Enterprise Communication Insight

Why does the antenna fail?

2009-01-05T20:06:00.000Z

Maybe its the device that I was given. But after using it for several months (less than a year), I have been noticing that my Blackberry curve is failing to keep its antenna active. It searches for network in places where it always found network. Did the T-mobile guys reduce the number of towers they supported in London.

Over the span of my use of the blackberry curve, I have noticed that the software can throw some problems at times. For instance, the Gtalk software installed on my Blackberry Curve throws exception errors so frequently that I have stopped using it.

Saying so, I must admit that RIM's devices still lead the pack in terms of business use. They have clearly thought it out. The idea of an e-mail centric mobile phone is just awesome. I remember the last time I spoke with a reporter from FT on smartphones, she said there was broader agreement that Blackberry is the de-facto choice. However, from my experience it seems that there is still some work to be done.

My blackberry is giving me the jitters

2008-12-22T07:36:00.000Z

Guys, have you faced continuity issues with Blackberry. Mine is 15 months old and it is giving me some problems.

1. The antenna doesn't work properly. It continuously searches for network in places where it didn't previously
2. The 'saved messages' folder seems to have lost a number of messages. For instance, a whole set of messages between certain dates have gone missing.
3. The IM chat sessions take ages to open these days. I haven't changed location nor have I changed what I used to do previously
4. The button that on pressing displays "Entering stand-by mode........" doesn't function all the time.
5. The call quality has deteriorated. The sound fidelity seems to have gone down.

Let me know if any of you guys are facing similar problems.

How is open source faring?

2008-12-15T14:23:00.000Z

In the beginning of the year, I supervised a colleague's work on open source. I found that the movements in that space fascinating. Towards the end of the year, I wonder how have they performed in 2008 especially because-

a) a number of these companies have been start-ups. A large number of them are SI/VARs etc. How are they managing their working capital in a slowdown
b) How are they raising capital needed to bid for large projects where the client wants to reduce TCO? Are they displacing the big guys in a small number of deals in the SMB space?

In search of answers, I dig into the websites of some of these companies:

1. Fonality led by Chris Lyman seems to doing well. It launched some firmware for mobile and Google integration in September and went on to announce a relationship with salesforce.com last week.
2. Pingtel: I am not sure if I can mention but I had written something about in the report in relation to PingTel (or maybe I had not written!). As the case maybe, Nortel went on to acquire PingTel. I am not surprised.....great news for SIPfoundry guys.
http://www.os-voip.com/2008/08/nortel-buys-open-source-ip-pbx-company-pingtel/
3. Digium: They got a new headquarter. Tom Keating snapped it all up. Follow the link-
http://blog.tmcnet.com/blog/tom-keating/asterisk/digium-headquarters-tour.asp
Their battle with sipXecs seems to continue. It appears that Pingtel managed to get one up on them by becoming a part of Nortel.

Who else? There are a number of great players in the market from the large vendors who OEM open-source to small ones like ADDIX, ESCAUX, and Novacom. I wish there was an opportunity to connect and get to know how they have been doing.

iPhone vs Blackberry: Consumer vs Corporate

2008-12-07T10:16:00.000Z

Somebody asked me who will win the smartphone war- iPhone or Blackberry. I said, "depends on the turf". Blackberry is a robust, reliable e-mail centric smartphone that can handle voice, multimedia and entertainment (the new versions are better at it). Its primary place of use is in business. iPhone is a awesome looking media and entertainment device that can also communicate.

Can blackberry fight iPhone in the consumer space? Not today at least!
Can iPhone win against Blackberry in the corporate space? No!

However, recent efforts by Blackberry to emulate the iPhone is distressing. I have had only a brief look at the Storm (don't get invited to those parties anymore ever since I changed my job). I will have to say that I wasn't impressed. I wonder where does RIM want to position the storm? In the corporate space?! But typing is such a problem with Storm. I wish I was in the centre of action to know more of these stuff.

Why doesn't Blackberry promote VoIP

2008-11-23T01:45:00.000Z

Blackberry is the most preferred smartphone in the world. And VoIP is what every aware user wishes to use. Most enterprises use VoIP and most of the voice traffic internationally is IP based. I wish Blackberry would promote more of VoIP. Despite acquiring Ascendant in 2006, we don't hear or read much of Blackberry's VoIP capability that can help users bypass the mobile voice bill-rates. Is it pressure from carriers?

In an article, Nadeem Unuth gives us ways to make use of VoIP on Blackberry. For the complete article, refer to the following link:
http://voip.about.com/od/mobilevoip/a/BlackBerryVoIP.htm

I am taking the liberty to reproduce some of what he wrote:

1. Truphone: Using the web a user can be called and then call the destination. Both the calls (to the originator as well as the called party) originate with Truphone which uses VoIP.
2. VoIP Softphone applications like Yeigo: This application can be installed on blackberry (need to verify!). Voice calls can be made using Blackberry's data plan.
3. Blackberry WLAN solution (Blackberry 7270 handheld)

However that being said, I haven't tried any of these. I know that some of my colleagues have tried to install some applications on mobile phones. Its high time I get in touch with them......

Interview with Richard Barrington of Sun Microsystems

2008-10-24T11:30:00.001Z

Blackberry in Enterprise 2.0

2008-10-10T11:54:00.000Z

The debate on which is the central application- e-mail or phone-is long over. Studies conducted by various Industry Analyst and market research houses suggest a growing tilt towards e-mail. Most users check their e-mail the first when they get to work and more often than phone. Blackberry took this ability one degree further. It enabled workforce to check their e-mail anywhere, anytime. But in the process it did something else too! It crossed the office boundary and entered the personal space. How often have you checked your Blackberry outside office hours?

Enterprise 2.0 aims to bring personal applications into workplace. It aims to tap into the productivity enhancing capabilities of personal applications such as IM, collaboration type software etc. For example, how can we forget Mayo's Hawthrone experiments that every HR manager learns in MBA school. There is definitely a need for a facebook like application at work as much as their is a need for a cafeteria. But I digress....... While enterprise 2.0 aims to bring consumer grade producticity enhancing applications into corporate world, Blackberry did just the opposite. It took a corporate application into our personal space. Being a user of Blackberry Curve, I must tell you that this transition has been smooth. I use Blackberry wherever I want whenever I want. Is this the beginning of the great blur between corporate and personal spaces?

Barrack Obama uses Blackberry

2008-09-20T07:44:00.000Z

Barrack Obama uses Blackberry. Not sure which model he carries. This is a great coup for RIM folks. And they richly deserve it. Given the circumstances they have been, with all the lawsuits and other things......RIM deserves better.

