I recently blogged about the hosting market growing slowly. At least that is what IDC is says in a recent report. I decided to get the perspective of M5 Networks a successful company in the hosting business. I asked Dan Hoffman, the CEO for his take on the article. Here is his lucid response. I agree with Dan. This is normal “Crossing The Chasm market Acceptance,” just like we are seeing with VoIP and e-commerce.
There has indeed been an irrational exuberance over the idea of hosting an IP phone system because it makes strong economic sense and has many technical advantages. However, two things need to happen before it captures major market share. First, as the author points out, the culture of owning a phone system needs to change, just as it did with payroll systems. This will happen over a decade or more. Second, businesses need trustworthy service providers. This is the catch – running an IP phone system and network is hard, and service providers that are good at it won’t spring up overnight. Telco organizations have never been good at selling phone systems, and interconnects are slowly learning IP. Telcos and start-ups trying to offer this service have been making a lot of execution errors – trying to use the open internet to provide business-grade service, wholesale models with lots of hands to coordinate, opening too many cities at once, or simply underestimating the complexity of the offering and adding it to the same old Telco product list. However, in time, new purpose-built companies and organizations will emerge, and businesses will outsource phone systems as much as they outsource webservers. In
March 2005 Archives
You may have heard about the Juniper and Kagoor acquisition (article) already but I have the inside scoop on the whys and hows and the future of Juniper now that Kagoor is part of the company. Juniper touts its mission as assuring and securing all traffic over an IP network and its customers, the large service providers are increasingly seeing the need for voice to be among the more important applications they need on their networks.
This led naturally to Juniper needing a session border controller product in its arsenal to allow them to supply the needs of their customers more effectively. In addition, Juniper’s VP of Marketing, Christine Heckart tells me that there are over 100 shared customers between the companies and Juniper wanted access to the company’s talent pool and development base in
I brought up the rumors I had heard of Juniper looking at other companies in the space such as Jasomi and Christine shared with me that Juniper generally does an analysis of all companies in a space before acquiring one. In the end they want to purchase best in class technology and Kagoor had the best technology hands down. Moreover, the ability of Kagoor’s products to scale as well as the superior functionality of the company’s products were deciding factors in the acquisition process.
The sale price was $67.5 million in cash which on under $5 million in revenue is a multiple of more than 13.5 times 2004 earnings!
I asked if Juniper thought they would be setting a trend by making this acquisition and they said they think they may as they are often trendsetters. Ultimately these decisions depend on the needs of other companies.
When asked how important VoIP is in Juniper’s overall strategy Christine told me it is on the top 3 items on the list of their customers. VoIP is strategic she told me. Finally, the Kagoor name will become Juniper and Kagoor product name changes (if any) haven’t been decided upon yet.
Another important point is that Juniper feels its customers would rather buy SBC technology from an established player such as themselves as opposed to a start up that may not be as stable.
This acquisition at a great multiple is a shot in the arm to the VoIP market. It will generate more energy and effort among other SBC companies and will also show investors that VoIP players indeed have good exit strategies. Personally I am waiting to see if Vonage announces they are being purchased soon. A successful sale by Vonage would be like a shot of adrenaline in arm of a VoIP market already running on 12 cylinders with the turbo at full boost.
According to Federal Computer Week, Nortel just won a $20 million dollar contract to supply VoIP equipment to the Defense Information Systems Agency.
The contract, announced March 29, will also allow DISA officials to migrate voice traffic from a network managed by MCI to a private network under total Defense Department control, a DISA spokesperson said. Pentagon officials expect the new switches to save money by allowing DISA to use the Defense Department's Global Information Grid-Bandwidth Expansion network to replace leased services.
Voice over IP "that meets military requirements has a clear, positive future as a result of this acquisition," the DISA spokesperson said.
Nortel officials will upgrade six of their SL 100 switches at Air Force bases nationwide to handle IP traffic, including IP trunking, management of PBX systems and voice-over-IP traffic, said Chuck Saffell, president of the company's federal solutions division.
