Communications and Technology Blog - Tehrani.com - Nortel Archives

Shockingly Nortel's Frank Dunn not Found Guilty in Canada

2013-01-15T11:52:31Z

In February 2004 I was invited to a Nortel analyst day. The Canadian telecom giant had great news to share about their worldwide sales – especially in China. CEO Frank Dunn was the primary speaker at the conference and explained just how well the company was doing. Thereafter, I met with division head after division head and the story kept getting better. The stated sales increases seemed too good to be true and it turns out they were – helping to batter the company’s share price over a number of years once news was released that the books were cooked.

Nortel’s senior management had large financial incentives to turn the company around quickly and they fraudulently recognized revenue at times which violated GAAP accounting standards in order to pay less bonuses than needed and to ensure they had reserve earnings needed to make the numbers in future quarters which allowed them to receive performance-oriented bonuses.

On March 12, 2007 the US DOJ said as much in a complaint against former execs Frank A. Dunn, Douglas C. Beatty, Michael J. Gollogly and MaryAnne E. Pahapill. "The fraudulent conduct at issue here was egregious and long-running. Each of the defendants betrayed Nortel's investors and their misconduct gave rise to billions of dollars in shareholder losses," said Linda Thomsen, Director of the Commission's Division of Enforcement. "The action we take today sends a strong message that officers of U.S.-filing foreign corporations will be held to the same standards of accountability that are required of all participants in the U.S. financial markets."

Asa result of this incident, the loss of trust between Nortel execs and the public markets, customers, media and analyst community coupled with the company overpaying for acquisitions during the dotcom and telecom bubbles combined with competition from ZTE and Huawei eventually forced this Canadian telecom icon to declare bankruptcy.

This is why I read with some surprise that an Ontario Superior Court judge dismissed the case against these same former Nortel Networks execs. The judge, Frank Marrocco said he was "not satisfied" the financials were misrepresented.

Greg Draper, who heads investigative and forensic services at chartered accountancy and business consulting firm MNP, says that the burden of proof was difficult to meet in this case.

"To prove that there was not just intention to do the conduct, moving the money and making the financial statements that were made, but to do it with a criminal purpose to defraud shareholders and the corporation is difficult to prove," he said.

In his judgment, Marrocco said the decision to only release $80 million in excess accruals when it had $189 million to boost numbers during the company's first quarter of 2003 were not out of the ordinary.

This policy did not lead to misrepresenting Nortel's "financial results to the investing public or Nortel's audit committee or Nortel's board of directors," he wrote.

Marrocco concluded the company's statements were restated twice in one quarter to reflect differences of opinion in accounting practices, not as an effort to cover up fraud.

Although the judge found that genuine accrued liabilities were not released when they should have been nor adjusted when they should have been, he was "not satisfied that any or all of the accused understood the extent of the excess accrued liabilities on Nortel's balance sheet." Furthermore, the amount was immaterial to the finances of such a large company, and even if they were not released, the executives would've received their profit bonuses anyway, Marrocco told the court.

At trial, Dunn's lawyer said his client approved the accounting at the telecom equipment maker but should not be held responsible if the figures given to him were inaccurate. At the time, Dunn was preoccupied with trying to save the company and trusted that the balance sheets were correct when he approved them, argued the defense.

"I am satisfied that non-cash impacting excess accrued liabilities on the balance sheet were not a priority," the judge wrote in his decision.

Dunn made the following statement as a result:

For a very long time, integrity has been the foundation of Nortel Networks' corporate governance and business practices. The documentary evidence and testimony re-affirmed this core value that I witnessed over my 28 years with the company," he said. "I am looking forward to turning the page on this chapter of my life.

At one point Nortel had almost 100,000 employees. While Dunn and the other managers are no doubt happy right now, many ex-Nortel staffers may feel like they have just been cheated out of seeing justice served to a management team which helped kill an industry icon.

Chinese Government Funds Global Telecom Roll Outs Through ZTE

2012-12-20T17:32:34Z

With global uncertainty the norm, many carriers have struggled to get financing for new infrastructure projects and in fact they have been a bit hesitant to spend on areas other than wireless where ROI is much more predictable. Subsequently, the financial challenges facing Alcatel-Lucent, Nokia Siemens Networks, ZTE and others aren’t expected to dissipate any time soon. What may be a surprise to some though is how ZTE, a Chinese telecom equipment manufacturer with relatively low costs could have lost $414 in Q3 of this year while seeing sales drop by 13% and gross margins cut in half.

In response to this decline, China Development Bank (CDB) an entity controlled by the Chinese government has given the company a $20B line of credit at very low rates allowing it to streamline operations, continue its expansion and perhaps most importantly finance its customers’ purchases.

According to Chris Antlitz, Networking & Mobility Practice Analyst at Technology Business Research (TBR), ZTE is investing heavily in smartphones, tablets, enterprise network communications technologies, LTE-Advanced, heterogeneous networks, software and services automation and will now be able to fund resource builds, such as new Global Network Operations Centers (GNOC) to support continued growth in the managed services business.

The company hopes this continued strategy of investments in technology and financing its customers will allow it to leapfrog Alcatel-Lucent and NSN to become the number three provider of telecom equipment by 2015. TBR agrees and you can see below (click to enlarge) their projected ranking of each of the major telecom vendors. They assume ZTE will grow 10% each year. They also believe Huawei and Ericsson will continue to grow but at progressively slower rates. Other vendors will see a decrease in sales according to their estimates.

