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, 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.