Barrack Obama using Blackberry has a problem. If he wins the primaries and goes on to win the elections and becomes the President of the U.S.A, he will probably need to forgo the device. Such a pity! It appears that Western governments such as France and the U.S.A discourage the use of Blackberry amongst senior level executives.

Maybe RIM can address their security and data protection concerns. Just a thought!

Mobile Unified Communications in Blackberry?

2008-08-17T07:50:00.000Z

Having been using Blackberry for a year, I want more. I wish that there was an update that could push my voice-mails as e-mails. I wish I could use VoIP data bits and bypass the mobile voice toll. I wish Blackberry improved the conferencing capabilities or at least partnered with someone. I remember communicating with the CTO of Genesys Conferencing earlier in the year when he said that there are plans to put their application on Blackberry. And I wish as a user I am told of these things happening.

Blackberry in my view is well positioned to become the central device driving mobile UC. However, given their size of business and the value chain entities they cover, it might be a difficult proposition for industry players to partner. Blackberry will have to open up more and support open standards or at least contibute to its development. Because you know what.......mobile UC is pointless without Blackberry as much as users would love to do more with their Blackberry

I'm back!

2008-08-10T20:10:00.002Z

I haven't been blogging actively this year for several reasons. For one, during the major part in the first half of the year, I had been excessively busy with consultative assignments. And in May, I changed jobs. After I left Frost & Sullivan, I decided not to post anything related to enterprise communication for at least three months.

In the last three months, I have seen the industry move ahead. "Unified Communication" is moving from a positioning exercise to become a part of the thought process. "Enterprise Mobility" is gaining greater awareness at least in Europe. In the press articles, U.S. consultants appear to be fighting the war of words on whether to let 'enterprise mobility' be a part of UC. Also, Collaboration of different form factors is gaining traction.

All talk of climate change has placed strong emphasis amongst enterprises to do their bit on preventing carbon emissions. I notice growing consciousness amongst employees, families and of course at the social level. Executives are beginning to ask the question-"Do I need to travel to do this meeting.......". I am sure some of them are facing questions from their wives and kids. Video-conferencing, tele-conferencing and other forms of collaboration are becoming 'preferred' albeit slowly. It is a difficult choice today. While on one hand you have the consciousness of 'climate change', on another you have the effectiveness of a face-to-face discussion. What is needed is a whole new set of benchmarks to let the story of video-conferencing and collaboration hit mainstream consciousness.

Interview with Timothy Marsden of HP

2008-06-02T02:28:00.000Z

Open Source in Europe. How much did you know?

2008-04-30T16:31:00.000Z

Frost & Sullivan conducted extensive research on the open source market in Europe. I have reproduced the executive summary out here. For details on the complete report and how you can buy, please contact nils.frenkel@frost.com

Open Source telephony has come a long way since starting as a collaborative project amongst tech enthusiasts. Today it is used as the means of communication by an increasing number of businesses. Frost & Sullivan estimates that there are over 3300 businesses in Europe that have deployed commercial telephony products that use some kind of ‘open source code’.

The market is constantly being tapped by new players. Early entrants include ADDIX, Digium, ESCAUX, and Novacom who have generated quite a volume of business in the early years. New entrants in the market include players of different backgrounds such as
a) Community based vendors such as Fonality and PingTel
b) Channel partners of major PBX or IT/software vendors. There is a greater attraction amongst channel that deal with Linux.
c) Major PBX vendors such as 3Com, Aastra. It is known that Avaya and Nortel are building skills in this area as well.
d) Hardware vendors such as Dell, IBM and Sun
e) Carriers such as British Telecom

The level of interest can be gauged by the number of free downloads of the base software. In 2007 alone, approximately 800,000 copies of Asterisk and TrixBox software were downloaded in Europe. Interestingly, overall in Europe an estimated 200,000 are still alive and are known to send heartbeat signals back to the community.

Our market research indicates that deployments have been scattered in the sub 500 user segment. The largest deployment that we studied was of 850 users by Novacom, which we have developed into a case study in the report. The complexity that some of these vendors deal with span from simple call routing to support sophisticated call centre application. ADDIX, for instance, has been successful in deploying a number of call centre solutions in Germany.

The total installed base of “open source” based systems in Europe is less than 1 percent of the market. There are numerous challenges that open source telephony vendors and channel partners need to overcome in order to be considered as a viable alternative in the market. A number of changes in the market dynamics favour the growth in momentum of open source telephony. The break-down of vertically-integrated industry structure is inline with the value proposition of “open source”. The ability to develop call processing software using open-source code running on off-the-shelf hardware and OS is expected to alter the telephony architecture in a number of organisations. Frost & Sullivan believes that with the right marketing strategy, ‘open source’ telephony will grow considerably.

Microsoft in Unified Communication

2008-04-18T12:42:00.000Z

Recently I did a talk on Microsoft's position in the Unified Communication world at the iconic Wembley Stadium on the outskirts of London. I have attached a slide-deck of the presentation.

Chart Focus: Vertical to Horizontal Transformation

2008-02-13T00:02:00.000Z

Unified Messaging- vendor push or market pull?

2008-01-12T21:23:00.000Z

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.

Executive Summary of European Wireless E-Mail Markets

2008-01-04T12:34:00.001Z

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?

2008-01-04T12:13:00.000Z

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.

Summary of events in 2007 and Outlook for 2008

2008-01-01T13:17:00.000Z

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!

I like Blackberry Curve

2007-11-16T20:41:00.002Z

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..........

Complete communication without distraction

2007-11-01T17:02:00.000Z

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?

Exchange UM vs Call Pilot

2007-10-26T01:24:00.000Z

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

2007-10-26T00:58:00.000Z

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.

Challenges for Microsoft in the UC world

2007-10-16T23:17:00.000Z

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.

Forum Discussion- Unified Messaging: Buying Behavior

2007-10-14T21:00:00.000Z

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.

Cheers,
Shomik

Software titans march continues

2007-08-23T12:14:00.000Z

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

2007-08-23T09:15:00.000Z

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.

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

2007-08-07T09:21:00.000Z

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.

Inter-Tel shareholders accept Mitel's offer

2007-08-06T09:16:00.000Z

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.

Follow-up on Mitel's patent infringement lawsuit

2007-08-03T15:31:00.000Z

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.

Update on OCS 2007

2007-07-27T15:57:00.001Z

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.

Web services model gain traction

2007-07-25T10:02:00.000Z

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

2007-07-25T09:20:00.000Z

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.

Mobile IP Centrex?

2007-07-20T15:46:00.000Z

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

2007-07-20T13:20:00.000Z

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.

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

2007-07-17T11:18:00.000Z

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.

Clever Microsoft technology for voice quality

2007-07-16T16:37:00.000Z

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!

ICA to celebrate its first anniversary

2007-07-13T14:20:00.000Z

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

2007-07-13T13:52:00.000Z

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.