Handling voice calls as IP traffic via DOD's high-capacity fiber-optic network should reduce DISA's costs, said Warren Suss, president of Suss Consulting. DISA's move toward voice over IP represents "a major technology milestone" for the agency, further cementing voice over IP as the preferred technology for voice traffic in government and industry, Suss said.
That the government is heavily deploying VoIP is no surprise to me. They have been exploring VoIp for quite some time now. They have been coming to our ITEXPO shows for years – the military as well, and seem to have done the research and are now ready to deploy. We will hear about more government deployments soon and there are some deployments we won’t hear about.
If you are Microsoft and you see what Apple has going on with the iTunes – some estimates say this service will generate billions in the next few years – you too will look for your cash cow. What if Microsoft were to one up Apple and come up with a video download service? But forget the per clip pricing you might expect from Apple… Microsoft has already taken that opportunity away by pricing its service a flat $19.95/year.
The MSN Video Downloads service draws on content from Microsoft partners such as CinemaNow, MSNBC.com, and TiVo, allowing subscribers to watch video on their smart phones, Pocket PCs, and Portable Media Centers reports PC Pro
Since the launch of the Microsoft Windows Mobile-based Portable Media Center last fall, more than 20 new content partners, including CinemaNow Inc., MLB.com, MSNBC.com, MSN Music, MTV Networks Music, Napster Inc., SnapStream Media Inc. and TiVo Inc., have agreed to make video available online specifically formatted for Windows Mobile-based multimedia devices.
The service requires Windows XP and Internet Explorer 5 or higher on the user's PC and Windows Media Player 10 and up. Users simply log onto the MSN download site, using a traditional laptop or desktop computer. They can download the shows and transfer them to portables. More.
I just received this e-mail and thought it worth sharing.
Dear Valued Go Daddy Customer,
Today I have the unfortunate responsibility of informing you that there has been a decision made by bureaucrats of a Federal agency that takes away your right to privacy as guaranteed by the United States Constitution.
This decision was unilaterally made by the National Telecommunications and Information Association ("NTIA") www.ntia.doc.gov without hearings that would determine the impact on those affected, and delivered without notice — in short, the NTIA decision was made without due process of any kind. This is exactly how our government is not supposed to work.
The effect of this decision is to disallow new private domain name registrations on .US domain names. In addition, if you already own a private .US domain name registration, you will be forced to forfeit your privacy no later than January 26, 2006. By that time, you will need to choose between either making your personal information available to anyone who wants to see it, or giving up your right to that domain name.
I personally find it ironic that our right to .US privacy was stripped away, without due process, by a federal government agency — an agency that should be looking out for our individual rights. For the NTIA to choose the .US extension is the ultimate slap in your face. .US is the only domain name that is specifically intended for Americans (and also those who have a physical presence in our great country). So think about this for a moment. These bureaucrats stripped away the privacy that you're entitled to as an American, on the only domain name that says that you are an American. I am outraged by this — you should be also.
If, like me, you are outraged at the NTIA's decision to strip away our constitutional right to privacy, www.TheDangerOfNoPrivacy.com will provide you with a petition to sign. (Only your name will be published, your address and email information will be kept private.) This Web site also provides a very easy way for you to send either a fax or an email, expressing your outrage, to your Congressperson and Senators. This is all provided at no cost to you. All that is required is for you to take the time to visit www.TheDangerOfNoPrivacy.com sign the petition, and send the fax or email to your legislators.
On my personal Blog, www.BobParsons.com there are a number of articles where you can learn more about the NTIA's unfortunate decision and what you can do to help get it reversed.
I also will be talking about our right to privacy on Radio Go Daddy, our weekly radio show that debuts today, March 30, at 7 PM PST. To find out how to listen in, please visit the Web site dedicated to the show, www.RadioGoDaddy.com.
