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.

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.

Tuesday, February 20, 2007

News from Alcatel's desk: An analysis

Last week Alcatel-Lucent participated in the 3GSM in Barcelona. They announced the launch of unified mobile TV experience. Claimed as world's first, a single device (such as a pocket PC powered PDA) offered access to TV channels delivered by 3G and broadcast networks. This offers interesting options to service providers, content players and users. Optimal business model needs to be found, that offers value for money to users and ROI to service providers. Other challenges includes ironing out the content value chain, address copyright issues, create a robust value chain for user generated content. Pricing models is probably the trickiest part of the overall proposition.

That being said, the availability of mobile TV is expected to drive some sales in the video equipment market amongst enterprise segment. I believe that if a value proposition is created, enterprises would be one of the largest creaters of content. Advertising and corporate communication will go to the next level within enterprises. The billion dollar business question is to design a valuable advertising model.

Alcatel has a strong enterprise portfolio. Recently they shipped their 10 millionth OmniPCX office. Its interesting to compare this with the announcements that Avaya and Cisco made late last year. While one announced the sale of 9 millionth IP phone, the other quickly followed with a bigger boast-10millionth IP phone. True, Alcatel's OmniPCX office says nothing of IP phones, but then its simple to see who has a greater market share considering the average number of lines for OmniPCX ranging around 27.

The vendor also announced a new IP dedicated recording (IP DRlink) interface for its OmniPCX Enterprise IP PBX. The IP DRlink enables Alcatel-Lucent's IP phones to be connected to voice loggers and quality management systems for voice recording in call center, financial trading floor, public safety and other enterprise applications. This feature is expected to gain the interest of contact centres, financial services and the healthcare industry. Inline storage and archiving of communication has a great potential in the times to come, as we start seeing greater traction for unified communication and indeed convergence.

Other announcements centered around carrier grade wireless and wireline, an area where I am still a student. I won't delve into those now.

Overall, the announcements were pretty sound. However, a close view of all their announcements showed that the vendor lacks a clear cut vision into the future. Seems more like they are a supplier who meets customers demands. This is good in a lot of ways such as minimising risks, however it takes the margin and early market advantage that Alcatel-Lucent can leverage from the work that the great innovators do at Lucent bell labs and Alcatel's R&D team.

Thursday, February 08, 2007

Siemens Enterprise changes guard

Andreas Bernhardt has stepped down as the CEO of Siemens Enterprise citing personal reasons. Erstwhile CEO of Siemens Enterprise, which the entity was a part of Siemens Com, Eduardo Montes has stepped in to take the position of CEO. Eduardo was been very successful with Siemens Enterprise in Spain. He took the position of CEO just before Dr Klaus Kleinfeld announced the Siemens Com demerger and the JV between Siemens Carrier division and Nokia Networks. The exact impact of the change is yet unknown. Eduardo is known to be very focussed to drive Siemens Enterprise business. Thomas Zimmermann continues as the president of the Enterprise systems unit with extended responsibility of indirect sales. Gerhard Otterbach carries on as the President of Services and Solutions with Stefan Herrlich who heads the direct sales and direct touch organisation worldwide reporting to him.

Wednesday, February 07, 2007

Nortel quantifies target reductions in workforce

Outlining measures to meet the objectives set out by Mike Zafirovsky, Nortel's business transformation plan is set to reduce headcount by 2900, 70% of which will take place in 2007. The reductions will be mainly in the general & administration and research & development functions. This is due to changed product mix, technology mix and out of efficiency improvement. In addition 1000 positions mainly in the R&D and operations functions will be shifted from high-cost to low cost locations, 40% of which will take place in 2007. The key countries to benefit from this shift are China, Mexico and Turkey. John Roese, CTO of Nortel explained that this transfer will help the company target the emerging markets better.

John went to offer financial guidance. He was speaking very fast, as a result I missed most of what he said. The key metrics that stayed with me are: 8.8% revenue growth in Q4, 2006, gross margins in excess of 40% for the first time in several years, and free cash to the tune of $900 million.

The area that John loves to discuss i.e technology came next. He outlined Nortel's focus on 4G wireless technologies such as mobile WIMAX, next generation carrier ethernet and next generation enterprise communication. He invited to view the first live LTE demonstration at 3GSM in Barcelona in a week's time and promised that the technology will only improve. John cheekily admitted to the excess noise created by getting BT's carrier ethernet contract to become a critical part of its 21 CN plan.

Finally the area that interests me the most, enterprise. John stopped to discuss their ICA with Microsoft. He seemed to dodge the question of where the alliance stood in the wake of the Microsoft-Motorola alliance. He outlined that while Nortel would contribute with telephony & real-time communication feature set and the signalling software, Microsoft will bring SOA, GUI, applications, presence amd collboration capabilities to the table. He explained that both vendors were free to choose other alliances.

Tuesday, February 06, 2007

Enterprise Mobility: Death of roaming charges

I get so angry and frustrated when I see the roaming charges on my mobile bill. As a engineer, I can't relate to the costing for a roaming service. In 2003, I presented a paper outlining how roaming is farcical. Let me take a couple of cases from the paper to illustrate my point.

Case 1: x number of customers of mobile operator A in UK travel to France to connect to mobile operator B. y number of customers of mobile operator B in France travel to UK to connect to mobile operator A.

Assume each customer calls to their home country only. For a call within the home country that costs 30 p/min, the roaming call cost on an alternate network can be expected (with anger) to be around 95p/min.

What we are told is that roaming charges go on as interconnect fees to be payed to the operator that is providing the access to make the call. In our case operator A earns (95-30)*y per minute and pays (95-30)*x to keep the difference as profit without a cause.

In technical parlance, what happens in roaming is that your HLR contents is transferred to the VLR of a different operator, which is the exactly what happens when you travel far from home in your home country. Apart from that the operators transfers the call through an interconnect, and CDRs are exchanged between operators. For this they charge what they charge.

Case 2: If a user A in UK travels to France and a user B in UK calls user A, both users pay excess charges. I wonder why?

Therefore, this roaming farce seems like cartel-pricing, rightly said by the European Union late in 2005. My reason to write this piece isn't to vent my frustration but to speculate the death of roaming with the rise of web based free services and private mobile networks. In a recent conversation with convergence specialist of BT, Rik Rocken, he outlined the forthcoming One-voice for mobile that will help enterprises get rid of roaming charges.

If we look at enterprise mobility and the rise of private networks, the value proposition is around saving costs (comparitively high access costs and long distance charges, and roaming costs). Its interesting that roaming charges gave enough reason for a new industry to be born only to kill its cause.