The bottom line is ZTE could be the number three telecom equipment vendor in a few years thanks to the deep pockets of the Chinese government.

The challenge the non-Chinese manufacturers have is bloated infrastructure, unions and legacy costs such as pensions associated with being in business for decades. Alcatel-Lucent for its part recently secured $2.1B in financing but much of this money will go to pay debts and to buy time as the company looks to spin off assets. It’s worth noting the Paris-based company has patent assets which includes those developed by Bell Labs and the aggregate number of these valuable pieces of intellectual property is at 27,900 and counting.

Perhaps they will sell some soon? After all Kodak just landed $500M using a similar strategy.

It will be very interesting to see if politicians tackle this issue as it does seem ZTE just received a major advantage in the market and could threaten global jobs as a result. The flipside of course is with American politicians actually using the funding of GM and Chrysler as a political advantage – explaining that without the government’s help, both companies would have gone under – there really isn’t a moral high-ground in a negotiation. Then there was that whole broadband stimulus bill.

Time will tell and 2013 should be a very interesting year for the whole market as mobility usage continues to skyrocket but not all players will benefit equally from this growth.

Voxeet Shows the Future of Conferencing - Stereo and 3-D

2012-12-12T17:26:14Z

About eight years ago I held up DiamondWare as a shining example of what communications should be – HD, stereo and 3-D. Nortel later purchased DiamondWare and integrated it into its Project Chainsaw initiative which allowed avatar-based communications. Then these assets were sold to Avaya as part of the Nortel bankruptcy. I am fairly disappointed that this technology never went mainstream. People it seems aren’t yet ready for avatar-based communications or stereo conferencing for that matter.

So you can’t blame Avaya for not pushing this technology more forcefully as the market didn’t seem to bite.

Now there is an app which works on Android and iOS which enables much of what DiamondWare did and it’s called Voxeet. I tested it earlier and Tom Keating reviewed the service as a result. In-short, it is rough around the edges but allows stereo, 3-D conference calling with crystal-clear quality. And it’s free. What’s not to love?

Sure, they need to work out the kinks but to me this is how communications is meant to be – the way we naturally hear it, with both our ears and the ability to clearly discern where voices are coming. On a busy conference call, the capability to drag participants to the left or right and front and rear could make the difference between understanding what is said and getting confused.

For casual conversations this may not be a big deal but if you are having an M&A call, it helps to know whether the lawyer speaking is on your side or not.

Avaya and Mitel Cross at Canadian Border

2012-11-16T18:59:51Z

New Jersey-based Avaya, spun out of Lucent and previously AT&T has a decades-long history of providing business communications solutions. With its purchase of Nortel’s business communications assets a few years back it picked up even more knowledge, know-how and relationships. Mitel, the Kanata, Ontario-based global business communications company cofounded in 1973 by Sir Terry Matthews is known for delivering superior technology. More recently Mitel has become publicly traded and acts sort of as a partner to the dozens of Sir Terry Matthews’s companies under the Wesley Clover Brand.

Avaya and Mitel do compete to some degree but Mitel is known more for small to medium systems while Avaya is known as the big-leagues supplier. Cisco has been a major competitor taking share from Avaya this past decade while ShoreTel has done the same to Mitel.

Now these two iconic brands are crossing the border in opposite directions. Mitel has announced a deal with Tech Data to target the US SMB market. Avaya will be launching its GrowRight channel program which includes a deal registration bonus in Canada. The program pays solutions providers 20% back per quarter on new and strategic product sales including RADvision and IP Office products.

The potential here is obviously bigger for Mitel as the US is a much larger market than Canada. You may remember, some years back, Mitel purchased Inter-Tel in-part to grow its sales in the US SMB market. The problem is the very solid Inter-Tel brand was killed in the process and Mitel didn’t brand themselves much in the US, post-acquisition. The result? Over $723M down the drain.

But Mitel is a new company as they have great virtualization technology and new management. Will SMBs buy from Mitel because they have a virtualization edge? Probably not, because if they aren’t current customers, they may not be familiar enough with Mitel to pull the trigger. The only way the Tech Data deal works for the Canadian company is if they began to brand themselves properly in the US or the Tech Data channel is very strong in telecom and decides to actively push Mitel products. In my experience however, resellers aren’t huge fans of promoting products which get customers responding “You want me to buy from who?”

Avaya for its part may make some progress selling its recently acquired RADvision products in the Great White North. I don’t expect the sales to be huge as the market isn’t so big but Canada seems to be one of the few countries with a stable economy these days which makes it a great location for an organization in search of sales growth.

Mobile Profits are Skyrocketing as 67,000 Are Laid Off

2012-11-15T22:44:09Z

Mobile is not your father’s tech space.

Over the past two years, profits from the top eight mobile vendors has risen from $5.3 billion to $14.4 billion for a whopping increase of $9.1 billion and all this while over 67,000 people have been laid off in the technology. How is this possible you ask? I posited a similar query two months ago regarding Corning’s shares losing value – even while they supply Gorilla Glass to much of the booming mobile market.

FierceWireless sums up some of the companies shedding jobs in the wireless space just this year alone.

