A Visit to the Ultimate IP Communications Experience
I just returned from Internet Telephony Conference & Expo where I was overwhelmed by all the activity over the course of the week. The show has grown over the years; from a humble event in the Hotel Del Coronado in 1999 it has become the Ultimate IP Communications Experience in the San Diego Convention Center.
One of the speakers at the show was Seamus Hourihan, Vice President of Marketing & Product Management at Acme Packet. I didn’t get a chance to speak with him for very long, but I noticed there was some noise about the Acme Packet IPO that took place during the show. Unlike the Vonage IPO that the whole world seemed to be intensely analyzing, this IPO was very quiet. Surprisingly quiet, in fact. Prior to the IPO, many in the industry questioned why the company would even consider the public markets as an exit strategy.
Many were very worried about the IPO because it came relatively soon after the crummy Vonage offering. Some insiders have quietly told me that Vonage has caused the IP communications market hundreds of millions of dollars (even billions) of financial damage. A few Vonage competitors saw their valuations drop immediately - just because Vonage went public.
So, many were a bit nervous about this offering. Despite all of this, it seems Acme Packet really pulled off a stunner. The stock was supposed to open at $8 to $9 but opened at $9.50 a share and now trades - less than a week later - at $17.34. This is certainly a ‘shot in the arm’ to IP communications companies everywhere.
I spoke with Seamus Hourihan after the show and told him about how many in the industry were nervous about the IPO owing to what happened with Vonage. He pointed out that Vonage and Acme Packet are in two very different industries. Whereas Vonage is a service provider, Acme Packet is an IP communications equipment vendor. They have very different target customers, different products and services, different distribution strategies, different competitors and different financial models. The only thing they have in common is their use of VoIP as a technology.
Even within the equipment market, Acme Packet is very different from the others in many, but not all, of these characteristics. The “others” would include the likes of Alcatel, Ericsson, Italtel, Lucent, Motorola, Nokia, Nortel, Siemens and Sonus. Thus, it is very hard to generalize.
I mentioned that the Acme Packet IPO was very quiet; Seamus told me the company can’t say much as they are in the “quiet period” and the registration statements have to speak for themselves. “That is the way it works in today’s world,” he said. Additionally, there was a road show which is available for perusal online.
From the service provider market we go to the enterprise, where Interactive Intelligence also saw their stock jump during the show, a result of their announcement of great earnings along with the fact that their revenue has grown 30% year-over-year.
Of course, stock price is not always linked to the real state of markets so I hesitate putting too much focus on snapshots of how shares are doing. Still, these two companies represent a wide swath of the IP communication space, from enterprise buyers to service providers that are deploying technology in their networks. As such we get some sense of where the market is with respect to the IP communications players.
Oh, I almost forgot. 8x8 - the company behind Packet8 - announced they will be cash flow positive during the first quarter of 2007. This is important news, since to date both 8x8 and Vonage have been getting hammered due to profitability concerns. This news could potentially put even more pressure on Vonage shares. In a related bit of good news, Packet8 service is now used by over 5,000 business customers.
One of the best parts about ITEXPO is getting to speak with so many thought leaders in the space. One such example is Michael Khalilian, Chairman of the IMS Forum, with whom I had an interesting conversation. While onstage in a panel on VoIP Service, Michael mentioned the need for consolidation in the VoIP space. He says some providers in the triple-play space are ‘gunning’ for the VoIP market and have considered giving away voice to customers who purchase broadband and certain types of programming. The goal here would be to wipe out pure-play VoIP providers so the market clears up a bit.
In Michael’s opinion, the best defense against such moves is pure scale. He advocates VoIP providers banding together as soon as possible so they are in a position to fend off threats from larger providers. He also pointed out that although it is difficult to get money for business expansion, money for acquisitions appears limitless (not his words exactly but that is the theme I took away from more than a few similar M&A discussions this past week).
Another trend I saw this week was that of SIP trunking becoming mainstream. For example, Ingate and BandTel were in the news and creating quite a stir at the show explaining how companies can benefit from this technology: it reduces the need for proprietary hardware and expensive voice circuits.
Interest in IMS and FMC was also huge as companies were trying to figure out the best way to get a handle on the rapidly-evolving worlds of both technologies. There was much talk at the show of the A-IMS [Advances in IP Multimedia Subsystem] initiative led by Verizon some people were even complaining about some internal Verizon comments about not needing IMS for many of the services they will be supplying (this last comment was overheard in the show hotel’s elevator).
Other comments about Verizon centered on how the company is very difficult to work with. A few of the company’s partners told me Verizon would rather endure a worse deal for itself rather than lose control over a partnership. Other service providers have had similar complaints lodged against them but Verizon’s name came up more than any other and the company appears to be the toughest with which to work.
