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.

Saturday, January 12, 2008

Unified Messaging- vendor push or market pull?

Over the past three months I have been researching this market in Europe as some of you know by now. I have spoken to a number of you in the meanwhile. It is amazing how similar the views are amongst people with similar firms and how different they appear from a different set of stakeholders. When I interact with vendors, all I hear is that the technology is mature, solutions well tested and sufficient knowledge base has been created. It is true that the delivery systems are more sophisticated now than before. The channel vouch for this. However the channel also suggest that sales are still hard to come by despite constantly rising numbers of license sales submitted by leading vendors.

Before Christmas last year, I had interacted with a number of end users in sectors such as education, government, finance and banking. I was surprised by the relative lack of awareness amongst medium sized organisations. This constrasted with the savviness amongst IT folks of large organisations especially in banks and other financial institutions. These people not only knew what UM meant, some of them used the solution in their organisation. To confirm my fears, I surveyed my contact list (users) asking them if they used UM and if they did, how and where. I offered a very general definition of UM. Out of over 30 responses, only four (three of them work with vendors in the communication technology space while the fourth is with a channel organisation) suggested that my definition was not appropriate but rather very general. Yet except two of my respondents, none of the others use UM solutions at work.

I am at the final stage of my investigation. I would very much appreciate your comments if any.

Friday, January 04, 2008

Executive Summary of European Wireless E-Mail Markets

Late last year, I researched the wireless e-mail markets in Europe. Many of you have helped me with your mails. As a note of thanks, I am reproducing a summary of the study. To access the complete report, please contact Nils Frenkel by writing to nils.frenkel@frost.com

Wireless E-mail is one of the largest segments in the mobile enterprise application market. The installed base continues to grow as new customers deploy the solution and those with deployments expand their footprint. Transitioning from a ‘nice to have’ to ‘must have’ application, there is a growing market momentum among end-users to formulate mobility strategies centered on wireless e-mail. Organisations see a wider scope in the use of wireless e-mail technologies. The capability to push and pull data between mobile devices and the back-end servers creates new application areas for the technology. Surveys indicate that CIOs consider mobilising enterprise applications (especially e-mail) as one of their key priorities. However the value-chain for delivery and access continues to be plagued with serious challenges. Nonetheless optimism in the market suggests a steep growth opportunity in the number of business users.

Research in Motion’s growth and its efforts in creating wider market awareness have led to a flurry of new entrants. There are several specialist vendors and niche players offering enterprise and consumer grade solutions. The key entities in the industry include the E-mail vendors, device manufacturers, mobile application platform suppliers and specialist players. E-mail vendors such as IBM Lotus, Novell GroupWise and Mirapoint look to follow Microsoft’s strategy to extend e-mail capabilities to wireless devices. Device manufacturers such as Nokia, Motorola and Samsung are investing to bring in new devices with the capabilities to support mobile applications such as wireless e-mail. A number of specialist vendors vie for growth opportunities in this lucrative segment. Several crucial stakeholders have taken measures to consolidate the industry. Acquisitions by Sybase (iAnywhere), Nokia (Intellisync) and Motorola (Good Technologies) are some cases in point. Specialist vendors and solution providers such as CommonTime, DMESync, Fenestrae, Funambol, LRW Digital, Notify Technology and OpenHand continue to play a crucial role in the market development. Mobile operators find themselves in an enviable position in this market. Several operators across Europe, such as Vodafone, T-Mobile, O2 and TIM now offer a breadth of solutions targeted to specific market segments. This is aided by the growth in white-labelled offers from vendors such as Consilient, CriticalPath, Funambol, Oz Communications, Seven, Synchronica and Visto, amongst several others.

The success of Blackberry (BES and NOC services) and the entry of mobile operators in the market have created new opportunity in hosted wireless e-mail solutions especially in the SMB segment of the market. Currently several solution providers and some vendors offer this capability with the help of third-party operators. Several critical factors, including the maturity of the technology, early adopter acceptance, falling prices and affordable packages have helped wireless e-mail application become attractive to the SMB, SoHo and prosumer segment. However ‘behind the firewall’ deployments remain typical amongst enterprises.

One of the reasons for wider market opportunity for this application is the marked change in our work pattern. As our professional lives are increasingly becoming integrated with our personal ones through the use of Internet technologies, our work life is changing. Growing trends of mobile workers, remote working and tele-working have placed out-of-office connectivity as a top priority. The relative pervasiveness of e-mail (except when compared with telephony) makes it crucial for CIOs to match its availability with changing work patterns. Remaining connected at affordable prices and using corporate resources remotely to make intelligent decisions not only improves performance effectiveness, but also leads to competitive differentiation.

Despite such attractiveness CIOs find it prudent to delay implementation decisions in the face of severe challenges. Scalability, unpredictability of operating costs, device & application security, device management, lack of standardisation, future-proofing and limited scope of interoperability in the value chain create road blocks to deployment.