You can be sure that I, and everyone at GoDaddy.com, will do everything in our power to get the NTIA decision reversed. However, we need your help. Please visit www.TheDangerOfNoPrivacy.com to sign the petition and express your feelings to your Congressperson and Senators.
Sincerely,
Bob Parsons
President and Founder
GoDaddy.com
The cyclical nature of the computer market is intriguing. When I first got my engineering degree from UCONN, the computer than most of the school was an IBM system 360-370 and we had to program on an OS called MVS and use dumb terminals. My memories are a bit cloudy – similar to how some repress pain or anguish. As I write this article I get that feeling you get when you have that dream – you know the one, where you are running to get to a final but haven’t been to class all semester so you don’t know where it is.
The only thing worse than how you feel when you wake up from such a dream is using an IBM mainframe in batch processing mode. You ran a program and as I recall went to a printer room to get the output.
As my professor of IBM Assembly language used to tell us – it was CS 267 and I don’t remember his name, the computer used to cost much more than the programmer and as such programs were batched. You batched your programs, sent them to the computer and then got a result.
Over time, computers became cheaper than people and we went into the world of PCs. Before PCs came into vogue many of us used Unix. I was a UNIX programmer back in 1982 and actually wrote the first database programs that TMC had at that time. I wrote invoicing and labeling programs, etc. At the time a hard disk cost $10,000 and held 52 megabytes! For those of you kids out there, notice there is no gigabyte reference. These drives weighed as much as a bowling ball and occupied as much space!
Getting back to my story, we are in a PC world and now with the advent of the web and programming tools like AJAX, etc we are beginning to see application intelligence on the server with dumb clients once again.
I was reminded of this story when I learned about a new company called Userful, a desktop Linux company who introduced Desktop Multiplier, a software product that turns one computer into ten. Using extra video cards in an ordinary computer box this software makes deploying or expanding call centers as simple as plugging in ten ordinary monitors and keyboards into the single central computer box. This approach gives call centers a ten-to-one advantage on their desktop computers using familiar PC hardware.
The value proposition is simple. You don’t need blades, use this technology to save money and accomplish much of the same goals. Save money, desktop space, heat dissipation, electricity, etc.
Users can run a mix of local and remote server based applications meaning you aren’t using dumb terminals at all. This ensures that contact centers get high performance when it is needed and centralized data security for those applications which require it. The company says don't need to sacrifice performance or wed yourself to a proprietary infrastructure to take advantage of desktop consolidation.
This is a niche play for sure but may be intriguing to contact centers who are running applications that require thousands of users but are low in terms of processor utilization. I envision this as reclaiming unused CPU cycles and in a way, it reminds me a bit of my painful mainframe days. But hey, if this article saves my readers thousands or millions of dollars then a little pain is a small price to pay :-)
Here is a good story on the ramifications of the Grokster, Kazaa and RIAA case. The issue at hand is if you sue inventors that produce products that can be used for illegal purposes, who will innovate? After all, the Xerox machine and iPOD can be used to break laws as well -- does that mean these products should be outlawed or Steve Jobs should be thrown in jail when an iPOD is used to steal a song?
Here is an excerpt:
"Copyright infringement is the only commercially significant use of file sharing," said Donald B. Verrilli Jr. an attorney for the entertainment industry. Acting Solicitor General Paul D. Clement, representing the government, said Grokster and its brethren were being allowed to "build a business model out of infringement."
Richard G. Taranto, arguing for the file-sharing companies, responded that the technology is used extensively for legal swapping of files and that the firms have no way of knowing when their users use the software illegally.
The entertainment industry wants the Sony precedent to allow for liability when the primary use of the product or service is illegal, or when the provider refuses to take steps to try to stem potential piracy.
But those notions provoked skepticism and sharp questioning from several justices, who wondered how inventors could know whether many people might use their products for illicit purposes.
"How do we know in advance on your test" whether the inventor is safe to go forward? asked Justice David H. Souter.
