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 In an economic slowdown, companies need to focus now, more than ever on their communications solutions. Today's technologies can make your company more efficient, save you money directly on communications costs as well as travel and even real estate.

Recently I had a chance to speak with Praful Shah, VP of Strategy from RingCentral, a company providing hosted communications services and he told me the last four weeks have seen business increase dramatically.

In a reaction to this increase, RingCentral surveyed its customers and found some very interesting trends. The company framed the survey as how Main Street is reacting to Wall Street - with a specific focus on the SMB.

• 75% of small businesses have been negatively impacted by the economic downturn
• 72% of small businesses are reducing overhead costs due to the economic downturn
• Nearly a quarter of small businesses are reducing overhead costs by eliminating cost of physical office space
• Only 16% of small businesses have staff centralized in one physical office
• 72% work from a home office
• 29% have staff in multiple locations across the US
• 18% identify themselves as road warriors

What are the takeaways here? Small businesses are moving away from a centralized, physical office - working from home and on the road. They are also reacting rapidly to economic conditions as evidenced by the fact that almost three quarters are cutting overhead and a surprising 23% are cutting physical office space.

What is interesting is that in an environment where companies are looking to cut costs, they realize they can save money by being more productive and efficient. And the influx of new customers coming to RingCentral just show the world that today's communications services allow unprecedented levels of productivity and efficiency and ultimately pay for themselves quite rapidly.

How do companies navigate a slower economy? Well, you first need to show strength to ensure your potential customers are not scared off. As Jon Arnold points out today, this is a challenge companies like Vonage have struggled with. You also need to provide ROI. In a recent conversation with Joel Hackney (pictured below), President of Nortel's Enterprise Business, he tells me customers are now looking for ROI of a single year or even nine months!
 

As he puts it, "Projects must be self-funding." He also told me yesterday at an event the company hosted at the New York Stock Exchange that customers in the financial community are still spending as long as they see a one-year or better payback. This is perhaps the opposite of what you would think. Let's put it this way... The financial markets are so bad that when we entered the NYSE on our way to the sixth floor of the building, there was a gift shop which was closed. One of the people who was headed to the meeting entered the elevator with me and wondered aloud if the closed gift shop had to do with the state of the financial markets. It was a joke - but only sort of.

This is a brave new world for the communications market but you know what? As an industry, we are up for it. We can without a doubt sell solutions to our customers which will make them more productive, save communications costs, save travel costs and in many cases save energy!

I queried Hackney about his company's Cisco Energy Tax ad campaign where the company focuses on the savings of their equipment over comparable products from Cisco. I mentioned my thoughts on oil prices heading to $30 (just a hunch - no letters please if we don't get there). He asked if my utility bill increased proportionately with the price of oil on the way up. I said no. He then told me it likely won't come down proportionately either.

He went on to say that 40,000 people used the company's energy calculator in the first ten weeks it was available. Furthermore he discussed how his company is selling solutions designed to work on heterogeneous networks, while utilizing SOA and web services, allowing solutions from competitors to work cohesively with those provided by this Canadian telecom vendor. This by the way is a big part of why the company is able to provide increased ROI levels as forklifts are minimized.

I queried Hackney regarding the financial strength of the company and he told me Nortel is as focused on the enterprise as ever and to be honest this makes sense as this seems to be among the strongest groups in the company. Moreover, I believe the company's products and technology partnerships in the enterprise space position it better here than virtually any other market the the company plays in such as wireless or cable.

We would have had a more in-depth financial discussion but the company is reporting earnings soon and can't comment on these issues at the moment.

For Nortel and other communications companies looking to maximize sales and profits, the focus needs to be on ROI. It is all about how fast can you sell a product or service which will return real money in the pocket of the customer. Companies have not stopped spending and by all accounts they are spending more on solutions which pay back rapidly.

What this means for all companies is a renewed focus is needed to ensure products increase sales or boost productivity. Vendors also need to ensure they focus on the products which customers are most likely to purchase in this environment. Communications and technology companies can and will grow in the next 18 months if they project strength and focus on solutions which return investments to their customers rapidly.