The imperfection of P&G (Postini & Google)

2007-07-12T09:28:00.000Z

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.

Shoretel's IPO and Mitel's lawsuit

2007-06-29T16:55:00.001Z

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

2007-06-29T11:02:00.000Z

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.

Mobile challenge

2007-06-25T13:23:00.000Z

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

2007-06-25T12:15:00.000Z

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

2007-06-25T09:15:00.000Z

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.

Thanks to WiMaX

2007-06-22T16:35:00.000Z

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.

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

2007-06-05T12:23:00.000Z

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.

Chart Focus: Siemens Open Communication Vision

2007-05-23T10:14:00.001Z

LG-Nortel

2007-05-17T14:06:00.000Z

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!

2007-05-17T11:55:00.000Z

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.

Cisco IP telephony grows in Q1, 2007

2007-05-16T16:38:00.000Z

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.

Chart Focus: Microsoft names handset vendors for its UC suite

2007-05-14T15:51:00.000Z

Interactive Intelligence embraces mobility

2007-05-10T10:19:00.000Z

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.

Mitel acquires Inter-Tel: Its all about IPO

2007-05-01T15:07:00.000Z

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.

Chart Focus-Key entities of UC

2007-04-17T17:13:00.000Z

ShoreTel-The world is Orange

2007-04-16T15:16:00.000Z

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.

Roaming 'rip-off'-Game over

2007-04-12T12:21:00.000Z

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.

Carrier Hosted UC

2007-04-02T11:16:00.000Z

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.

Enterprise Telephony - Market Performance Card

2007-03-27T22:05:00.000Z

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

Enterprise Telephony shipments forecast

2007-03-27T21:52:00.000Z

PSA initiative?

2007-03-27T21:44:00.000Z

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

2007-03-27T21:16:00.000Z

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

2007-03-27T21:05:00.000Z

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.

Media enterprises are losing the plot.....

2007-03-25T09:57:00.000Z

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.

Nortel on track with management priorities

2007-03-23T11:16:00.000Z

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

2007-03-23T10:17:00.000Z

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.

Italian province of Trento goes Wi-Fi

2007-03-16T17:19:00.000Z

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?

2007-03-16T11:47:00.000Z

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!

Cisco acquires WebEx

2007-03-15T13:39:00.000Z

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.

Telepo explores client-server architecture

2007-03-14T18:10:00.000Z

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

2007-03-14T13:41:00.000Z

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?

2007-03-14T12:09:00.000Z

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

Lotusphere, London

2007-03-13T17:11:00.000Z

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.

Siemens maintains its topline in FY 2006

2007-03-10T01:26:00.000Z

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

2007-03-10T01:19:00.000Z

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.

Skype doesn't have a PBX

2007-03-08T16:18:00.000Z

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.

Why doesn't London underground have wireless connectivity?

2007-02-28T22:35:00.000Z

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!

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

2007-02-27T23:00:00.000Z

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?

2007-02-27T15:11:00.000Z

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?

Appear Network expands to Netherlands and the UK

2007-02-21T12:41:00.000Z

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.

News from Alcatel's desk: An analysis

2007-02-20T09:42:00.000Z

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.

Siemens Enterprise changes guard

2007-02-08T22:10:00.000Z

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.

Nortel quantifies target reductions in workforce

2007-02-07T18:10:00.000Z

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.

Enterprise Mobility: Death of roaming charges

2007-02-06T13:29:00.000Z

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.

Alcatel-Lucent: The lay-offs begin

2007-01-31T15:50:00.000Z

Lay-offs following the formation of Alcatel-Lucent has begun in the USA. During the merger announcement, we were told that close to 10% of the employee base of the combined entity will lose jobs by 2009. It is believed that Lucent is taking over the NA operations of Alcatel. Right now, there is a lot of restructuring, reshuffling and a good deal of lay-offs going on.

Content: The value proposition

2007-01-29T12:43:00.000Z

While new distribution channels continue to enter the market, revenue streams don't seem to go up linearly. As a result the whole value proposition of content business is being challenged. Lets spend some time analysing this space.

Lets start by looking at the variables:

1. Number of customers
2. Access media
3. Distribution networks
4. Content

Adding customers increases the overall market size. But more importantly increasing their spending will impact the total revenue potential of the market. This is common sense. However, this is where we all seem to be struggling. Why? Because we don't know what will make the customer pay more? Is it content, quality of content, availability of content.....

Over the past couple of years, the number of access devices that can store/play content has risen manifold. HDTV and mobile TV are to name a few. Thus definitely we have improved on availability and reachability of content, yet not affecting the revenue to any significance. In fact, newer devices have started a price war for content and has taken the copyright protection battle to newer levels.

The argument of convergence has brought in several players in the content distribution map. Web based players for one, service providers both wireline and wireless, legacy cable players and the antiquated broadcasters of TV and radio have cluttered the industry space trying to win the customers attention. Last year saw a plethora of triple-play and quad-play services being launched in the market. However latest news suggest that the cummulative return from these new distribution networks haven't improved the total revenue earned from content consumption. In fact the competition is attempting to eliminate a few types of players rather than increase the size of the pot.

Having discussed the revenue implications of the three variables, we are left with content. And its here that we find few clear winners. And they are already well known. In fact its their success that started this new revolution. Yes I am talking of Youtube and Myspace. They set up platforms for newer content to be created which were then distributed via web. Some of the lucky creators got recognition and fame while others took pleasure in the experience of sharing their creation. One additional example that might be controversial. I add Skype and Vonage to this list where they share space with Google Talk, Yahoo! and other internet based voice services bundled with IM. They set up platforms where users created content (telephonic conversations) that was distributed over the web. Thus I think that until newer content is created and a strong incentive scheme build to motivate the artists, the distribution channel supporting various access media serving the same consumer will be pushing the same content. And the smart consumer will use the one thats cheap and easily available.

I argue that consumers are happy to compromise on quality to the extent possible. Remember the lack of five 9s in mobile phones. Given the choice of seeing a Bolshoi Ballet at the Royal Opera House or sitting on a cushy sofa and watching on the TV, it will take a connoisseur's effort to enjoy a live performance.

2007: Outlook

2007-01-28T14:26:00.000Z

Climate Change in 2006 Rippling into New Streams in 2007

This outlook provides a concise review of the enterprise communications industry. The past year’s activities of the major players, equipment vendors, newcomers and start-ups are appraised against the background of the overall and ongoing changes in the industry and technologies.

A. Key Announcements in 2006 and their relevance in 2007

A.1 Microsoft’s entry into the Unified Communication Market

Microsoft unveiled its vision and roadmap on Unified Communication in 2006. The vendor has been in the periphery of telephony for more than 15 years. During this time it has built capabilities to offer components of what is now called ‘Unified Communication’. The greatest testimony of its capabilities is the announcements of several strategic alliances with the telephony vendors preceding this announcement.