Justice Antonin Scalia said that an inventor has to know what his liability would be from the beginning. "I'm a new inventor," Scalia said. "I'm going to get sued right away."
Scalia and Souter asked whether other popular technologies, such as the Xerox copying machine or Apple Computer's iPod music player, would have seen the light of day given that they can and are used for illegal purposes.
And even if an inventor knows there might be illegal use, asked Justice Anthony Kennedy, how much is too much?
Justice Stephen G. Breyer noted that there are "excellent uses" of file-sharing technology, including by libraries and other institutions that transfer documents that are not copyrighted. Some music bands also allow their songs to be traded for free.
But the justices expressed discomfort with the notion that if they uphold the ruling of the Court of Appeals for the 9th Circuit Grokster and Streamcast Networks would walk away scot-free.
Breyer and O'Connor asked whether the case could be sent back to lower courts for a trial on whether Grokster and Streamcast networks deliberately induced users to steal songs and videos, which would be illegal under existing copyright law. The lower courts largely sidestepped those issues.
That is the outcome preferred by several major technology and telecommunications companies, such as Intel Corp., Microsoft Corp. and Verizon Communications Inc. which condemn Grokster but want the Sony precedent maintained.
But Verrilli argued that merely going after the Groksters of the world for encouraging infringement deprives the entertainment industry of being able to quickly seek to shut down businesses based primarily on illegal file sharing.
The case is MGM Studios v. Grokster Ltd., 04-480. A ruling in the case is expected by July.
Another area that wasn’t discussed is the constitutionality of outlawing software. I was under the impression that software was like speech and was protected as such. This wasn’t mentioned in the article and I am not an expert on the constitution or federal law.
I did a bit of research and found that the ACLU has a statement on this issue and more importantly links this case to the FCC Vs. Brand X case that admittedly has much more to do with my core competency than the recording industry does. But bringing these cases full circle, the ACLU said in a statement yesterday:
"People have grown complacent about freedom on the Internet, but bad policies can easily limit that freedom and stifle growth," said Barry Steinhardt, Director of the ACLU’s Technology and
In MGM v. Grokster, the Court will decide whether Grokster and other makers of "peer-to-peer" software, which allows individuals to share computer files directly with each other, can be held liable for illegal uses of that software such as the sharing of copyrighted music files.
"File sharing is one of the most innovative uses of the Internet to emerge since the advent of the Internet," said ACLU attorney
In the second case being heard by the High Court today, FCC v. Brand X (which has been consolidated with a similar case, National Cable and Telecommunications Association v. Brand X), the underlying issue is whether providers of cable broadband Internet services should be forced to provide access to Internet Service Providers other than their own.
"The cable monopolies own the wires that people use to get online," Steinhardt said. "They must not be allowed to parlay that ownership into control over subscribers’ e-mail, Web surfing, Internet telephone services, or other applications and services. These are companies that have both the technological means and the economic incentive to interfere with the free and open Internet by depriving consumers of access to competing services. If the government does not stop them, the result should surprise no one."
Steinhardt added, "At root this case is about free speech, because if the forums where speech take place are not themselves free -- and the Internet may be the greatest forum of them all -- then the First Amendment becomes nothing more than a dry, meaningless abstraction."
In 2002, the ACLU commissioned an engineering firm, Columbia Telecommunications Corp., to examine the technology behind broadband Internet access. CTC’s report makes clear that cable broadband providers can and indeed already are interfering with the free, neutral "end to end" Internet, the ACLU said. The report and a recent supplement is available at www.aclu.org/broadband.
The ACLU’s amicus briefs in both cases are online at www.aclu.org/supremecourt.
I never thought to tie these cases together. Does file sharing have anything to do with Internet access? I suppose the answer is yes. This country is based on freedom and one of the reasons the
As is pointed out so well in this SFGate.com article:
Central to the Grokster case is the 1984 Sony Betamax decision, which Consumer Electronics Association President Gary Shapiro called the Magna Carta for the technology industry.