As communications vendors rethink their business models for the future, the successful ones will keep these ideas in mind.

One of the more exciting conferences I have attended lately has to be the Dialogic One Event at the Hotel Del Coronado in San Diego, CA. Rob Martinez, VP Sales Americas kicked off the event, speaking to global partners from over 125 companies who were in attendance at the kickoff session last night (see pictures throughout). Martinez thanked the enthusiastic crowd and sponsors and explained what we would see over the next few days. After a short intro, Martinez handed the microphone and stage over to Nick Jensen, the President and CEO of Dialogic.

Jensen was right at home on the stage and as always, was full of passion and enthusiasm. He started the session with a recent history of his company including the acquisition of the Dialogic brand from Intel by Eicon Networks, the purchase of Cantata which was once three companies, Brooktrout, Excel and Snowshore Networks. This led him to discuss the recent acquisition of NMS which is still pending.

He explained the company will do about $220 million in sales this year and this was a bit slower than expected. Jensen alluded to the fact that if you weren't a CNBC watcher a few months ago, you are now. He mentioned the credit markets and global stock market crashes. He went on to say, a week ago things were worse but the markets are now behaving better. Jensen explained the credit markets are the most important factor in our markets today. He explained that without credit, you can't sell your products (likely referring to financing mechanisms). He went on to discuss how in an industry awash in acronym s we have had to learn new ones like CDO and LIBOR.
 

The question he asked, is when will government intervention produce results? To this question, Jensen answered with words of advice. He explained we should watch our costs but keep our long-term vision. He said, now is a good time to reevaluate business models and think about things like adding video to your solutions. Jensen says video is the future for his company and as an industry we need to focus on it.

He went on to explain the company is in the business of providing enabling building blocks which you can use to sell a solution to an enterprise or carrier. He explained that the company will not produce applications which compete with customers.
 

He then segued into how he has talked about consolidating the industry. He says as an infrastructure provider, size and scale matter. He went on to say "mission accomplished." The next step is video, security, deep packet inspection and more. He says video will hit 3G handsets before the enterprise deploys it en masse.

He mentioned one application which is needed is keeping adult content off your kid's 3G handset. He also discussed how as they progress in this space, they may acquire and/or build products organically.
 

He says when you produce video applications, you need to create demand. "Most people don't know why they need video," he exclaimed. He went on to discuss how caller ring back tones are an example of an application which we could not foresee. "Teenagers are now driving this six billion dollar market today," Nick explained.

He then mentioned a video caller ring back tones. Do we want to see this? He says most people will not, but family members just might. He repeated emphatically to "think outside the box." He says, if you stay in your box, someone else who is young and innovative will take this opportunity away from you. He says they will likely come from another country which is ahead in the video space. He said, "If you are in the voice or fax business, I urge you to consider video as it will be crucial at some point soon."

Where are the biggest markets for video today? He says CALA, India and China. Video to the enterprise is not happening on a mass scale yet he explained. The reasons may have to do with screen sizes or UC integration. He said enterprise customers generally take a few years to adopt new technologies.

Jensen explained his company plays in the edge network space - where customers buy the media and signaling components from Dialogic. He says that the edge will grow and call centers will soon upgrade as well to add video capability.

Jensen said emphatically, "Video is the new voice and a will be a huge platform going forward."

He then went on to detail a sample solution where a person on a 3G Blackberry could be on a call with and could say "compliance" and some code words relating to where the conference is to be stored. For example, project "take over", involving company "X and Y." He says this ability to record and file a conversation will enable you to instantaneously call up the results of the conference call with full recordings and screen shares as needed.

He says in the economic crises of the day, this sort of technology could have been crucial. He says, in court you would need to be able to prove such files have not been altered. He mentioned that Dialogic technology can allow this functionality today and companies looking for compliance solutions will be interested in purchasing it.

Jensen then went on to say video is incremental - it does not replace voice or fax or cannibalize it.