Google/Motorola shed 4,000 jobs but these were anticipated. Motorola like others on this list is losing share to Apple and more recently Samsung.
RIM shed 5,000 jobs and is betting the company on Blackberry 10 which is due out in Q2 of 2013.
Alcatel-Lucent has let go of 5,490. Similar to Nortel’s troubles, the company has suffered from a seemingly perpetual slowdown in carrier spending and competition from Asia.
Nokia has shed 10,000 jobs which makes sense as they lost the leadership role in smartphones to Apple and Samsung.
Nokia Siemens Networks has shed 17,000 jobs and faces similar challenges to other carrier equipment providers.

AT&T, Verizon and many other carriers around the world are benefiting tremendously from the massive spending on wireless connectivity from its customers and yet this money is not reaching the majority of equipment providers or device manufacturers. It is worth mentioning Cisco is certainly a beneficiary here and they will now get into the small cell market, making life even more difficult for existing players in the space.

In the past they haven’t been immune to cuts though as they recently laid off 11,300 people.

Sony too announced plans a while back to lay off 13,000 workers. This is the company that invented the mobile audio space, has historically produced some of the lightest and sleekest notebooks on the market and with its SonyEricsson division really led the way in mobile phones for a few years.

The challenge is the wireless market has a lack of competition for now. Apple and Samsung are so dominant the other players have to eke out a living in the shadows. Samsung has done an amazing job using technology and a plethora of devices sizes and shapes to fight this war. Another challenge – the aforementioned organizations are so large they can afford to design and in Samsung’s case, manufacture their own mobile chips. What this means is typical suppliers to a thriving market like Texas Instruments have trouble making a living. This is why TI announced they too are laying off 1,700 wireless employees… A staggering amount for an arms supplier in a wireless arms race.

This is a brave new world for technology – when the PC market was thriving there were hundreds of companies providing computers – some which you put together yourself and others which were bare bones models at discount prices. But now, prohibitive marketing budgets, need for a patent arsenal and carrier relationships have made it difficult for a no-name company to become a market leader overnight.

Google and Amazon are exceptions but they can afford to lose money in mobile for as long as they need to in order to further their core businesses.

Instead, the growth seems to have to come from the aftermarket space – meaning ecosystem plays. Apps makers, hardware add-on companies like Square and case making are the angles to play to generate big money in wireless. For traditional hardware arms suppliers like NSN and TI, mobile is not your father’s tech space.

Check out a Webinar on Telecom Visibility 2.0

2012-03-20T17:41:14Z

For over 20 years I’ve been tracking Unimax a company that has been the only pure-play moves/adds/changes solutions provider to large enterprises around the globe. Andrew Hunkins was the founder/CTO/CEO throughout the years and my most memorable meetings with him were at the Harry Newton/CMP Computer Telephony EXPOs also known as CTEXPO in Los Angeles, California. A huge accomplishment for the company Hunkins founded was lasting – it’s been around since 1985!! This is a big deal.

It is worth mentioning that Hunkins has moved on from the company but he/Unimax made national news when after the Iraq war they were featured in BusinessWeek because they lost a partnership deal in France because there was a brief spat between the US and the French over the Iraq war.

You remember, when we were briefly calling French Fries, Freedom Fries and body odor French perfume – admittedly I might have been the only one speaking the latter – but I know you were thinking it.

Unimax has evolved over the years and Minnesota-based company is sponsoring a webinar on TMCnet which will discuss how organizations can increase their telecom visibility and reporting. I would have called the webinar using big data and analytics to manage your disparate PBX and communications systems across the campus and/or globe but admittedly that is a really long headline.

But you get the idea. The webinar takes place in a couple of days and thanks for working with me during this brief commercial message from our sponsor.

Chinese Nortel Hack Unconfirmed by my Sources

2012-02-16T01:33:35Z

Although reports have been swirling regarding Chinese hackers breaking into Nortel's computers for over ten years in order to steal trade secrets, I have been unable to confirm such a breach took place. I have tapped into a few high-level sources and they were unaware of anything like this happening - the internal Nortel employees would almost certainly need to know if such an attack was taking place.

After all, reports say that even Nortel CEO Mike Zafirovski had a computer which was compromised.

One of the reasons Nortel went bankrupt had to do with Chinese competitors Huawei and ZTE undercutting Nortel on price for carrier wireless and other products. So it easy to understand why many would easily believe that Nortel had been hacked.

And hacks from China are not unusual - they have happened to numerous US companies and even government agencies.

But again, would you not let your company workers know if this was the case?

Siobhan Gorman has a story in the Wall Street Journal on what happened at Nortel and it seems there is enough information to make you believe the hack was real. But still, I remain skeptical that the breach if it happened was on such a massive scale. I reached out to Siobhan in order to see if there are any public documents which would enlighten us. I will advise you if I hear of anything - please drop me a line if you know of anything as well.

ITEXPO East 2012 Miami Out of Office Message

2012-01-24T22:15:59Z

While I digest the super-strong, mind-numbing Apple growth numbers which propelled the stock to a high of $460 per share after hours I have just set my out of office message for next week when I will be at ITEXPO. The message is below in case you want to use something similar. And for your convenience here is the first show daily from the event – which covers news from Sprint, AT&T, Whitespace Alliance, Panasonic, Accedian Networks, Cycle30, FaxSIPit, Phone.com and Polar Media.

