Thebenefits of voice-over-internet-protocolincostandflexibilityare well understood, but
what is not yet certain is how the supplier community will
ultimately shake out. With multiple companies offeringdifferent voice-over-internet-protocol (VoIP)
components, how are thesuppliers aligning
themselves?
"You think about voice when you think about VoIP, and
you think about the private branch exchange," says Jon Arnold,
principal of Toronto-based VoIP market analyst Jon Arnold &
Associates. "However, we're moving beyond simple voice applications
with VoIP," he says. What is more, the
traditional private branch exchange (PBX)
is slowly dying.
"Within the last year or so,
unified communications has
become a big story, and
all the suppliers are
jumping on that bandwagon and pitching a higher-value solution,
of which VoIP is just one piece," Arnold explains. This is changing
the structure of the VoIP market. "Suppliers are pitching this
unified communcations nirvana, where if you put your faith in IP,
then the mega-solutions will pull everything together for you."
That also leads to a discussion of IP-based communications in the
context of business processes. How, for example, can customers
integrate VoIP into their SAP solution so that the enterprise
resource planning (ERP) system automatically communicates with the
right people at the right time? And which supplier can handle that
integration?
That leads Arnold to carve the market up into three tiers. In
the first tier are the traditional PBX suppliers that have focused
purely on voice communications. Many of these companies started
with legacy analogue PBX solutions, and a few began with an all-IP
platform, but they all focused exclusively on voice communications
using hardware. The second tier encompasses relative newcomers to
VoIP, who have an IP-only history and are heavily promoting VoIP as
part of a software-based system that will bring new functions to a
company's application base. The final tier - comprising
portal-based, VoIP-as-a-service providers - is a wild card, he
adds.
Alcatel,
Avaya and
Nortel are traditional suppliers with a heritage of legacy
products that migrated to IP, says Arnold. "They're trying to keep
their existing customers in the fold by offering IP PBXes that
carry VoIP," he says. Companies like 3Com also focused heavily on
hardware-based voice communications, while at the lower end of the
enterprise market, you'll find organisations like Mitel, Suretel,
and Panasonic.
"The traditional guys tend to draw bridges," says Henry Dewing,
principal analyst at Forrester Research. "They can do a lot of
modular things that let people bridge between the old and the
new."
Dewing believes we are at an inflection point in the industry,
where the traditional voice suppliers are moving rapidly towards a
software-based IP world. "They have the potential to fail miserably
if they don't keep their eye on what's happening," he says.
The challenge for them is that they face heavy competition from
the second tier of suppliers, who come from a purely IP-based
background and who, in some cases, have much more experience in the
application space. Microsoft sits in this tier, and while
Cisco is an IP supplier with voice roots, it has a strong
emphasis on applications such as telepresence.
"Microsoft has the potential to build Office Communication
Server and then swap everything in the background," says Dewing. If
the company can dazzle customers with its communications
applications, they might also buy the VoIP components that support
the applications as a fait accompli. Shifting voice around a
network is becoming more of a commodity these days, so these
suppliers will want to lump it all in together.
This creates a branding war between the relative newcomers from
the IP world, and the traditional PBX suppliers trying to get into
IP. The latter need to assert their rich heritage in communications
in their marketing material. "If you can get IP buyers and users to
recognise that quality comes from Alcatel and others then you will
drive customer preferences," Dewing says. In the meantime, however,
IP-centric suppliers like Cisco are putting IP phones on every
desk, which aside from guaranteeing interoperability with its own
back-end equipment, also creates an incredible branding tool.
A lot will rely on the channel, says Arnold. It is the value-add
resellers (VARs) and systems integrators that will help decide who
wins. "Ultimately I believe the major PBX suppliers have competent
quality products. The ones who win in the end have channel
partnerships."
Reliability may be the trump card for voice suppliers, who will
claim that they've been doing voice for years, whereas the likes of
Microsoft are relative newcomers. Do we really want the blue screen
of death infecting the phone, too? But Microsoft has made some
major wins in the unified communications business. Shell, which
rolled out VoIP systems based on Microsoft servers around the turn
of the year, is the poster child for Microsoft's communications
business. And for those that don't want to buy the whole stack from
Microsoft, its partnership with Nortel on unified communications
products, inked last autumn, will have been a reassuring move.
Cisco is an interesting newcomer because it straddles the second
and the third tier, the IP newcomer and what we might as well call
the communications-as-a-service (CaaS) market. "Ideally, there is
nothing installed at the customer end," says Sara Radicati, founder
of analyst firm the Radicati Group says of this third tier of
suppliers. "It's a hosted PBX, where rather than using analog
switching lines, you're using the internet."
Skype (which hasn't penetrated the business world much) is a
CaaS play, but there are others. "A lot of people are buying
managed meeting and collaboration services now," says Dewing.
"Cisco has a big opportunity."
Microsoft is running beta tests of its Live services, and IBM
has an initiative called Bluehouse, which offers hosted SameTime
environments. "I'm sure it won't be long before we see SameTime
with unified telephony," Dewing predicts.
However, no-one has a lock on the CaaS market yet because no-one
has tackled it perfectly, warns Radicati. This is why Arnold calls
it a wild card, and predicts that the real winners could come out
of left field.
"Google is emerging as a serious alternative," he says. "Google
isn't a major player yet, but they have the scale to do it and they
aren't far off. There isn't a major supplier in this space that
isn't scared of Google."
What would a Google solution look like? The only sure bet is
that it would be a cloud-based CaaS proposition, standing in stark
contrast to the traditional PBX and IP-only offerings. There would
be little or no customer-premises equipment, and
SMBs would likely be the
target market. All we've seen from Google so far is the
underwhelming consumer-focused
Google Talk client,
acquisition of telephone management startup GrandCentral, and its
shadowy investments in large amounts of dark fibre. Maybe Google
won't go any further, or maybe the winner in the CaaS market will
come from somewhere else. In a market this disruptive, the signals
aren't that clear.