Hollywood sought to shut down Sony's video cassette recorder, but the Supreme Court ruled that as long as a device had legitimate uses that did not violate copyrights, its maker could not be sued. The author of the Betamax decision, Justice John Paul Stevens, still sits on the court.
"The country seems to have survived" the Sony standard, said Justice Breyer. Several justices asked what kind of new rule would be preferable to Sony.
Ironically, the VCR wound up producing bigger studio profits from film rentals than theater releases -- following the path of a century of innovations from the player piano to radio that the entertainment industry initially resisted.
Intel argued that many technologies -- including Internet servers, computer hard drives and DVD players -- were developed under the Sony decision, and that eroding that protection would "chill innovation and put a damper on one of the largest components of the U.S. economy: computer, software, consumer electronics and telecommunications companies."
Opening such companies to contributory copyright infringement would "let lawyers into the design room," Intel argued.
So there you have it. We are a crossroads once again. Will the
Juniper just picked up session border controller company Kagoor Networks. In brief talks with company representatives I learned the two companies have similar customers and partners and don’t compete so the synergy was natural. There are many session border controllers on the market and one wonders if this move will lead to more consolidation or bring new competitors into the market.
Will competing with Juniper make it more difficult or less to be in the session border controller space? I hear that virtually all other companies selling SBCs are doing well so the market seems to have lots of life left in it. I also see VoIP peering as a natural way for these companies to continue their growth curves – as the universal translators of VoIP.
There is an interesting VoIP article in the Wall Street Journal today that discusses the increased competition in the market and how the players may be able to find areas where they can specialize in. James Tobin the vp and general manager of advanced voice services at AOL sees VoIP as a reason for customers to move to broadband. This is something Niklas Zennström, Skype CEO and co-founder said to me in a recent interview as well.
The article then mentions that the battle will boil down to the relationships the existing phone companies have with customers today versus the ability of cable companies to bundle their services into integrated packages.
The article ends on the note I mentioned above and that is that VoIP providers will have to learn to differentiate themselves.
"The market is still so new, we'll be able to coexist," Mr. Tobin said. "Time Warner has 500 magazines but you wouldn't say that they're competing with each other; it also has two movie studios but they do different things."
I agree with this article wholeheartedly. In the end it is all about services and sticky applications that customers will have a difficult time walking away from. AT&T CallVantage’s conferencing feature was a brilliant addition to the service for example. VoIP allows truly inexpensive conferencing and there is a tremendous opportunity to provide superior conferencing features with a GUI and presence that customers will get hooked on. This is just a start of course. Taking advantage of the integration of a web interface for call control and presence allows a bewildering array of features to be offered that will keep customers on your service and will make others want to join.
A pretty important case was just decided on in
Mr. Huckaby, whose home state doesn't have an income tax, paid
Mr. Huckaby's attorney, Peter Faber, said the case is one of the first of its kind involving the income-tax liability of a telecommuter. He said he may appeal to the U.S. Supreme Court because most states base income-tax liability on the residence of the taxpayer.
Marc Violette, spokesman for state Assistant Solicitor General Julie Mereson, said, "
This case has dramatic implications for telecommuters everywhere and could potentially reduce the talent pool that companies in big cities have access to. Another potential result is that companies will likely have to pay higher wages as out of state workers may not be so eager to work for companies in states with high taxes. In reducing the talent pool, salary levels will likely rise.
