime 7.5 is more than just an instant messenger. Its a platform for collaboration that offers location based services, advanced presence capabilities, integration with blackberry and other mobile devices, file transfer, a neat slide presentation capability, hand-up for attention to the moderator during a conference amongst other cool features. Together with e-mail and IM, Lotus has a very advanced product set-up. This with their strong websphere portfolio will make their proposition quite lucrative to enterprises with some disposable cash.

All that was said was said and heard. Great stuff. However when the folks tried to run a demo, working wasn't as good as the talking. The blame was conveniently placed on the poor wireless data network.

There was more to come, but mostly talk. IBM requested its customers to try out the beta version of Lotus 8 which is said to offer further advanced capabilities such as group calender, advanced scheduling and office capabilities such as documents, spreadsheets and presentations sharing. And you know what, Lotus will support both Microsoft and open document formats. IBM is taking the market seriously. My job will get more exciting.

It also appears that IBM is watching the market closely. Lotus has come up with a slew of applications such as social networking, websphere portals, Quickr, Lotus connections amongst others. To me, they all seemed like the enterprise version of cool consumer tools like flickr, facebook, orkut amongst others. What I missed was a underlying thread that linked them together so that for instance the profile information on Quickr could be replicated and found on other tools. Also, the discussion seemed very silo-based, but I may just be a skeptic.

Finally, the area that interests me the most. IBM's UC2. Finally, the big blue is up in action. It has created an ecosystem of partners, build the necessary framework and is planning to use the upcoming e-mail and collaboration uptake surge to promote UC2. It will be an interesting space to watch. IBM is undoubtedly the leader in collaboration, and is placed second to Microsoft in corporate e-mail. The two giants are expected to be using the replacement surge to push their agendas of unified communication during 2007-2009. With these thoughts in mind, I left Lotusphere wondering how the industry will shape in 2007. More, later.

Saturday, March 10, 2007

Siemens maintains its topline in FY 2006

I had a quick chat with Siemens execs before some detailed discussion around CeBIT. I have been concerned about their performance in real growth in systems, shipments, new accounts and top line. It has been widely speculated that the vendor might take a hit in its topline. However, in FY 2006 Siemens measured upto its FY 2005 performance after registering a growth of slightly greater than 5% in shipments. This is chiefly attributed to a buoyant CAPEX in the market and its success with Hipath 8000. The ongoing replacement surge, better investment climate in Germany and successful growth in its indirect channel helped it maintain its course. I am very hopful of the success of its pure IP product, the Hipath 8000 in CY 2007.

Inter-Tel 7000 to target its Axxess installed base

I had a long conversation with Jeff Ford, CTO of Inter-Tel today. He said, Intertel's 7000 GA has already made some inroads into the UK market. In its early traction, it aims to replace the Axxess installed base with the SIP based 7000 product apart from targeting other medium sized organisations up for replacement. Inter-Tel 7000 has some clear advantages which I shall write about in another entry. Its a great time for Inter-Tel in UK. Already the vendor does around $60 million business in Europe.

Thursday, March 08, 2007

Skype doesn't have a PBX

Today I spoke to Michael Jackson. Yes, you read it right. Michael Jackson, Director of Operations for Skype discussed his company and its vision. He came across as very helpful. During the discussion he mentioned that Skype, a 500 strong organisation spread across Europe and North America doesnot have a PBX. wow! I said. He added that they have one external line for the reception. I wondered how did the receptionist transfer calls internally. Pat came the reply, "We use Bosky Box". Hmm, let me provide a little bit of background on Bosky. It is a small manufacturer based out of United Kingdom that has built a small box to connect Skype with a KTS/PBX or a phone.

So, all small enterprises out there reading this blog know that you need not invest in costly end points. You can do without. Not only do we have Bosky, but there are others who offer some kind of plug-ins. These can be used to interface with KTS and PBX in an enterprise. Skype as a standalone comes very handy to a traveller. Last year, Polycom announced the launch of a product that supported Skype. Asterisk is understood to be in discussions with Skype. That makes sense. A partnership will help create an interesting PBX solution for enterprises. Its interesting times for small enterprises.

Wednesday, February 28, 2007

Why doesn't London underground have wireless connectivity?

I have often wondered what it takes for the underground network in London to have wireless connectivity. Technically, it isn't impossible. Then why?

Seems like operators need to enter into an agreement with the transport of London on modalities of revenue sharing before any such service can be offered to thousands of passengers who commute long distances daily. Seems amazing. What about public service? What about value for money? I continue to be amazed at the roadblocks bureaucracy creates in offering one of the basic services.