Business Continuity/disaster recovery was another trend at the event. There was much education on the topic and a really nice demo appeared in the form of a bright yellow Hummer powered by Pacstar/Sphere Communications equipment. Expect to see this Hummer again at ITEXPO in Ft. Lauderdale this January 2007.
In addition, Max Schroeder of the ECA and FaxCore also led a Disaster Preparedness Workshop at the show that was well attended.
One of the more interesting disaster preparedness-related stories worth mentioning was from Iwatsu They have a service called Enterprise Messaging Application (EMA) which is a partnership with Aizan Technologies. The application is a service which is all about building voice and web communities. As you may have read previously, I am a big believer in communities as the future of communications.
One EMA customer is the United Space Alliance (USA), NASA’s prime contractor for the space shuttle. In a disaster scenario such as a hurricane, employees can call an 800 number to get information about the status of their building and when they should report to work. You can also add/update contact information via telephone and be notified if/when things change. The application also works with fax, SMS and email.
EMA can be used by any company that worries about disaster preparedness as well as other kinds of organizations such as schools where an emergency could take place. Parents can use EMA both to keep in touch with the school and to be notified of any changing conditions. EMA supports other applications such as reverse 911, enabling emergency management offices, for example, to tell consumers that a hurricane is coming, or that residents near a gas leak should stay indoors.
What I like about EMA is that it is being supplied as a service from a PBX company, which means that the dealer network is able to piggyback this application as a differentiator when competing against other PBX companies. So think of EMA as a voice/web community service that is the ultimate enhanced service, with little or no competition in the PBX space. This gives Iwatsu VARs, for example, a tremendous advantage and I expect to focus on this area a great deal at our January show in Ft. Lauderdale.
From there we go to Zig Serafin, General Manager, Unified Communications Group, Microsoft Corp., who was absolutely mobbed after his keynote session. I received many compliments about what he had to say and was impressed as well. When he finally had a chance to break free we spoke for a while about Microsoft’s vision for the future of communications.
Here are some key quotes in response to my question, “What do customers need to know about unified communications?”
Unified Communications is about bringing the power of software innovation to communications and changing the way information workers think about voice - in the context of daily processes. This will bring new levels of productivity to information workers and organizations, similar to the impact the Microsoft Office Suite made on worker productivity over the past two decades. Today’s enterprise buyers should evaluate their budget spend across VoIP/IP PBX, TDM PBXs, voicemail and consider how they can make sound investments that will get them on the path toward a software-based platform for enterprise communications.
Another booth I had a chance to stop by was that of cyLogistics, which is not only a full-service distributor of IP communications products, but also sells various service provider products, such as their TrueLine ITSP Billing and Tax Database. I think this is an important product, since service providers have to keep up with so many city, state and federal taxes around the country.
The product has been in production for over 12 years and it is now IP-ready. There are 17,000 municipalities represented allowing ITSPs to manage the true cost of their business. The company also sells a Class 5 server as well as a session border controller.
Other important news was the IMS Forum’s announcement of a series of IP Multimedia Subsystem plugfests. ReefPoint unveiled a new Universal Convergence Gateway focused on fixed mobile convergence (FMC). Audiocodes released a new transcoding blade enabling developers to change coders on the fly without the need to recode applications.
There was much more and I would like to direct you to this page for more information.
In short, the outlook for the IP communications market seems very bright across the entire spectrum, from enterprises to service providers. Companies focusing on businesses are now looking to penetrate the SMB space. In the service provider market the sky’s the limit as wireless is an area of tremendous growth and IMS/FMC are also areas seeing rapid product deployment. The one concern here is that carriers are spending billions of dollars on technology - they need to be more certain of the ROI of these investments. “What are the money-making applications?” they rightly ask. As an industry we need to make sure we answer these questions to keep service providers investing and reaping the rewards from these investments. Let’s make sure we can transform the ultimate IP Communications Experience into the ultimate revenue generating experience for these companies and let’s ensure that companies of all sizes use IP communications to not only save money but to tremendously increase productivity.
ITEXPO Back in Ft. Lauderdale in 2007, Bigger and Better
As you have noticed, the Internet Telephony Conference & Expo keeps getting better and better. It has become the ultimate IP Communications Experience and we are proud to host an event where IP Communications Decision makers come to buy their equipment and services.
We have received tremendous feedback about this most recent show and we are more encouraged than ever that ITEXPO provides a educational experience superior in every way to all other events. From the quality of our speakers to the topics we cover, there is one place you need to be when making VoIP/IP communications buying decisions - this show is it.
When planning 2007 budget spending, you will not want to miss the conference and exhibits as we will have over 200 exhibitors. Moreover, expect our educational sessions to get even better. Please check out our testimonials (we are still amassing the testimonials for the most recent show. Please check back for the latest comments) on the show and register now so you have one less thing to worry about later.
Please also book your Ft. Lauderdale hotel rooms now as the show for many years has sold out months in advance and I don’t want you spending all of your time commuting to the hall.