---

Thank you for your message. Starting Jan 30th I will be at ITEXPO (www.itexpo.com) in Miami.

This is the global tech and communications conference - covering cloud, MSP, super WiFi, 4G, M2M, Patents, SIP, VoIP, HTML5 and featuring keynotes from Google, Sprint, Samsung, The FCC and Sir Terry Matthews.

On Friday, Feb 3rd @ 1:45 pm I give away a new Mustang - You must be present to win so I hope to see you there. (http://goo.gl/vkqrd)

Have a wonderful week and enjoy the New Year.

New Interactive Intelligence Quick Spin Cloud Contact Center Trial Portal

2011-10-17T14:00:00Z

Coming off the first six months of 2011, Interactive Intelligence enjoyed cloud-based revenue growth numbers of 58% while orders increased a whopping 146% during the same period. Moreover, the cloud accounted for 26% of the company’s total new order dollar volume in the first half of 2011. Company CMO Joe Staples said the following to me in a meeting in New York, “We are seeing a huge shift towards the cloud.” He continued, “It is talked about in every single deal we are in.”

As a refresher – the company started selling a hosted solution in 2005 but relaunched its cloud-based communications as a service or CaaS solution in 2009.

And when you have a successful service, you always look for new ways to expand – in order to bring it to a larger audience. This is why the company has launched Quick Spin – a new trial site which is designed to allow companies to kick the tires of the hosted service before they buy. Staples explained that some of the functionality has been removed – typically items which require training to use properly. What you get is full unified communications including conferencing, desktop call control and enterprise IP PBX as well as contact center functions such as ACD, basic IVR, reporting, analytics and on-demand recording. Some things not included are predictive dialing, workforce management and post-call surveys.

The Quick Spin Start Page

Joe tells me you can set up the service in about an hour – and you can have a total of ten users, 3 workgroups and five skills. Moreover you can have 10 keywords or phrases you can use for speech-analytics.

The Quick Spin Settings Page

Here is the interesting part of my discussion – Interactive Intelligence is chosen by customers in-part because of their long-experience in the market. The reason this is interesting is the company has been in the contact center space since the mid-nineties which makes their longevity years longer than many newer cloud-based vendors. When the company stormed onto the call center scene in the nineties they differentiated themselves by unifying communications across once-disparate boxes for IVR, ACD and PBX… For the first time, you could have a single unified system handling most everything you needed your contact center to do. But for years, the company was considered a newcomer going up against more established players like Melita, Rockwell Electronic Commerce, Lucent, EIS Davox and Aspect. In the cloud-based contact center space they are now an established incumbent.

The Quick Spin Workgroups Screen

Of course there are other reasons the company is winning in the cloud such as their use of virtual machines for each customer as opposed to multi-tenant architecture. Although for most situations, multitenancy works well at isolating user sessions, virtualizing each company’s sessions adds even greater isolation to user data each customer uploads to the Interactive Intelligence cloud. As an added bonus - Interactive allows customers to migrate from the cloud to an on-premise based solution. This feature is obviously a great option for companies who aren’t sure if they are ready to move to the cloud forever.

For companies looking to trial Quick Spin, you will go through a brief qualification phase to make sure you are a real company, not a competitor, etc. Then you are off and running with 2,500 minutes of use or 14 days of service – whichever comes first. Joe tells me companies will likely not use the system in a live environment but rather as a trial system. One of the benefits of note is the supervisor screens and reporting are both of production quality meaning you get a great feel for what it would be like to become a customer.

The Quick Spin Start Configuration Page

Of course any new technology takes time to be taken seriously but hearing that all discussions with new customers mention cloud and moreover that 26% of the company’s approximately $200M in annual revenue comes from cloud-based solutions shows that as far as customers are concerned, the move to cloud-based contact centers is very real and not slowing down.

Latest Trends in Speech Technology, CRM, IVR, Collaboration and Cloud Computing

2011-08-14T23:45:22Z

Speech analytics in greater demand

At the recent SpeechTek 2011 conference in New York I gained some great insight into the state of speech technology. For example, Jeff Schlueter of Nexidia told me his company’s speech analytics solutions have been in greater demand in this current economy as the desire to control costs has led to increased adoption of speech analytics. In addition, the company has released version 9.0 of its Enterprise Speech Intelligence product suite which cuts the TCO in half and allowing for customers to handle even larger amounts of data.

Voxeo goes big

The idea of handling larger systems was echoed by Dan York of Voxeo who told me the latest version of the company’s new VoiceObjects 11 solution has scaled for a mix of global carrier and enterprise customers to handle 20k ports. More importantly the ports are all linked into a private cloud of sorts allowing central reporting across the VPN, a central console, full resiliency, redundant failover and one-click roll back in case there is a problem which quickly needs to be undone. York explained the company has also rolled out Prophecy 11 which adds HD voice, IPv6 and fax support. One good bit of news is wideband audio makes it easier to recognize voice because as York explains, “There is a lot more data to analyze.”

New player Novauris intrigues

Competing against established players like Nuance, Microsoft and Loquendo isn’t easy but Novauris, a newcomer to the speech technology space has already inked some deals with tier one OEMs and carriers and they have a specific niche where they think their performance is best in class. Specifically, accessing very large sets of databases such as addresses, names of people, product catalogues, IPTV and electronic programming guides, local search and directory assistance. The company works with Angel and SpeechCycle in the call center space as well – doing name and address recognition in the cloud and passing back the data via XML in real-time.