Frost & Sullivan believes that the industry will work towards overcoming these challenges, making investment in wireless e-mail more attractive. We expect to see increased efforts towards standardisation and interoperability. We forecast a strong growth of corporate wireless e-mail users from an installed base of 8.4 million in 2006 to 85.8 million in 2012 in Europe.

Market Slowdown?

First few days into the New Year, I am reviewing some of the macro-economic numbers that came in towards the end of 2007. Preliminary analysis indicate a slowdown in procurement this year in Europe. I would like to invite my readers to mail me what you think 2008 has in store for us.

Tuesday, January 01, 2008

Summary of events in 2007 and Outlook for 2008

New Year Greetings!

I am aware of my irregularity in adding posts over the past two months. It is amazing how much time it can take up to maintain and update a blog. In the New Year, I'll try to improve on my track record. Let me start off my reproducing the article I wrote for CommBusiness which will also be available on frost.com in a few weeks.

Stepping into New Year, let’s look back at the European enterprise telephony industry in 2007 and review the major announcements that will affect 2008.

Key Announcements in 2007 and their relevance in 2008 and beyond

1) Microsoft releases its Unified Communication portfolio

The launch of Office Communication Server 2007 (OCS) and Office Communicator 2007 (MOC) has been one of the most high-profile announcements in the Unified Communication marketplace. This heralded Microsoft’s entry into the industry that has been dominated by PBX and switch manufacturers. In addition to Microsoft, close rival IBM has developed strategic interests in this market. The entry of these software powerhouses will play a strategic role in shaping the future of Unified Communication in the years to come.

2) Avaya goes private, Mitel acquires Inter-tel and NEC acquires the assets of Sphere

One of the leading companies in the enterprise communication technology industry, Avaya agreed to become a privately owned entity. This move led to concerns amongst a section of the market. User organisations who contend this to be a sign of further consolidation were fearful of the investments. Generally, buying organisations procure enterprise communication infrastructure with a long term view. Industry consolidation creates uncomfortable questions on the future of product lines and the validity of existing agreements. Despite these concerns, the industry witnessed consolidation amongst players that cater to the SMB and mid-market segments. Mitel acquired Inter-Tel to become the leading vendor in the SMB segment in North America. NEC acquired all assets of Sphere.

While the industry consolidated, new players continued to enter the market bringing with them innovative products based on cutting edge technologies. These effects of consolidation and innovation are set to play crucial roles in infrastructure/application procurement decision making amongst buyer organisations in 2008.

3) Leading vendors acquire strategic assets in the ‘Software as a Service’ space

Signalling changing times, leading ‘on-premise’ vendors acquired strategic assets in the ‘Software as a Service’ space. Microsoft acquired TellMe, Cisco acquired WebEx and IBM acquired WebDialogs to set them on par with changing times.

These market moves indicate that these players spot growth opportunities in the ‘SaaS’ space especially after the success of players such as salesforce.com and the growing clout of Google (GoogleApps). This makes sense as competition and innovation continue to erode the precious gross-margins in a market that is increasingly looking to share the risks with its suppliers.

4) New products continue to enter the market

Over the span of 2007, the market has been regularly greeted with new product announcements. This is reflective of the perceived growth opportunity. Alcatel-Lucent, Cisco, Panasonic, Samsung, Siemens Enterprise, and Toshiba BCD amongst others launched new products. Others released new versions of their successful products.

Alcatel-Lucent renewed its focus in the 100-500 user segment with the release of Business Integrated Communication Solution (BiCS). This launch fills the long standing gap in the vendor’s portfolio. Targeting the same segment, Cisco announced the launch of Cisco Unified Communication Manager Business Edition that will cater to the 150-500 user segment.

There were a number of new products released in 2007, majority in the sub 50-extension segment. Cisco launched Unified Communication 500 series that can scale to 48 users. Siemens Enterprise announced HiPath OpenOffice ME, to be released in January 2008. The IP based UC toolset is designed to not only cater to the 20-50 user segment, but scales up to support 150 user enterprises. Panasonic’s launch of KXTDE marked its entry into the IP world. The traditional vendors in the SMB space weren’t to be left behind. Toshiba BCD launched Strata CIX40 while Samsung released OfficeServ 7100. Besides them, Microsoft released its UC portfolio that we have discussed earlier.

At a glance these announcements reveal an interesting point. Almost all target the sub-500 segment. This is inline with market results published by Industry Analysts. One recent report released in December 2007 claims a decline in the growth in the mid and enterprise market segments, while the SMB segment in the U.K is reported to have grown by 20 percent in Q4, 2007.

Based on the developments on the supplier’s side and analysis of market demand in 2007, the following trends will shape 2008.