So, it is the transport of London that is stopping the mobile carriers from setting up pico and femto cells across the underground network. Thales, which operates the communication network doesn't quite see a lucrative value proposition to offer mobile connectivity to the customers of underground service. Egad!

Tuesday, February 27, 2007

Will Ofcom continue to be friends with the low power GSM license winners

There are perks in being a Industry Analyst. At the end of a hard day's work, I had a meeting appointment with Ian Sugarboard, President and CEO of LGC Wireless at Picadilly Circus. The place falls on my way back home. Not really, ended up taking a circuitous route.

Ian started by articulating his vision for LGC Wireless, followed by explaining their value proposition, their place in the market and the like. James Cooper, who had arranged the meeting helped me to a shot of caffeine. Hey, not saying anything against Ian. He was superb, but then three meetings with senior managements of three companies earlier in the day had drained me of all my energy. Well not all!

Responding to one of my queries, Ian opined that Ofcom was visionary in licensing the 6MHz guard band to 12 players in 2006. The winners who include BT and Teleware have a very huge business opportunity to be leveraged in the wireless enterprise space in UK. However there remains some complications. While the license allows the winners to offer in-building GSM coverage, the solution will be successful only when it offers seamless connectivity outside the premise. The hand-over to wide area wireless carrier has to be transparent for the solutions to gain greater appeal. Till now we haven't read any deal in the press. Ian mentioned that while GSMA assures international roaming to all service provider, national roaming and interconnect is within the framework of the national regulator. What this effectively means is that, in the event of the new winners of low power GSM licenses not getting any interconnect agreement with the mobile operators, they can knock on the doors of Ofcom, who by regulation can force the mobile operators to open up interconnect with these new players. The big questions that remain to be answered include-

Will Ofcom be so friendly with the new winners?
Do we see a fixed price interconnect regime in the future?
Will mobile operators succumb to the pressure and offer access rates that are on-par with fixed operators?

Ian's opinion kept ringing in my ears throughout the 50 minute underground journey I undertook. What a way to end the day. Now, I am planning to do a bit of analysis on this rather interesting segment. Thanks Ian. You gave me another job and the inspiration. Thats why I say there are perks in being a Industry Analyst.

When to stop milking the cow?

Today I met with the Head of Strategy, Siemens Enterprise at my offices. Not technically. Although we were supposed to have the meeting in our offices, since all the conference rooms were booked, we descended to a bar nearby which we assumed would be empty at 9AM. To our surprise, we had company. Lots of people were having meetings, suggesting a serious shortage of office space in the Victoria area of London. Fortunately my guests liked the arrangement. They even collected the visiting card from the concierge of the hotel to which the bar is attached.

That was a sidetrack. Getting to the point. Siemens Enterprise is in a unique position. They have historically enjoyed a position of strength when TDM signals ruled the voice world. They were like a rajah, with a very huge entourage of direct sales force keeping their installed base happy. While their friends (or do we say foes in the market) such as Alcatel and Nortel slowly adjusted to newer market forces by moving indirect, Siemens Enterprise defied the writing on the wall and continued with their direct sales at the cost of falling margins. Till 2004, close to 90% of their revenues were attributed to direct sales. However, we have to give them their due credit. While the market pressure forced giants such as Ericsson and Nortel succumb, Siemens kept going, thanks to their strong portfolio. Today they stand at a juncture.

Its is known that the future is indirect, is hosted and is most likely to be a software based service. The brilliant engineers at Siemens' have built the product that will take them to the future. Yet, they can't stop milking their cash cows (legacy infrastructure). The big question before them is- When and how do we switch?

Wednesday, February 21, 2007

Appear Network expands to Netherlands and the UK

Appear Networks provides context-aware software infrastructure that transforms wireless data networks into rich multimedia channels to power next generation mobile application and services. Credited with the success stories with Dutch Rail and Paris Subway, Appear went on to win several awards at the recently concluded Cisco Networkers Event in Cannes, France. Leveraging a strong partnership with Cisco, Appear Networks is braving new markets. Recently they got on board two high experienced sales resource, one to be based in UK and the other in Netherlands. The space that Appear operates in is highly lucrative. Net margins of 60% isn't uncommon. However the level of skill set required is quite high and so is the risk in project execution. Currently Appear Networks can still be classified as a small business. Its nearest competitors Intellisync and iAnywhere was acquired by Nokia and Sybase last year.