As part of the roadmap, Microsoft announced new products that included Office Communication Server 2007 (updated version of LCS 2005), Office Communicator 2007 amongst others.

This announcement has offered credibility to the value proposition of unified communication, otherwise a buzzword for vendors and buyers hard to find. Also it has created a more competitive environment with increased seriousness at the board level of the vendors and awareness amongst large customers. Also Microsoft’s entry to be followed by IBM and others has the potential to create new categories in the overall competitive landscape that might shape the market in 2007 and ahead. Microsoft and others in this category carry the power to disrupt the centralised proprietary IP architectures of IP PBXs to create an open telephony model based on SIP centric application servers.

A.2 Alcatel and Lucent merge

Two of the largest telephony vendors merged to form one of the largest conglomerates in this industry. Although the fallout of this merger in the enterprise market in Europe is very limited, the future roadmaps seem poised interestingly. The merged entity can either focus on service providers and telcos offering them enterprise and carrier grade infrastructure to cater to enterprise telephony needs or Alcatel’s ESD division is left alone to do what it does best. Thus the ramification of this merger on the installed base of Alcatel in Europe and the future of its ESD division will become clearer in 2007.

A.3 Several vendors change management

Following two ‘not so great’ quarters, Avaya decidedly changed its management both at the corporate level as well as in EMEA. Lou D’ Ambrosio replaced Don Peterson as Avaya CEO while Carlos Sartorius took the mantle of the president of EMEA. Both of them have a strong services background, underlying the direction of their leadership in the times to come.

Avaya has announced greater emphasis on software and services as its strategy for 2007 and beyond.

Siemens Enterprise created a new management following the creation of an independent operating company within Siemens AG. Andreas Bernhardt became its first CEO and chairman of the executive board. Previously Eduardo Montes held the position of CEO when the entity was within Siemens AG. It is believed that Siemens will continue to leverage its Openscape portfolio and HiPath 8000. Its promises to provide ongoing, innovative open communication technology that promotes consolidation. The entity has expressed its intention to partner while by the latest reports seem unlikely to happen in the near future.

Nortel saw an executive re-shuffle in 2006 preceded by Mike Zafirovski taking over the mantle of CEO from Bill Owens in Oct 2005. Mike has placed a new team committed to improve transparency, focus on markets where it leads the pack and improve the efficiency of the organisation. Announcing the innovative communication alliance with Microsoft in 2006, Nortel charted a new course in moving to system integration.

Apart from these Philips, NEC United, Ericsson and Alcatel have seen changes in their management teams in 2006. The changes will affect the course of 2007.

A.4 New range of products in the P2P category announced

Acquisition of Nimcat Networks and the launch followed by runaway success of Avaya One-X quick edition in the small business market tells us a story in itself. It is well known that the small businesses have been deprived of IP telephony solutions because either they were too small or the solutions were too pricey for them. Not after peer-to-peer products pioneered by Nimcat Networks came to the market. Such was the influence that Siemens and Aastra Technologies used Nimcat’s technology to come up with BizIP and VentureIP products respectively. It is well known that small businesses represent the largest segment in terms of numbers in Europe. Estimates put the number of lines at around 48 million in Europe alone. From 2007 this segment will be a keenly fought turf where not only will the vendors claim a pie for themselves but they have to compete with players who offer P2P as a service such as Skype and Popular Telephony.

A.5 Nortel and Microsoft announces an Innovative Communication Alliance

Microsoft stunned the industry by announcing preferred partnership with Nortel to form an innovative communication alliance (ICA) that involved joint R&D and product development, sharing intellectual property and co-marketing. We believed that this paved the way for Nortel to move into the integration space with the creation of a global services business. Since July 2006 the business unit has come up with 3 joint solutions and 11 implementation services. The business unit with its expanded integration services portfolio spans the entire network lifecycle from design and deployment to support and evolution.

In addition, Nortel and Microsoft have presented a roadmap for 2008 and beyond for moving business communications onto a software platform that will drive a higher quality user experience and reduce total cost of ownership. The roadmap outlines several key applications and technology developments including a UC contact center, Nortel feature server, expanded hosted UC solutions, mobility and client solutions, and application-aware networking enhancements.

ICA is credited with several customer wins in the past few months in North America and Europe. The future of this alliance will be keenly followed by the industry in 2007.

A.6 Siemens Enterprise breaks free

After several attempts to restructure the ailing Siemens Com business unit, Siemens AG decidedly carved out the carrier business that formed a JV with Nokia Networks. The other big unit that carried the enterprise portfolio was made into a separate legal entity as of Oct 1, 2006 christened as Siemens Enterprise Communications, a wholly owned subsidiary of Siemens AG. The US entity of the business is named Siemens Communications, Inc.

One of the early adopters of open communication, Siemens suffers from being in the market too early. Its LifeWorks and OpenScape vision were too ahead of time. Another tricky issue that the vendor faces is to move its installed base to SIP based IP telephony solutions because most of the installed systems cannot be migrated without a forklift.

The biggest strength for the vendor is in leveraging on the vast breadth of businesses under which Siemens AG operates.

In 2007, the biggest challenges for the vendor are its large direct sales force and its rather limited presence outside EMEA. The vendor earns a substantial portion of its revenue from maintenance and services which with the ongoing market transformation will continue to put serious bottom line pressure.

A.7 Zultys goes bankrupt

Zultys Technologies was incorporated in 2001 and launched its first IP telephony platform, the MX-1200 Enterprise Media Exchange in January 2003. Zultys is one of the first few companies to introduce a completely SIP-based IP telephony system to the SMB market. Zultys offered MX250 - a SIP-based PBX and MX25 -Modular SIP Gateway. It offered text-to-speech capabilities on its MX250 system to enhance its value proposition. In April 2005, Zultys introduced the MX30, which integrates voice, data, video, and fax, and provided the functions of an IP PBX for a small business or a branch office in a single appliance. The vendor grew its installed base and enrolled several large distributors and resellers globally.

Zultys technologies announced large scale downsizing in July 2006 subsequent to its failure to seek funding. In spite of a pipeline of orders Zultys resellers and channel partners were left with no products to fulfil them. Also, a major section of their European team moved to ShoreTel.

This case is highlighted to depict the increasing entry barriers and growing competitive pressure for sustenance. In 2007 not only do we expect to see far less number of players entering the IP telephony market but also increased consolidation. Philips-NEC United and LG-Nortel are just the beginning of a trend. By 2009 the IP telephony vendor space is likely to be left with 3-4 global players.