Industrial speech apps boost productivity

Wavelink Corp has been in the mobile device management space for many years and its Avalanche software has been upgraded to 5.2 providing increased capabilities in terms of reporting, organizing devices, security, location-based services and two-way messaging between administrator and user devices. Moreover, in a conversation with Jay Cichosz, he tells me the company has been enjoying success in the industrial market where the company’s terminal emulation solutions help workers more efficiently manage packing and shipping logistics via handheld devices. Moreover, by speech enabling these apps – his customers have seen productivity gains as floor workers no longer have to glance at a watch or PDA to see what they need to do next – they can now just listen and respond with voice as well. The company’s Speakeasy voice solution was upgraded this past March and differentiates itself by being priced very competitively and doing the speech processing on the mobile device in order to save precious bandwidth on factory-floor networks which typically aren’t designed to handle bursts of multimedia traffic.

Microsoft to abstract devices for more seamless experiences

Last year, Microsoft introduced me to their Xbox Kinect gaming system with built-in speech recognition and I was very impressed. To date though the gaming system has been better known for its motion detection – allowing the body to be the controller than its speech technology. This will potentially change soon as speech has now been put into the SDK.

In my meeting with Grant Shirk, I also had a chance to use Windows Phone 7 Mango and as Shirk explained some areas of speech integration are apps, search and address book. By the way, the new Mango OS supports 500+ new features 4 of the top 15 requests for improvements included speech.

I asked Shirk about his thoughts regarding HTML5 and he believes there is a lot of opportunity for speech to be integrated into HTML5 and moreover, he said companies HTML5 investments generally start with customer interactions and he said, “Speech is a natural interface.” When queried about where Microsoft sees itself in these spaces, he replied, “We are in a great position to provide services to help companies build cross-channel experiences independent of device.” To me that makes the company sort of a super-middleware provider of the future and in some ways, Adobe’s new Edge tool I just covered will be competitive with this vision.

SAP feeds customers feeds

SAP is best known for a suite of software solutions used to help companies get products from manufacturing to the customer, allowing them to collect money and pay taxes – and just about everything in-between. In a conversation with Anthony Leaper and Dr. Volker Hildebrand, they told me how the company sells their solutions in bite-sized chunks and also makes rapid-deployment solutions available for delivery in 6-8 weeks. Sales, service and marketing are just some of the areas where such packages are available.

One of their latest announcements is Sales onDemand – a feed-based system which brings structured and unstructured data together in a collaborative, Facebook like way. Similar to Salesforce Chatter or Cisco Quad, the company is targeting very large companies and will also release Service onDemand. These two products will work together allowing salespeople to see a feed of customer late payments or service requests. Leaper believes SAP has an advantage over Salesforce because his system is more integrated allowing all objects in the CRM database to be seen while he sees Chatter as a bolt-on solution.

The challenge for SAP is they are late to the game but they may see these new releases as a way to protect and cross-sell to their installed base and speed-to-market has to be balanced with interoperability across the company’s ever-expanding software suite.

Turning Oscar Madison communications into Felix Unger

The Odd Couple was a favorite TV show of mine as a kid featuring a very Messy Oscar Madison who was roommates with a very neat Felix Unger. I couldn’t help thinking about these two when I met with Alok Kulkarni of Cyara Solutions and his customer Sam Jackel from Westpac, Australia’s largest bank with 6-7 million customers. Cyara provides next-generation premise and cloud-based solutions for simulating, testing and monitoring IVRs, voice biometrics, outbound dialers, voice callback and other contact center systems and applications.

And what they did for the bank was to help them take disparate solutions handling IVR, speech, complex routing algorithms, Websphere, java apps and more and integrate them more efficiently to dramatically improve customer satisfaction. A three-year project resulted in customers being able to get to the information they want via phone in only 14 seconds. This is down from 90 seconds – a significant improvement. To get an idea of what challenges the company had, every time there was a customer interaction, messaging needed to traverse a number of different firewall hops and pipes between Telstra, IBM and Westpac networks causing potential packet loss, latency and jitter.

In addition, by using automation, the need for human testing has been reduced by 50% - allowing these testers to be deployed for more sophisticated testing.

The bank is thrilled and says they view Cyara as a key plank in their strategy around quality and efficiency and use the company for end-to-end regression, systems integration, functional, stress, performance and load testing and real-time monitoring of the customer experience in the production environment. You generally don’t get such a large company to give such a glowing testimonial to a relatively new company so I thought it worth sharing.

Zoho’s Appleization

In a conversation with Sridar Vembu and Raju Vegesna of Zoho they explained to me their take on the future of computing. Sit down before continuing because this is a really big deal. The software market is going through a gut-wrenching change. Consider, even the most complex apps can be put out in a few weeks because of the maturity of the latest development tools which can be constructed atop existing frameworks. And once released, distribution of these solutions has been commoditized through app stores. Basically, software is on the verge of being commoditized and if we learned anything in the PC Vs. Apple war it is that a slick, simple-to-use interface is worth far more than a commoditized solution.