Alpha-Telecom promises to get your company to VoIP without the forklift. Whether you are on Centrex or a Nortel or Avaya PBX, you can minimize you initial costs. The company’s Arion series of VoIP gateways migrate an enterprise's legacy telephones into the service provider's system, enabling the carrier to offer Centrex features over its IP backbone and to seamlessly provision, configure and manage VoIP service without user intervention; the service provider merely ships the Arion units to the customer for plug-and-play attachment to individual phones by the enterprise's IT department or by the users themselves. Your IT department can also deploy an Alpha Telecom element management system (
Tom’s Vonage blog is sure to jog your memory of that catchy Vonage jingle. While you listen you can learn about Vonage’s use of a direct mail newsletter to drive customer affinity and sell more product. If for no other reason than to wake service providers up, I am glad Jeff Citron is at the head of this company. What was the most interesting marketing ILECS have done? Answer: Stuff a flyer in your phone bill. Sure this is great timing. Hey my phone bill is $150 this month. Bummer. What’s this? A way I can spend more money? I can purchase Voicemail? Caller-ID? Where do I sign?
This guy knows how to market (OK there is an entire marketing team so I need to split the credit). Regardless. You get the idea. These guys know marketing and have quickly taken the lead over the number two player. After cable companies there is no really strong second to Vonage. What a great place to be in.
Deloitte & Touche today named Carol Mattey a director in regulatory consulting practice for technology, media & telecommunications industry. This is the second Deloitte blog entry today
Ms. Mattey will provide a comprehensive range of consulting and regulatory compliance services to clients in Deloitte’s TMT practice, helping them to anticipate and address strategic and operational risks in the regulatory arena.
Prior to joining Deloitte & Touche, Ms. Mattey was the deputy chief of the Federal Communications Commission’s Wireline Competition Bureau. She previously served as chief of the FCC’s Policy and Program Planning Division, Common Carrier Bureau. Prior to her 10 years with the FCC, she was with the National Telecommunications and Information Administration within the U.S. Department of Commerce.
“Carol Mattey’s regulatory experience will be a major asset to our practice,” said Philip L. Asmundson, vice chairman and national industry leader for the TMT industry group, Deloitte & Touche USA LLP. “Her extensive telecommunications experience will be of great benefit to clients as they assess the business implications of alternative regulatory paths, and execute strategies to achieve desired outcomes."
This sort of addition can only aid Deloitte in its practice. This is certainly a good get for the company.
AudioCodes is announcing lots of new products including the Mediant 1000 VoIP Media Gateway which will fit in enterprise and service provider markets quite nicely. Think of this as the Bud Light (meant respectfully of course) of media gateway as it is cost-effective and compact. Having only seen the product briefly I am not in a position to opine on whether it tastes great or is less filling but it does take less rack space which is a plus in many of today’s enterprises.
The IP-PX companies really like this product because it allows them to add a Pentium CPU blade making an IP-PBX and Gateway combo. Resellers like the product as well because the can plug in a T1 or analog tray. This product can also be a SIP proxy.
The company has also released new additions to its MediaPack product lines including the 112, 114, 118. The MediaPack 112, 114 and 118 are designed and optimized to address the needs of service providers and enterprises for feature-rich, high quality analog media gateways. The MediaPacks enable a wide range of applications including converged access, IP Centrex, fixed-mobile convergence, and next generation PBXs. Simultaneous mixed interfaces of FXS and FXO, survivability, guaranteed QoS, security and standard billing interfaces are examples of additional features in the new hardware and software of the MediaPack product line. Integration with AudioCodes’ Element Management System allows fast deployment and maintenance of large and complex networks for large scale service provider deployments.
AudioCodes has been in the VoIP space for a long time -- they continue to be on the leading edge of VoIP development and are an enabler for many of the mainstream VoIP products on the market.
The latest offer accepted by MCI values the company at roughly $7.6 billion, but it's still below Qwest's latest offer of $8.45 billion in cash and stock.
"We believe our agreement with MCI represents superior value and is a compelling proposition for MCI's shareholders, customers, employees and creditors," Verizon Chief Executive Ivan Seidenberg said today.
Qwest has argued that its deal will generate more than twice as much savings as Verizon has promised, and that a Qwest-MCI deal would raise fewer objections from government officials concerned about lost competition. The savings include up to 15,000 job cuts, or more than twice as many as Verizon plans.
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