Market Trends in 2008

A) PBX is passé, ‘UC’ is the buzzterm

Unified Communication (UC) has certainly become a very popular term in the industry especially since Microsoft began its marketing. Its importance amongst the vendors can be felt by the fact that Microsoft, Cisco and Avaya have created business units to cater to this market. Most vendors in the enterprise telephony and indeed the communication software industry have developed UC portfolios.

Cisco re-branded its flagship Call Manager (IP PBX) as a Unified Communication Manager. Its UC portfolio includes IP telephony, messaging and collaboration products. Alcatel-Lucent on the other hand has bundled its applications into a suite, called OmniTouch Unified Communication. Avaya’s UC portfolio is similar to Cisco’s. The portfolio includes products from IP telephony, messaging, conferencing & collaboration and enterprise mobility families. Siemens Enterprise employs a different strategy. Its UC portfolio includes HiPath Openscape, a portal that offers presence enabled collaboration.

Besides enterprise telephony suppliers, software vendors such as Microsoft and IBM amongst others offer a suite of products under the UC banner. Others such as Oracle and SAP are all also set to join the party. Infrastructure players such as Tandberg and Polycom don’t want to be left behind either. These vendors have developed their own UC portfolio focussing on their strengths.

Overall the UC industry is an amalgamation of different communication technology and application silos. It will be the buyers who will help shape the market in terms of sourcing decisions in the years to come.

B) The Focus Market for Enterprise Telephony is Shifting to SMB

In the previous segment, we discussed the growing importance of SMB. In 2007, a number of players have developed new initiatives to foster channel presence in the SMB segment. Nortel created channel marketing bureau to deepen its presence in the SMB and mid-market. Siemens launched its global partner program- Go Forward! As part of that, there is news that Siemens Enterprise will be investing around € 4 million in U.K, a major part of which will be invested in the development of channel to carry their OpenOffice product. Cisco’s new channel initiative in the SMB space is called the Cisco Industry Solutions Partners Network. ShoreTel, another emerging player in the SMB has been extending its partner network for sometime now.

C) Enterprise Mobility is ‘Hot’

Industry Analyst reports suggest very high growth rates for mobile enterprise applications. A Frost & Sullivan study forecasts CAGR of over 20 percent for wireless e-mail and mobile CRM over the period of 2008-2013. It is only natural that enterprise telephony vendors will aim to get a piece of that action.

Several players such as Aastra Technologies, Alcatel-Lucent, Avaya, Cisco, Ericsson, Mitel, Nortel, Siemens amongst others have a breadth of solutions in this space. A number of players such as Ericsson and ShoreTel amongst others have been marketing Mobile Unified Communications. As buying organisations develop mobility strategies, we can expect to see an increase in activity in the times ahead.

D) Collaboration Gains Fresh Impetus

The growing mindshare for Web 2.0 innovations have given a fresh impetus to the need for collaboration software within organisations. Surveys indicate that a majority of business managers believe in the value of Enterprise 2.0 type collaboration tools and software.

Although there aren’t many stories on deployments yet, the strength in the buzz appears to have the potential to create a market. However there are concerns that some of the claims made are over-rated and the entire hype will fizzle out.

E) SOA and Web Services Gain Traction

Downward price pressure on hardware and the renewed focus on software and services has brought to fore the opportunities for SOA and web services. Most leading infrastructure vendors including Cisco, HP amongst others have been promoting the idea of SOA.
The current replacement cycle is an ideal ground to sow the seeds of SOA. The market moves by leading players such as Cisco, Microsoft, IBM, SAP and Oracle suggest that there will be stronger emphasis on web services.

F) Open Source and Open System Gain Mindshare

There has been a number of marked changes in the architecture and technology of IP telephony systems. There is an increasing acceptance of third-party components such as server and media-gateways. While a number of vendors continue to harden the servers, the momentum is towards the use of standard off-the-shelf components.

Since 2004, Linux has replaced Windows in most of the new products rolled out in the market. This, along with the growth of Asterisk (now used by Digium, Aastra technologies and 3Com), marks the ascent of open-source in call control systems of enterprise telecommunication. Apart from NEC United and Nortel (except CS2100) most tier-1 vendors’ flagship products run on open source OS, with Linux ranking highest on choice.

Industry standards such as SIP and SOA are getting embed in their core system design. Offerings from leading vendors such as Alcatel OmniPCX Enterprise, Avaya Communications Manager, Cisco Unified Call Manager, Ericsson MX-ONE, Mitel 3300 ICP and Nortel Succession series were made SIP capable. Several products including Siemens IP portfolio including Hipath 2000, 5000 and 8000, 3Com VCX7000 and InterTel 7000 were designed on SIP from scratch. All new products introduced in 2007 were SIP based.

The events in 2007 and the trends evolving as a result promise to make 2008 an exciting year for all of us!