Subsequently, Zoho, a company with a suite of 30+ cloud-based solutions is working on making their interfaces even simpler to use. I got an early glimpse of their new CRM software and was very excited about the new and much-cleaner interface which loses no functionality in its pursuit of Apple-like simplicity.

What I like best is the ability to tie together email, office apps, CRM and everything else so users don’t have to bounce around between a myriad of apps on the desktop to get their work done. An early pioneer in the cloud space, Zoho is now up to 1,500 people and is profitable and experiencing 100% YoY growth.

In two weeks you can expect a new solution, Contact Manager which the company bills as CRM for the beginner. For more on Zoho, check out this video interview TMC’s Erik Linask conducted with the company late last month in San Jose.

So there you have it – if you made it this far, thanks and be sure to catch up on other articles from Speechtek from TMC’s Tammy Wolf:

Will AT&T, T-Mobile Merger Slow Wireless Innovation?

2011-07-25T18:46:59Z

AT&T has done an incredible job of getting special interest group after group to endorse its merger with T-Mobile, saying it will provide better broadband access for minorities, rural subscribers and just about any group of people you can think of. The broader gay community too has endorsed the merger - apparently transgender-Americans have been hoping for the day when there was one less GSM provider to choose from.

Here is how the system works - AT&T has hundreds of thousands of workers and inevitably large numbers of them in myriad groups. This in turn coupled with large contributions to various organizations and associations is rewarded with the reciprocal endorsing of anything AT&T requests.

To help grease the wheels even further, AT&T has further upped its lobbying budget by 58% according to PC Magazine.

AT&T is doing the smart thing by getting rid of its sole GSM provider allowing it better negotiating leverage in its roaming agreements with foreign carriers and gaining the ability to raise rates with one less major competitor to depress market pricing. It will also gain more leverage when negotiating with hardware and software companies.

An anti-merger video by the Free Press Action Fund

If the US government blocks the deal it will be because the remaining major companies AT&T and Verizon will have so much share that they are effectively a duopoly at about 80% - allowing them to raise prices at will.

Again, if you are an AT&T or Verizon shareholder, you likely want this merger to happen and AT&T is serving its short-term shareholders well by seeking this transaction.

But the challenge I see is that with one less major telecom carrier in the US it becomes that much more difficult for innovative start-ups to launch, get funding and hold their breath long enough for a carrier to buy from them. Sprint and T-Mobile have been fairly aggressive working with smaller companies that provide FMC solutions for example and because of this, funding has flowed into a bunch of companies serving the needs of the telcos. To make matters worse, Alcatel-Lucent has struggled for years to make money in this new landscape of shrinking carriers and NSN is really having problems making profit. Moreover, Nortel well bankrupt largely because of a single wireless contract it missed out on so obviously the challenge here is for the telecom hardware and software ecosystem as a whole.

So with less competition there will be less need to innovate and subsequently telecom equipment providers will have more trouble making money, getting funded and spending on R&D. This in-turn will cause a negative feedback loop where there are less companies innovating and Verizon, AT&T and a host of other carriers have less advanced services to offer. This in turn will eventually reduce revenues for carriers.

But this outcome will take a while to happen because investors aren't thinking about these issues, they are still licking their lips trying to take part in a telecom deal like the one where Skype sold to Microsoft for $8.5B.

AT&T should know these dangers and they probably do - but it is possible they are giving up on services. After all, IMS was supposed to unleash a wave of new applications and the carriers were going to share in the profit. Well the the app store quickly brought an end to that hope.

But then again, Verizon CEO Lowell McAdam is set on bringing what he calls the innovation from wireless, into the wireline side of the business. But if Verizon really wants an environemnt where there is lots of innovation, one would imagine it would be very vocal in opposing the AT&T, T-Mobile deal. To date they haven't said much.

So for AT&T, Verizon and a host of other larger carriers in the global market, this merger could make it more difficult for them to find the next killer service like SMS. But then again, if you own one of the two major wireless superhighways, you may not have to offer anything in exchange for increasing your toll prices.

TMC Dallas Video Interviews 2011

2011-07-25T15:57:02Z

Recently I spent some time in Dallas doing video interviews with companies in the Dallas, Texas area and during the course of the discussions I was able to get a sense of where the markets have been and are going. The vast range of different opinions really comes together into a few themes.

They are simply that wages and turnover rates in India are skyrocketing meaning some jobs may be headed back to the US. This is offset by an interview with King White of the Site Selection Group - an organization which helps companies decide which countries and states they should locate in. He tells us that states with higher taxes are less attractive and subsequently deter companies from opening there. Simply stated, voters electing candidates who consider raising taxes are likely killing the future job prospects of their state.

This is also the case in elections of congressmen, senators and obviously presidential elections.

On the tech side, there is an increased push towards video, wireless, small cells, mobility and the call center space is enjoying renewed growth and energy.

For more details, browse the descriptions below, view the videos and read the articles.