A.8 Mobility gains traction: New products announced

The growth in the number of mobile workers and the development of wireless networks has enabled companies to provide access to the organization’s internal and external information to its mobile workforce. With the help of scalable technologies, it has become possible to deploy various applications, such as mobile office applications, customer relationship management (CRM), field service automation (FSA), enterprise resource planning (ERP), Sales Force Automation (SFA), Field Force Automation and other workforce management tools, to mobile executives, sales force personnel and field force employees, on a host of wireless devices.

Even the large enterprise players understand the value proposition. Avaya and Cisco for example have announced partnerships with Nokia to offer PBX type features on dual mode handsets that can be used to bypass cellular costs in a private wireless network coverage area. Regulators like Ofcom in the UK have licensed the guard band GSM to allow service providers to offer low power GSM services to enterprises. Also several wireline telcos are gearing up to offer private wireless networks while wireless operators are toying the idea of mobile PBX. In summary, in 2007 several of these products and services will face the litmus test of customer acceptance.

A.9 SIP based products launched

IP telephony not only broke technology barriers but also made ‘best-in-breed’ in vogue. As dust settled from the war between several standards such as H.323, MGCP, Megaco and SIP, the latter clearly turned the winner.

Vendors were fast to adopt SIP when it became clear that this standard is here to stay. 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 will be SIP based.

A.10 Open source software gains traction

Ironically, as Microsoft’s application suite enters the enterprise telephony market, we see Windows gradually being displaced by Linux as the preferred operating system supplier. In the last three years, 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 and Aastra technologies) 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 operating system with Linux being the OS of choice.

Nonetheless, there is still a long way to go for open source. Today while they have made inroads into the call processors, application servers and media servers continue to predominantly run on Windows. This situation will only be bolstered with the advent of Microsoft’s UC products in 2007. In the short term, the strategic alliance partners of Microsoft will ensure that applications such as messaging, presence, collaboration continue to run on Windows platform. However, when the market gets past the early adopter stage, OS battle is likely to begin.

The above 10 market movements will greatly impact the shape of things to come in over the next 12 – 16 months.

B. The Market in 2007

I measure the enterprise telecommunication pulse by PBX lines. In the year 2006, the market in Western Europe grew by an average of 3.7% while Eastern Europe grows by around 11%. In total the total number of lines shipped in Europe stood at 20.54 million lines registering a growth of around 4.9% y-o-y. This being put in perspective paints a less than rosy picture as we stand in the middle of a replacement cycle. In the year 2006, CAPEX wasn’t as big an issue as the previous two years. However vendor’s strength in Europe seems to have diminished considerably. Amongst them include Siemens, Avaya and Ericsson. However that being said, increased challenge is being posed by service providers (including telcos, next generation carriers, and ASPs) offering hosted and IP centrex type of solutions.

C. Competitive Landscape

While the traditional market players such as Alcatel, Siemens and Nortel held ground, one of the largest slips was encountered by Ericsson. These four players in together constitute the traditional silo. While Alcatel and Siemens held on to their number one and number two spots, Nortel was ranked four while Ericsson at six. Together they own 70% of the enterprise (>50 users) installed base.

Aastra Technologies ranked third in Europe. This firm has grown in size through a series of acquisitions including Nortel’s legacy telephony assets, EADS telecom, Ascotel and DeTeWe.

Avaya has maintained its fifth rank. However it has lost some market share points due to a weak performance in the first two quarters. A change in management with Carlos Sartorius at the helm in Europe might change things for the better in 2007.

The dark horse in 2006 has definitely been Cisco. Rising from the bottom of top 10 vendors in Europe, it has shown remarkable grit to fight it on in one of the most competitive markets in the world. It has gained close to three percentage points in market share in 2006. This is definitely the company to watch in 2007.

D. Major Trends in 2007

Taking cue from the developments on the supplier’s side in 2006 on one hand and gauging the market’s pulse on the other, the following are the major trends that will shape 2007.

D.1 Disruption and Confusion precedes Convergence

Finally we are starting to see a transformation in the industry. I call this the ‘confusion phase’ that my peers term as the movement to shrink silos. It’s important to note that we are all talking about the same thing. The classical industry segments no longer stand in exclusion. It is getting difficult to categorise players, services, products and solutions into silos such as wireline-wireless, enterprise-carrier, business-residential, hardware-software and even IT-telecom. To me this is start of a larger transformation, the process when settles down will lead to new categories being defined. It’s an opportune moment for new innovative players who stand to benefit as and when the barriers are broken and new rules are set.

D.2 Unified Communication Story Gains Momentum

It is no doubt that Unified Communication has been the buzzword in the industry since the June 25th announcement by Microsoft outlining their vision and strategy in this space. Its importance amongst the suppliers can be felt by the fact that Microsoft, Cisco and Avaya have announced the creation of business units to cater to this market. Cisco has re-branded its flagship Call Manager as Unified CallManager.

Although there is euphemism on the supplier’s side, the market is still in the learning mode. There have yet been only a handful of complete rollouts. Surveys have revealed the need for greater awareness for enterprise users in terms of the capabilities and benefits.

D.3 Small businesses rally for peer-to-peer networking products

Small businesses have been left behind for quite a while now. While enterprises with larger sizes migrate to next-generation communication platform, a large market approximately the size of 48 million users in Europe alone have been left behind using the traditional key telephony systems or centrex type solutions from telcos. Starting 2005 but more prominently in 2006 a new hope came in the form of peer-to-peer networking products. Not only are these products priced affordably for a large section of the segment, it is easy to install, maintain and are generally flexible. One of the most notable vendors for this segment is Nimcat Networks, now acquired by Avaya Inc. Nimcat’s technology has helped Siemens and Aastra Technologies to come up with products for this segment. Going 2007, this segment of the market is likely to see a large scale churn of old key telephony systems leap frogging to pure-IP systems.

D.4 “Best-of-breed” or a single vendor solution

Shrinking silos, converging platforms and increased openness have created the notion for “best-of-breed” solutions. However if truth be said there are significant challenges in the path ahead. The increasing shortage of skilled labour pool to address the complex issues of integration is just one. The battle for openness is a keenly bought one with stakeholders trying every attempt to safeguard their interests and make the most of the opportunities they can. It is safer to say that in 2007 vendors will continue to place greater emphasis on nurturing ecosystems and that system, network and application integration business will continue to grow.

E. Final Comments

It is believed that 2007 will be the year for (a) mobility in enterprises and (b) Unified Communication. The quest for newer avenues for cost-cutting has led to mobile enterprise. Still in its buggy, this will be a story of a very fast growth as the necessary infrastructure is in place. On the other hand with so much of investment already gone into perfecting Unified Communications, the witching hour is near. Already the stakes are becoming unmanageable for some vendors.

