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A Fresh Look at UC

A few days ago, I had the pleasure to visit Aastra’s Concord, ON, headquarters and to meet again with Tony Shen, Aastra’s Co-CEO, President and COO. I must admit, he is quite different from other executives I interact with! His practical, down-to-earth talk is in complete contrast with the inflated marketing bravado of most other high-ranking individuals in the industry.

I also enjoyed listening to Jason Andersson, Head of Aastra’s Center of Excellence for Applications, brief me about Aastra’s current UC strategy and portfolio using Aastra’s ViPr videoconferencing technology.  Thank you, Jason, for going back to the office at 9 pm Swedish time to do this video call for me! I have to say video really adds to the quality of the conversation. It helps establish a rapport with the other participants and be more productive. Although I found the ViPr quite good, the Aastra folks hinted at the upcoming launch of a next-gen product that will help bring better and much more affordable video to the mass market.

So where does Aastra stand today in the global communications market? According to our recent research, in 2009, Aastra was among the top 6 market participants in terms of total PBX and IP PBX line shipments and revenues and IP desktop phone shipments. It has a large installed base it can leverage for future growth. It is also on track to gradually consolidate and synchronize its multiple product lines over the next couple of years. But how does it differentiate? What does it do better than its competitors?

It is tempting to quote Shen who addressed the above questions by saying “We all sell sugar,” referring to the fact that communications have become a commodity, adding “we are just easier to do business with.” He strongly believes that Aastra’s main competitive advantage is in delivering technologies tailored to local customer needs and its ability to use local resources who speak the language and best understand the peculiarities of the specific market. “The French buy French”, Shen elaborated, pointing to one reason why Aastra is doing so well in France, whereas Ericsson before couldn’t (and where U.S. vendors are struggling, too).

Aastra has also adopted a very pragmatic approach to UC. While the rest of the market has gotten a little carried away with the desktop-centric approach spearheaded by Microsoft (as it best serves its purposes), Shen and his team see little demand for soft clients. As I have indicated in other blog posts and presentations, I also think it will take a few years for soft clients to populate the marketplace and become a more commonly used interface. It will not be until customers deploy a larger number of advanced communications and collaboration applications such as IM, presence and conferencing, that they will see the value in the unified desktop client. For most users, a basic softphone provides little more than a convenient alternative when travelling. Yet, Aastra is looking to keep up with its competitors and potential customer demand and will soon be launching InTouch Plus, an advanced client that can be used both for voice and IM. So, if you are looking for an OCS-like experience and you believe in convergence at the desktop – Aastra will have a solution for you later this year.

Aastra sees greater potential in mobility. In fact, according to Shen’s definition, UC is more about integrating corporate and mobile voice communications, than it is about the desktop client. Aastra offers both mobile PBX extensions and a solid portfolio of VoWLAN and DECT capabilities, which can meet both outdoor and indoor mobility requirements. Although Frost & Sullivan’s definition of UC is quite client-centric as well, I have to agree that mobile smartphones have a greater potential than desktop clients in replacing the desktop phone as a primary communications device.

Aastra is also one of the few telephony vendors heavily promoting the voice interface. I thought voice navigation remained somewhat confined to the IVR and auto attendant space. Shen, however, gave me some interesting examples of his vision for speech, which included voice navigation of calendars and folders. When I think of the time I waste looking for documents, this sounds like a life-saver to me. Also, the ability to schedule a meeting over the phone, speaking commands such as “book me a meeting with Joe at 2 pm on July 3rd” may be where the market is going next.

Aastra is also offering some interesting collaboration capabilities with its recently launched InReach social networking software. It enables employees to create various interest or project groups where they can post comments (“micro-blogs”) and share files and ideas. This software will eventually become integrated with InTouch Plus, the advanced UC client, so users can IM each other, see status updates and pictures, etc.