COMPANY			Description
Site Selection Group	Video	Article	Learn how higher taxes kills jobs
Varaha Systems	Video	Article	Mobile solutions - voice, data and video
Airband Communications	Video	Article	Fixed wireless for business
Vanillasoft	Video	Article	Inside sales automation
Airwalk Communications	Video	Article	Small cells and the future of mobile & wireless
Sipera	Video	Article	Unified communications security, simpler SBCs
ABP	Video	Article	Death of value chain PBX distribution
Mavenir	Video	Article	Mobile 2.0 discussion
Working Solutions	Video	Article	Home agents, social, call center technology
Alepo	Video	Article	IT solutions for wireless carriers
Conexion One	Video	Article	Hispanic outsourcing services
ViewCast	Video	Article	Coding formats for video delivery
Doublehorn Communications	Video	Article	SMB broadband communications, SIP trunking
Samsung	Video	Article	Mobile phones, devices, content, smartphones
Reallinx	Video	Article	Better broadband, security, VoIP service & support
Spectrum Corpo	Video	Article	Contact center monitoring, data analysis
ICON Voice Networks	Video	Article	Was Iwatsu America. Now more strategic US focus
Epygi	Video	Article	More scaleable phone & video solutions
Artisan	Video	Article	Infrastructure as a service - wholesale, pure-play
MinuteMan UPS	Video	Article	Extended run-time UPS systems
Facetcorp	Video	Article	Flexible, customized PBX systems
Fonality	Video	Article	The move to cloud communications
Telstrat	Video	Article	Workforce optimization, coaching, analytics
Novo 1 Contact Centers	Video	Article	Call center agents coming back to the US
Telstrat 2	Video	Article	Evolution of the call center, recording 2.0

Are you using Lync or USING Lync?

2011-07-18T08:22:24Z

Thought leader and noted UC analyst Blair Pleasant is skeptical that 70% of the Fortune 500 are implementing and using Lync. But Steve Ballmer tells us that 70% are on Lync. As we all know, there is a difference between using something and really USING it. Especially when you consider how many workers a typical Fortune-class company has - does a few people per 100,000 constitute real use? We need more accurate usage numbers to back up his claim.

The interesting thing is you can likely argue that almost all companions use Skype in some capacity - and as it merges with Lync - you could say virtually all companies of any size use Lync. I wonder what Blair will have to say about that.

PSTN Death is Near

2011-07-07T14:13:04Z

I vividly remember driving my car in 1999 – two years after the company where I am CEO, TMC decided to launch Internet Telephony Magazine and thinking VoIP was going to change the way communications works and eventually kill the PSTN. It seemed to me that within five years most of the world would make the transition as the cost disparity at the time was quite large between the PSTN and VoIP connections. Moreover, there were a myriad of free calling services using VoIP such as Dialpad which were ad supported, putting even more pressure on traditional telecom networks.

Within a few years the dotcom and telecom bubbles burst (we collectively said goodbye (details) to Dialpad and its competitors) and the cost for using the PSTN dropped substantially in order to better compete with IP communications alternatives. So my internal projections which I am not sure I ever wrote about before turned out to be too optimistic.

The period between 2001-2004 could easily be referred to us the nuclear winter of VoIP – well communications in general is more like it – not to mention tech. But the last six years has seen continuing evolution in IP communications with VoIP peering and SIP trunking just some of the latest solutions to make a cost savings and productivity–boosting technology even better.

And from the consumer standpoint – they all know about Vonage, Skype – have cell phones and use IM and social networking to communicate. So it will come as little surprise to you that according to an article from TMCnet’s Peter Bernstein:

As of May 2010, 23% of respondents lived in a mobile-only household
37% of adults in the 18-24 and 30-34 age groups lived in a mobile-only household
Only 6% of the US population will still be served by the public switched telephone network (which is defined as TDM access line service) by the end of 2018

Simply stated, the PSTN is dying.

Industry leader and past TMC conference speaker Tom Evslin a person who I couldn’t respect more, even suggests the government needs to get involved to ensure there is universal access as we enter a transitionary period. Specifically he explains that USF dollars help maintain the network and as more high-value customers leave it, there are fewer dollars to maintain service in areas which are expensive/hard to reach and potentially devoid of alternatives.

Specifically he says:

Although it offends my free market sensibilities, I think government also must be involved in assuring that everyone who now has PSTN service has access to either a broadband or cellular communication alternative.

BTW – it is always tough to argue with free-market sensibilities – my confidence in the government doing anything right beyond putting out fires, enforcing contracts, and keeping us safe through the military and police force is pretty low. Of course this is in part because I see the law of unintended consequences rearing its ugly head virtually every time the government acts. See Net Neutrality: More Unintended Consequences and Dear Government, Please Stop "Helping" Us for details. Want more? Google effectiveness of Obama stimulus.

But getting back to the discussion on the PSTN – Bernstein suggests a separation between the pipe and service business. But are we to rely on the government or a separate monopoly to upgrade these pipes for us or is it better to allow a combined service/pipes company provide both? In the latter situation, the combined entity has increased incentive to upgrade the pipes quickly so as to provide value-added services over the connection.

Of course in my example I assume that one company will be responsible for maintaining both a copper and fiber network – would it make sense to have multiple companies maintain networks which are unprofitable for one company to maintain?

Moreover, would it be better to wait for Congress, the Senate and White House to come to an agreement on which fiber pairs should be run to our homes? Or will a separate company manage these networks and if so, who runs that? Will the FCC decide? By the way, is the new company regulated? Will it be forced to dig up and replace the technology from time to time? And finally, who pays for it?

Of course this situation is far from simple to solve and I wonder if satellite providers may not be a missing puzzle piece requiring more study. Then there are new technologies such as white spaces/super WiFi which could theoretically work in a meshed capacity to solve some of the remote access issues we now face.