Far from these burning issues IP penetration will grow unabated at a pace higher than last year. In 2007 we expect to see a stabilisation of the technology. Enterprises today understand that IP telephony do not guarantee cost savings or productivity improvements; but is a medium to be used to derive such benefits. In this year we expect to see the deployment of applications such as unified messaging, mobility and contact centres to derive greater value out of the investment in IP telephony.

Avaya acquires Ubiquity

2007-01-12T18:30:00.000Z

A Purchase Towards Ubiquitous Services

An anticipated acquisition which places Avaya in a stronger position with potential to break into the carrier space….

Buying a creamy piece of another pie:

Ubiquity, a Cardiff based SIP application server vendor has been the torch bearer of session initiation protocol (SIP) and internet protocol multimedia subsystem (IMS). The company credits itself with a rigorously tried and tested SIP services platform, pursuing the case for ubiquitous IMS platform that would virtually enable all carrier grade applications.

Why the Acquisition Makes Sense:

While the broadband revolution takes place, telcos are re-aligning their strategies and re-architecting their networks. There is a growing prominence of Ethernet in the last mile and an extensive use of MPLS in the wireline space. Investments in 3G and other wireless high speed broadband technologies continue. These have created a huge market opportunity for next-generation delivery platforms such as SIP and IMS application servers. Studies (ours?) forecast an opportunity in excess of $5 billion by 2009.

SIP capability is the prerequisite for almost all next generation services that includes services such as virtual PBX, hosted voice, hosted speech, multi-modal applications, IP centrex, and multi-media collaboration. As IP gains ground the case for these services becomes stronger. In the last three years carriers and large enterprises have made significant investments in IP Centrex and hosted voice services.

Other pieces of the pie

In the SIP and IMS application server market, Broadsoft, Sylantro, Netcentrex (now acquired by Comverse) compete with Ubiquity. With the growing prominence of centrex type services, these vendors are seeing increased traction from the carriers.

The SDP is a prerequisite to offering enterprise hosted services, which in Europe alone could be around $7.9 billion in revenues by 2011. To this end we have seen the acquisition of Netcentrex by Comverse (a billing and messaging vendor) and HotSip by Oracle (an enterprise database vendor). Hence, given Avaya’s strong hold in the enterprise space combined with its vision to lead the communication industry, the acquisition makes perfect sense.

The merged entity:

Avaya stands to gain from access to Ubiquity’s technological edge in SIP and IMS application server space. Ubiquity’s programmable SIP server can easily be considered to be the best in the industry, and one of the most experienced.

Avaya has announced that the Ubiquity’s team will help them build a single software application development platform for both enterprises and carriers.

This being said, it remains to be seen if Avaya has any plans to enter for the carrier market. This can be argued since Mitel Networks (founded by Terry Mathews), a competitor to Avaya didn’t grab Ubiquity (funded by Celtic House that is affiliated to Terry Mathews) although the SIP vendor’s strengths have been well known. In case they do, there is a potential threat that telcos might see them as a potential competitor (read ISV) instead of being a supplier or partner. This threat is currently dispelled by Avaya announcing that the motive behind the acquisition is to move to the software application development world, which is bolstered by the fact that Ubiquity’s web services expertise can be used to develop solutions for a large section of enterprise users in the all IP world.

Ubiquity is considered as the leader in the service delivery platform (SDP) and in the IMS space, with affiliation to almost all major entities in this industry. Its tier 1 carrier customers include AT&T, Bell Canada, British Telecom and Global Crossing. Till now, it is credited to have 12 named carrier accounts including ISPs and another 120 carriers in trials and discussions. On one hand this shows the promise of the vendor while on the other explains how nascent the market is. In addition to these carriers, Ubiquity has entered into partnerships with Microsoft, Lucent and Huawei amongst others.

Ubiquity is a publicly traded company listed in the London Stock Exchange since May 2005. Before then it was funded by Celtic House, a venture capital firm affiliated to the leading technologist, entrepreneur and a successful venture capitalist Terry Mathews who has founded Newbridge Networks and Mitel Networks. Newbridge Networks, a leader in ATM technology was acquired by Alcatel. Mitel Networks is a leading IP infrastructure vendor for the enterprise market.

What does Google get from Youtube?

2006-10-11T10:55:00.000Z

News talks of the $1.6 billion acquisition of YouTube by Google. In fine print there is mention that YouTube will remain a separate entity. I want to understand how is YouTube valued at Google's bid price.

I use YouTube. It offers fantastic service. Its simple to use and offers powerful tools. It offers a very strong value proposition around video sharing. And I had to look hard for their business model. Its a clever concept.

However when I compare with Google Video service, I don't see how You Tube can derive such large price out of its rival. I don't see anything that Google Video couldn't copy/substitute at a much lower cost. Additionally, such a development would not require Google to undertake the acquisition pains.

News suggest that YouTube has a larger user base. True, however YouTube offers viewers access to copyrighted video material mostly without permission thus offer a platform to increase piracy. I don't blame YouTube for that. However, Google with its clean image will have to develop checks and measures to stop the proliferation of video piracy. I fear that as Google tries to stop piracy in YouTube, it will loose the visitors and therefore a source of revenue. Also such a step will reduce the valuation of the business. It does not stop there. Creating a YouTube clone won't be much of a challenge. There are a number of them already. The visitors who move away from YouTube will choose to watch alternative video channels. My argument is to emphasise the point that Google Video has a lesser number of visitors not because of its content or lack of visibility. Its because of something that Google cannot do with its current public image.

In conclusion I think that YouTube acquisition is a costly decision where ROI calculations didnot factor in the potential threat of loosing visitors in wake of quality control and copyright protection.

Open source in telecom

2006-09-18T11:04:00.000Z

Like in the operating systems, open source has come to telecoms. Spearheading the movement are two communities:

a) Asterisk
b) SIP Foundry

The community is quite extensive and geographically well spread. However the community is very restricted to the development of technical know-how. To add marketing and sales to these novel projects, four companies have been set up.

1. Digium: Founded in 1999, this company uses Asterisk as the base platform to develop enhanced suites to meet business needs
2. Pingtel: The base code of its products come out of SIP foundry. Pingtel focusses more on the support element to gain traction.
3. Fonality: Based on Asterisk, the company offers PBXtra- an advanced version of PBX using Asterisk base code. The value proposition of Fonality is around designing the communication architecture to offer best solution thus maximising customer value.
4. Hugh Symons Telecom: Recently launched SIPtrix, a Asterisk based solution developed by the distributors in-house technical consultants.

The big question is:

How successful will the open source players be?