Although it feels like Aastra is lacking that single defining characteristic that will differentiate it in the marketplace – such as Microsoft’s message around software-based communications or Cisco’s one-stop-shop approach, for example – it may very well be that Shen and his team have identified a successful growth formula that is not based so much on marketing, but on practical, customer-centric strategies. In the SMB market especially, its local approach is far more important than technology superiority or marketing clout. Of course, this is not to say that Aastra’s technologies are not competitive, it is just to reinforce Shen’s pragmatic view of the commoditization of communications.

Shen stated that Aastra seeks to evolve its portfolio around four main tenets: the voice interface, mobility, video and security. Although I believe these have a very different value for different users, they seem like potential growth opportunities and differentiators for Aastra.

In my opinion, Aastra’s open, standards-based approach and ability to integrate its endpoints and applications with other vendors’ technologies could be its ultimate key to success. Going forward, an accelerated portfolio harmonization roadmap and a stronger message around the benefits it can deliver to larger businesses with disparate, multi-vendor environments could help it maintain and grow its market share in the communications marketplace.

WebRTC

Hosted Communications Gaining Traction in North America

Vanessa Alvarez and I just completed the update of our North American Hosted IP Telephony and UC Services Markets study. Here is a summary of our findings:

In 2009, the economic crisis continued to plague enterprises, particularly in the small and medium business segment, which is the target market for hosted IP telephony.  Many service providers suffered customer retention issues as SMBs downsized and some even went under and couldn’t pay their bills.  Customer acquisition was even more difficult as many enterprises held back on making communications decisions or made other IT technology investments a priority. 

Yet, 2009 was a relatively successful year for hosted IP telephony. The installed base grew by close to 30 percent with new adds compensating for losses due to workforce reduction in customer organizations.

Although the concept of unified communications continued to make inroads into enterprises, it did not gain as much traction as originally anticipated.  As a result, although many hosted service providers took 2008 to retrench and include more UC offerings into their portfolio, the market segment targeted by hosted services was not ready for unified communications, and UC adoption rates and revenue impact were minimal.

Frost & Sullivan estimates about 1.4 million installed hosted IP telephony lines as of the end of 2009 and expects the installed base to reach between 7.5 and 8 million lines in 2015. Revenues, estimated based on an average bundle of features and capabilities, reached about $700 million in 2009 and are expected to reach $3.8 billion in 2015.

Many factors will contribute to growth going forward.  The macroeconomic situation forces enterprises to reconsider maintaining their own infrastructure as opposed to using hosted services.  Enterprises today want to focus on driving their business, not managing their IT environments. 

Parallel to this, hosted IP telephony, and hosted services in general, have evolved in terms of features and functionality.  Underlying technologies are also evolving, allowing service providers to upgrade and enhance their own networks and data centers, making the delivery of IP telephony easier and more cost-effective.

The market remained fragmented with over 50 providers, each offering varying bundles of communications applications typically including local and long-distance voice, voicemail or unified messaging, auto attendant, conferencing, contact center and CRM applications, frequently also packaged with an access line and an Internet service. Frost & Sullivan predicts that consolidation in this market will accelerate, as large IT service providers look to bundle communications services into their overall IT hosted services offerings.  As cloud computing begins to evolve in service providers’ data centers, it will become easier to deliver compelling cloud-based communications services.  Also, within the next two to three years, some PBX vendors will look to develop their own solutions, in the form of virtual appliances hosted in their own data centers or the public cloud, and deliver services more directly to end users, bypassing the traditional telcos.  

Enterprises today must consider what delivers greater value to their business.  Many are finding that managing their own IP telephony systems, or any IT for that matter, just doesn’t make economic sense.  It is best to focus their IT and communications management resources on delivering superior products/services to their customers as quickly and efficiently as possible.

WebRTC

Counterpoint

The counterpoint to what? Good question. I wanted to talk about some personal experiences with communications technologies. Since the sentiments in this article may appear to contradict ideas I have shared previously – taking more of an analyst, rather than a consumer point of view – I thought I would present them as a “counterpoint”.

Frequently, nascent technologies promise to improve the way we live and work. But at the early stages, both businesses and individuals tend to experience more challenges than benefits.