He then discussed more applications based upon the meetings he has had with global carriers. He suggested that developers too speak with customers before they develop code to ensure they are on the right track.

Jensen went on to explain how a 3G video-enabled phone could be used to video record a problem and send it to a call center. At this point a video call can be initiated and the customer can have their problem solved in real time - while looking a call center agent in the virtual "eye." He envisions global mass contact center upgrades as the movement to video proceeds.

He then explained how 3G gaming allows multiplayer functionality and the future is HD gaming and video. He says you will now be able to look someone in a gaming room in the eye on an iPhone or Blackberry Bold. He alluded to strategy games such as poker where seeing the opponents face makes the experience better for all involved.

He says today's social networking generation is familiar with video and therein lies the opportunity.

In the future, Jensen sees P2P video conferencing/collaboration being a huge opportunity. Virtual tours of hotels (I would add real estate to this example) are a great example. He also thinks social and dating applications are a natural and he reiterated people may not know they need it but once they try it and see it is easy, they want it.

Another application Jensen explained is soon to appear in India where you will be able to call a yellow pages type of service where you can say "Starbucks" and the application will come back with a map of where you are and where you want to go. In addition, if you allow it, you will get a video and coupon. In this example, the carrier gets revenue from the customer, the directory company and the coffee shop. He explains that video is the only thing that will help ARPU go up in India. Analysts predict that ARPU will go from $8 to $9.50 in this country, which is not a huge dollar volume but adds up when you have a billion users.

Another important point Jensen made and I agree with is the first mover advantage is huge in business. You want to be first with successful applications, not second, third, etc.

The great examples continued to flow as Jensen described being able to speak into an automated assistant and tell it you are two adults and three kids and over the weekend in New York you want to go to a museum, Broadway show and a ball game and you like French and Italian food. The application could come back with a detailed schedule and a mashup of maps showing you how to get to your destinations. For example, you could be told to visit the museum at 10:00 AM, then the Ball game at noon. Lunch is hot dogs in the stadium, followed by an early dinner at a nearby Italian restaurant near Broadway.

Jensen explained that many applications can be upgraded to video with little effort. He says they are betting a great deal on video and are really serious about this market. He thinks in less than a year the company will be a major player in the space.

Next up was Joe Mele, the head of the Dialogic Media Labs. Early into his presentation he began discussing how H.264 is becoming a compelling and global standard for video compression. You get 2x the performance with the same bandwidth as previous technology he explained. He related this standard to the MP3 standard which became the audio standard.

The company is busy building products and filing for patents in the space. They are coming out fully featured. He explained his team has done similar things before and just like building multiple houses, each time you build one, you come up with better ideas on how to do things.

Applications discussed and profiles built-into the Dialogic platforms include mobile video streaming, desktop video conferencing and IPTV. These will all be in the box when customers want to build solutions for these markets he explained. Beginning the second half of next year, we will begin to see these codecs in the media server and gateway product families.

From there the audience witnessed mobile video demonstrations based on Dialogic technology and the competition. As you might expect, Dialogic generally beat the competition in all the demos we saw. The company's solutions seem to really excel when conditions are less than perfect.

Although we are only a few hours into this event I get the feeling the video market is hitting critical mass. With standards in place, powerful devices with bigger screens and 3G and 4G networks springing up around the globe, there is no reason to think there won't be a slew of new multibillion dollar applications we can't even conceive of yet. If you look at the SMS market, you realize billions are being spent on just one simple application so it may just be one killer video app that changes the world. We may not need dozens. I can see video and collaboration compliance alone topping $10 billion annually at some point in the next 5-10 years. The applications Jensen and Mele discussed today are compelling and I would at least try them all myself. Admittedly I am not the demographic for 3G video but still, I have been surprised at how much video content I have been consuming as of late because I have an iPhone with me at all times.
 

If Jensen is right and (mobile) video is the new voice, then we will see the IP communications market enjoy massive resurgence once again. After all, the market for conferencing, video and collaboration is already exploding with growth. When you add in mobility the potential seems to grow exponentially.

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