Some analyst firms predict them to gain a market share of 1-2% in Europe by 2008. That effectively translates to anything between 21000-35000 lines depending on the market size estimates from different analyst firms. Most research firms agree that the initial traction for open-source solutions will be in the SMB space due to their lucrative pricing and close relationships/personal rapport that some of them enjoy in this segment.

However once the proponents of open-source demonstrate their products

a) reliability
b) scalability
c) security
d) features and functionalities
e) vendor support on customer lifetime management

that are close to acceptable standards, they will be able to negotiate a larger pie in the carrier market.

For example: Leading analyst firms have forecasted that by 2010, close to 15% of enterprise telephony will be hosted. This translates to approximately 3.8-3.9 million lines in Europe depending on whose market size estimate one refers to.

This is a significant market that open source vendors are likely to look into.

Nortel is trimming

2006-08-06T21:30:00.000Z

Nortel executives are in advanced stages of discussion to sell of its UMTS assets to Alcatel. Nortel has a strong and comprehensive portfolio of access solutions that can compliment Alcatel's. This transaction will position Lucent-Alcatel closer to Ericsson who continues to impress the market with solid growth.

Mobile Hosted Solution- An opportunity!

2006-08-06T21:15:00.000Z

During my latest industry briefing (August 2nd) I was asked to comment on "mobile hosted solution" by a mobile messaging and billing vendor who has recently invested in acquiring a platform vendor. Until a fortnight ago I could confidently say that mobile operators are only concerned over the strong anti-FMS (fixed-mobile substitution trend) and that they are looking at various options to mitigate the threat. However recently I have been involved in discussions towards creating a business model for one of the leading mobile operator in Europe. The operator plans to roll-out hosted business telephony services to enterprises. This is interesting from several points.

1. Entry of mobile operators in the enterprise telephony market will spice it up.
2. Ability to communicate business applications wireless with give credibity to the hosted proposition and in turn put immense pressure on customer premise equipment vendors.
3. Fixed-Mobile convergence and in turn triple convergence (data-voice, wireline-wireless, and IT-telecom) will move another important step closer to reality.
4. A new entity called "Managed Service Provider" will gain lot of traction.

The Zultys saga

2006-08-04T10:17:00.000Z

Last week, the large scale lay-offs to reduce operating costs in wake of a funding crisis has crippled the operation and adversely affected the name of the vendor. Coming at a time when Zultys announced the launch of new products and a release that boasted of new capabilities in collaboration and messaging , Zultys failure to secure funding has devalued its branding significantly. Spotting the opportunity another innovative software based PBX vendor, Swyx invested with Google to divert eyeballs from Zultys to their website by exercising a cute marketing campaign.

There are a few takeaways from this episode. For one, the entry barriers have reduced significantly. However the importance of PBX hasn't dimished with the customers. This I believe is going to put significant pressure on the channel to constantly monitor their supplier's health to the effect to get contractual commitments from them to be in business.

Second is the intense competition in this market. The campaign launched by Swyx is indicative of the margins that can be gained when a software solution replaces a hardware product.

Why did LG Electronics lose Crane?

2006-07-25T10:03:00.000Z

LG Electronics participates in the SoHo and sub-30 enterprise markets in United Kingdom. Their gear is imported to the UK by Crane and Capstan. The vendor enjoys a reasonable installed base in a market that is led by Panasonic and BT Versatility.

Recently, Crane announced its decision to severe relationships with LG. As reported by Comm Business, in a letter to its resellers Crane Chairman David George said:

“As you will be aware, Crane has communicated our intention to cease from the supply of LG products. In order to prevent a chaotic and disorderly market and transition, it has been agreed that Capstan will purchase all of Cranes inventory and will be the sole supplier of LG. We are no longer able to sell LG with immediate effect.

The sole UK distributor and importer for LG products is Capstan Communications. Any requests for support on LG product issues or queries must now be directed to Capstan.

Any outstanding and future technical support tickets, product issues, warranty requests, DOA’s and orders will be passed to Capstan with your consent.

Crane remains committed to continuing to support and build our LG maintenance & repair business and associated service contracts.”

It is interesting to note that Crane is happy to support its customers running LG gear, therefore protecting its customer ownership base. Apart from LG, Crane distributes Avaya, Mitel, Nortel and Samsung. This may help push Avaya's One-X quick edition.

It is believed that Crane was upset when LG Electronics announced the appointment of Capstan as a master distributor. While efforts were being made to diffuse tensions, I believe things didn't go as planned. Crane has over 20 engineers supporting 2000 LG maintenance contracts in the UK.

Speculating Alcatel's Q2,Q3 performance

2006-07-24T06:05:00.001Z

In the last 5-6 years, the proposition of owning channels has undergone quite some change for large PBX vendors, at least in Europe. During this period, Alcatel's go-to-market shifted from being 100% direct to become 100% indirect. Still, its dependence on one channel (Nextiraone) can't be over emphasised.

As Nextiraone changed ownership recently, Alcatel's woes has begun. The channel is undergoing major restructuring that couldn't have come at a worse time for Alcatel. The vendor's merger with Lucent has exposed and sidelined their enterprise solution division. Adding to that is the poor uptake in France that lead the vendor settle for the number two position in shipments in 2005. And now, the restructuring of its primary channel.

I am told to understand that at the ground level, Alcatel is loosing base. Nextiraone's presence extends far and wide. Apart from France; Italy, Spain are affected. It will be interesting to Alcatel's Q2 and Q3 result. Knowing the great company that Alcatel is, I am sure they will take stock and react. And I believe their reaction might just become a good case study for the rest.

Product and Services-Gross Margins

2006-07-24T05:56:00.000Z

Last week Nokia reported their second quarter 2006 results. Unfortunately, I couldnot attend the conference call hosted by Olli-Pekka. From their press release, it is understood that the quarter was a very positive one for the vendor, well yes, the vendor because when Nokia wore the service provider hat, it ended up in losses. Enterprise solutions reported an operating margin of (22%). How do we analyse this?

Motorola's Eric comes to help. I had a chat with him on Friday when he educated me on the offerings of Motorola's services business. They have recently merged their networks and GEMS (government and large enterprise) to form a single entity to offer end-to-end service and solution. Eric is heading the business in EMEA and CA . He helped me understand the business model and the financial outlays. Eric spoke about two extreme situations.

Case 1:

Network operators in mature markets are fanatic over control and they like to own their infrastructure. Hence, its a sell market. However, vendor financing is very strong in this space. On the other hand, in the greenfield opportunities in emerging markets, either the operator has a strong support from a financier who acts more as a guaranteer, or else the vendor helps the operator get upto speed, a fact that was coroborrated by the CEO of Ericsson during second quarter earnings call on the Friday last.

Case 2

Large enterprises believe in the mantra of 'core competence' and in 'efficiency'. Therefore, there is a general trend to out-task/outsource/offshore their infrastructure.