I work out of a home office, like many other professionals today. Organizations are becoming increasingly virtual and IT managers are struggling to deliver reliable, secure and cost-effective communications to their growing remote workforce. In fact, many technological advancements – such as enterprise mobility, unified communications and SaaS/cloud-based communications, to name a few – are touted as particularly appropriate for mobile and geographically dispersed users. But remote workers frequently face issues that negatively impact their ability to leverage the full potential of these advanced technologies.

Here follow some quick references to popular marketing pitches and my counterpoints as an end user:

UC and software-based communications provide a cost-effective and convenient communications solution for remote workers.

COUNTERPOINT: At home, I have a regular POTS line, as well as a Cisco IP Communicator client on my laptop. I am glad I have the Cisco client because it allows me to call home when travelling or call an international number from home – free of charge to me. However, the few times I have tried to use it to attend an audio conference or make a critical business call, the quality turned out to be so poor that I had to switch to the POTS line or my cell phone.

There are several “weak links” in this scenario and the soft client is just one. It may be the quality of my Internet connection. I have a DSL line (I believe 4 Mbps downstream and 1 Mbps upstream) and I frequently have quality problems (breaking voice or slow website upload) when using various web applications or soft clients. It may be my wireless router – which is integrated with the DSL modem. It may be my laptop RAM or processing power. It could also be an issue with my VPN, the size of my Lotus Notes mail box, or any other application I access on my laptop. It may be some cookies or software bugs on my home network.

So it could be anything! But my point is, I am not ready to dump my TDM line OR my desktop phone for a PC-based soft client any time soon. Though my experience is that of a home worker, I think business environments are not immune to such challenges. If you really believe PC-based clients are ready to replace desktop phones, maybe you need to make sure the money you save from eliminating desktop phones is properly invested in assessing and upgrading LAN and WAN connections, PC processing power, RAM and hard drivers, etc. In my opinion, soft clients make a great adjunct to desktop phones, but not a viable replacement alternative … yet.

SaaS and cloud-based communications enable convenient self service for SMBs and remote workers.

COUNTERPOINT: I strongly believe in the value of hosted/cloud-based communications for businesses with limited in-house resources. But I have an issue with the claims around self service. I suppose, self service makes sense at the very initial stages of service selection and provisioning. Certainly, IP telephony – hosted or premises-based – also enables self-service moves, adds and changes (MACs), which provides substantial cost savings. IP telephony also enables IT managers as well as end users to manipulate settings through software/Web-based interfaces – providing flexibility and cost efficiencies.

However, self service only goes so far. In fact, hosted IP telephony and other ASP services never gained much traction exactly because service providers were not able to provide sufficient network implementation and management support required for mission-critical, real-time communications.

Inevitably, hosted services involve some customer premises equipment (CPE). To begin with, LAN and WAN reliability and security are top concerns with both hosted and premises-based IP communications. Therefore, router and switch selection, proper configuration and management are critical. Further, telephony endpoints and the respective wiring still require someone to literally crawl under people’s desks. Small business and remote workers should not be left entirely on their own when implementing or managing hosted IP communications.

Most of the time, a remote worker, similar to a residential user, uses… well, “cloud” or hosted communications. The Internet service, the POTS line – it is all managed by a service provider. And remote workers frequently face some common challenges. For example, my intermittent Internet connection has been an issue for a while. Having to spend hours on the phone with a customer service rep and stick pins into the router to restart and reconfigure it could be immensely frustrating. My phone company, on the other hand, has so far left me without a phone service only once (for about 24 hours). But even that one time, the warning that if they come to my house and it turns out to be a problem with my internal wiring or phones, they’ll charge me whatever it is they charge, etc., etc. … well, it leaves a bitter after-taste.

So, my point is, small business, remote workers, even medium and large businesses – they all want to feel taken care of. They’ll expect someone to come in and install or fix things for them as part of the monthly service charges and will not be too thrilled about self service.

I hope my thoughts make sense. Let me know what you think.

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