I’d love to hear from you if you have some thoughts on how to resolve the situation and bridge the gap.

Be sure to check out TMC’s Super WiFi Summit, September 13-15 in Austin, Texas to learn more about this promising technology and how it could could be part of the solution to sunsetting the PSTN.

Avaya's Support Strategy Emulates Successful Cancer Diagnostic Systems

2011-06-23T22:03:29Z

It is an unusual occurrence for me to receive a call from any company to discuss their support. Generally the media gets all warm and fuzzy about tangible things like new product launches – scoops and items you can put in the category of breaking news. Ironically though if you ask most companies what differentiates them from the pack, service and support is typically the most common answer. Yet, I can’t remember other companies asking me to meet their new head of global services.

And yet perhaps one of the most important things you need to do when you have a complex system of networks carrying packets full of voice and video communication is to ensure it all operates at peak efficiency. In other words the area which could be most important to a customer – getting a communications and/or networking system back up and running after an outage is often an afterthought. It is hardly discussed.

But still, I was a bit surprised when the offer came from Avaya to meet Mohamad Ali, President of Avaya Global Services. The company’s PR team was so excited about the meeting I decided to take it. I was tentative – but walked away impressed.

Ali started the conversation telling me he is passionate about service and this is to be expected – but what is more interesting is that he doesn’t come from the service and support space. In fact his background is quite different and most impressive. He worked for IBM where he led and integrated many acquisitions such as Cognos, FileNet, Ascential Software and he also was the program director of the GSM semiconductor business and co-led the PricewaterhouseCoopers acquisition which transformed the company. He has also worked for Adobe and has an EE Bachelors and Masters from Stanford.

The reason this is important has to do with the fact that Ali can be doing anything – he could be heading up M&A at Avaya, managing the design of products and a whole host of other initiatives. When I mentioned this the response was that Avaya CEO Kevin Kennedy is a visionary and has said the company should be investing heavily in services and service technology as a differentiator. Moreover he said Kennedy was willing to put a key person in this role – which to me says a great deal.

The cancer connection

So half the story is about the resources Avaya is dedicating to support the other half is that Ali is looking to radically simplify support and to dramatically reduce time to resolution. And where he received his inspiration is interesting. It turns out that he heard a presentation from a cancer researcher at Mass General who spoke of the evolution of cancer treatment. It was once necessary for doctors to try treatment after treatment to determine the correct drug which needs to be prescribed. In other words a hit or miss process. But then a machine was built which matched biopsy results to the right type of gene mutation allowing improved results.

The goal then is to imitate the workings of the machine described above – and in doing so create true service innovation and of course differentiation. One point he made was that Avaya systems have diagnostics and alarms allowing for lots of output on which to perform diagnostic analysiss. He contrasted this to a competitor (he didn’t mention any by name but obviously Cisco) which has a lot of disparate boxes making this task more difficult. Of course Avaya recently acquired Nortel – bringing a few disparate boxes into the mix as well.

The night shift

One technique the company uses is simulating traffic at night in order to pinpoint problems with critical and other systems. This can be done across the contact center products, switches, voice and video systems. Ali tells me Nortel gave Avaya access to excellent diagnostics and these will be incorporated across the product line soon. Moreover, not everything is covered across the product portfolio is covered yet but they are working on getting all the diagnostics to cover all the products.

Streamlining Support Advantage

One of the biggest pieces of news from Ali’s department is the new Avaya Support Advantage model features two packages Essential Support and Preferred Support. Essential Support is the basic level of support. It’s targeted at those customers who require solution level remote technical support, and also software updates and patches. Preferred Support includes all the features of Essential package and more comes with remote monitoring that alerts Avaya within 90 seconds of receiving an alarm, and it can drive up to 20 percent faster resolution times, on average, due to increased visibility via around-the-clock monitoring. Plus, it includes Avaya EXPERT Systems.

Moreover, support pricing has been detached from the underlying product making it easier to determine the price based on a standard schedule. For customers who have multiple support contracts there is the option for co-termination and synchronized billing going forward.

Some of the benefits to customers are easier management and budgeting, less paperwork, less bills, reduced time to resolution and better customer service.

Nortel and Avaya users to benefit

Nortel and Avaya Support are expected to both improve as the best features of each will be rolled out across the other product line. For example there is now lifetime support across the Nortel portfolio and an emergency response program designed to help Avaya customers with catastrophic failures.

A more difficult support future

Ali mentioned the architecture of communications moving from centralized management approach to highly distributed service with multiple servers at the edge and in the cloud. He went on to mention that UC is becoming more unified and voice, data, video, IM and SMS are being used through a unified environment. He mentioned that Aura helps unify these modes of collaboration and Avaya’s diagnostic technology leverages Aura at the intersection allowing multimodal analysis in a holistic manner.

Like I mentioned at the top – service and support is usually a talking a point in my vendor discussions and it rarely comes up in detail. Avaya seems to be committing serious resources into differentiating itself in this important area. Now the question becomes how important does this become to enterprises? We know IT departments are constantly being asked to do more with less – perhaps now is the best time for Avaya to be making this push. In addition to customers, I am looking forward to seeing how the rest of the information technology and telecom market responds to Avaya’s cancer treatment-inspired support improvements.