However, in both the cases, the comonality is the requirement of high capital outlay for the vendors to be compensated for regular long term revenue inflows. It is to be noted that the vendor bears the technology risk and this is affecting the value-chain. In today's world of fast changing technology, a new disruptor gives a vendor the edge for no more than 12 months, however, if he misses the boat, his value proposition drops by 10 points. When we compare the two and extrapolate over a $75 billion global market, with price differential on products dropping at an average of 11% in the services market, being a product vendor offers less advantages than being a service provider because-

1. Service provider is the prime contractor and therefore the owner of the account. This presents him with possibilities to upsell, cross-sell etc.
2. With operating margins in high teens, a price differential on products by 10 percent can be easily offset as products constitute around 40% of the total project in a typical multi-year managed service contract.

Mapping the pros and cons, while the gross margins drop to 30-35% in a services business, it guarantees longetivity.

Nortel partners with Microsoft

2006-07-18T16:54:00.000Z

Microsoft is interested in unified communication. They propose to change the way enterprises communicate. They propose a people-centric model, which is markedly different from a network centric one that has been pervasive for the last 20 years if not more. But then the enterprise PBX market is saturated and most of the large vendors have strong relationships with their customers, why are they making a beeline to partner with Microsoft, who is unknown in the voice industry.

The reasons are deep rooted. While the market is owned by the traditional telephony vendors, the market is inherently hardware based. Microsoft believes that it can squeeze out some margins from these hardware products, thus forcing a bottom-line pressure on the telephony vendors.

From the announcement made jointly by Microsoft and Nortel, I feel that Nortel wanted to communicate its intention to move to the system integration space and leave the unified communication product gap to be filled by their partner. Like a move by IBM a few decades back.

Its not 'if' but 'when' calls will become free of charge

2006-07-17T08:40:00.000Z

The telecom world is changing so fast these days. Not only is there a change in technology, but also a change in business models. I was reading a new item on Jagah, a PC based VoIP service provider. This company is planning to offer voice calls to the mobile, akin to the calling card world, but cheaper. If this offering along with several others come to mainstream, mobile service providers revenue stream from call processing and call transport will shrink. The will reduce these entities to charge for their connection (read to the web). The sad part will be the amount of mobile trunks and gateways that will become non-performing assets. In view of this, I would advise mobile service providers to get into managed contracts with the infrastructure providers and integrators and pay them a part of your accruals. This will help the mobile service providers adapt their business models and also share risks with partners.

From the consumers point of view, this is just amazing. Who doesn't want cheaper service. The only hitch will revolve around QoS and I personally believe that quality can be improved. Another problem will be around billing. The consumer might end up paying more than one service provider to stay connected to the web using the mobile device.

Finally, the looming threat of such a substitution will play a role in reducing the high service costs, a benefit consumers can enjoy.

Tax communication services?!?!?!

2006-07-12T08:20:00.000Z

I was reading an article in 'IT Week' on plans by the EU to tax e-mails and texts. Before, I submit my opinion, lets have a look at the facts.

The article says that a working group in Brussles is reviewing a plan for an EU wide tax on texting and e-mail. It goes on to say that "the idea is to introduce an EU wide tax of 1.5 cents on each text message and 0.00001 cent on each e-mail."

It is estimated that around 196 billion phone text messages were sent across in Europe in 2005, and 5475billion e-mails (including spams). The tax if applied at the suggested rates will generate
€2.94 billion from text messages and another €0.54 million from e-mail. Let's not forget the exponential grow each of these services are having.....well, in case of imposition of such a tax, it would be prudent to say 'were' having.

Let's look at the scenario where voice calls are taxed too, say at the rate of 1 cent a minute. With over 966billion minutes of fixed-line traffic in Europe (82.585 billion in UK alone) and 447 billion mobile minutes in Europe (63.119 billion minutes of mobile telephony in UK alone), the total tax amounts to €14.13 billion (€1.46 billion in UK alone). Definitely, a huge sum of money.

However, as soon as such a tax is imposed, the market dynamics will change. Free SMS will be gone. The world of Yahoo mail and Google mail will have to treak their business models if they continue to offer free mail service. The pricing of data services in advanced third generation networks will be guided by the tax structure, thus all the discusions on pricing by size of traffic will be lost.

New service delivery models will become a difficult to pursue as even a nominal tax will increase the entry barriers. Further, enterprises would rather have premise-based systems instead of network based services. I can think of a whole lot of changes, however I will stop here to leave all my visitors ponder upon the idea.

How do you notice great ideas and nurture it to make great products?

2006-06-24T09:28:00.000Z

Last Wednesday, I went to the Royal Ascot to meet Avanade, yes them and not the queen. However, I did take some pics of the queen when she came in her royal entourage and captured a smiling Princess Sophie.

Well, back to Avanade. This company formed as a 50:50 JV between Microsoft and Accenture can be put in the system integration space. Today, Avanade is 78% Accenture and 22% Microsoft. I was speaking to Mark, who is the Managing Director of UK. While the usual discussion on the market was going on, he spotted 'The Lexus and the olive tree' by Friedman and our conversation drifted towards globalisation.

I asked him, in this globalised world, ideas can come from anywhere. How to you create a system/process/framework to tap those ideas. His answer was simple. He said that Avanade has a colaboraton software with access rights for everyone. Avanade has a incentived program for contributing to the collaboration tool and the incentives are linked to their KPIs. The time spent in contributing is also factored in. Mark said that Avanade has done away with the old model of having an innovation team confined in a building in some corner of the world. I found it prety impressive. Mark has invited me to have a look at their systems. I just can't wait. Will update on what I see.

Why is this happening to Siemens???

2006-06-19T11:33:00.000Z

Siemens AG has been in business for years. In fact, it remains one of the few companies that have survived the two world wars. Siemens Com is a relatively new entity, a flagship business that was formed to grow and dominate the ICT market.

However, call it the effect of globalisation, market dynamics or poor performance, Siemens Com came under speculation since the parent announced its financial results last year. The results clearly showed that Com, a private unit within Siemens AG was bleeding and affecting the overall profitability. With Siemens announcing their JV with Nokia in the service provider space, the future of Siemens Com came under cloud. Answering a question from the press, Siemens executives clearly stated that they are talking to two potential global partners. I expect some announcement between now and next two months. Of the people I spoke to at Siemens, I think they are more inclined to partner with a strong technology player. The only hint that I can offer at the moment is that the partnership will make the new entity number 2 in global revenues.

Today Siemens Com's enterprise unit makes revenues of around 13.5 B Euros globally, growing at 9% HY 2006 over HY 2005 (Siemens fiscal year is from October to September) in sales and has an operating margin of approx 3%. It employs close to 50000 people and has assets in all continents.