IT Telephony

Following a number of other vendors (for a change!), Objectworld recently announced pricing based on a "cents per user per day" model. The price range is system size dependent and can be as low as 5 cents/user/day, we announced 7 cents, because it reflects the middle range price.

Needless to say, the announcement has stirred up a lot of commotion with analysts and the media - as a business, can Objectworld afford it? Objectworld's pricing is so low - how can we offer a price so much lower than our competitors for more functionality? It sounds like a low-budget television commercial, but the truth of the matter is, we're just that low priced (and you can see for yourself with our pricing estimator at www.objectworld.com/pricing/).

The price point for Objectworld UC Server® hasn't actually changed with this announcement. In fact, the pricing for Objectworld software has changed remarkably little in the last four years. We decided to announce our pricing to capitalize on a benchmark that other vendors (like Avaya and Cisco) are using. We don't really like the model, but when in Rome! In this case in particular, Objectworld UC Server based solutions offer far more functionality than those being offered by our competitors, and our price is a fraction of the cost. But this is a value proposition that Objectworld has been offering successfully and telling our customers about for the last 6 years.

More important, our pricing reflects a trend in the market that Objectworld predicted several years ago: namely, that prices in the UC space would drop due to the changing paradigm in the PBX and UC space (are there any old PBX vendors who aren't claiming to sell UC?). But what's driving the prices down?

For starters, the real issue of pricing and survival is that the paradigm in the old PBX, and now the UC space, is changing. Open interoperability standards from the IEEE and IETF such as 802.3 Ethernet, Internet Protocol (IPv4 and IPv6), Session Initiation Protocol (SIP), and Real-time Transport Protocol (RTP) have changed all that forever, making previous ITU standards irrelevant and improving accessibility to standards to anyone with access to the internet. IEEE 802.3 Ethernet and Internet Protocol is now ubiquitous and inexpensive with POE Ethernet for SME deployments at $20 or less per port. Combine that with the effects of Moore's Law making CPU cycles inexpensive (driving DSP solutions ever deeper and constantly removing the need for customized hardware) and we see a typical function increase with decreasing cost for server, gateways and telephones.

Since specialized hardware is no longer required, UC solutions are now software, and software resides in the data center. Data centers are controlled and administered by IT departments. IT departments like solutions that they can administer and control just like all their other software. IT departments and VARs like centralized administration tools like Microsoft's Active Directory™. The requirements for UC functionality, deployment and ongoing administration are changing. And no one vendor can provide all the products required for a UC deployment. UC by definition is a multi-vendor solution, which invariably will use open interworking standards. Evolution is at work. Some species will emerge and flourish and other older species will become extinct. Smaller, leaner players like Objectworld (and even larger players like Microsoft) are of the emerging species kind. I'll leave you to decide which PBX players are on the path to extinction.

Looking at some specifics, what has changed in the last couple of years to lower the cost of UC Server Standard Edition deployments? New hardware products have appeared with increased functionality and lower prices. For example new gateways from Dialogic, Vegastream, Audiocodes and Quintum are now available that allow UC Server to interwork with a very wide variety of PBXs at much lower cost. And Moore's Law has dramatically driven down the cost of vastly increased capacity servers over the last 3 years. On the interoperability side, even the economic barriers to connection of third-party systems by PBX vendors are starting to drop, albeit slowly, as PBX vendors reluctantly drop them to make open systems interconnectivity viable economically.

The cost of Objectworld UC Server SIP Edition deployments has also declined due to gateway and server costs. However, as most everyone knows about 50% of the cost of a UC or PBX system is in the phones. The selection of SIP telephones from vendors like Polycom, SNOM, Grandstream and Aastra have increased dramatically while the price points are consistently dropping. Add in great new SIP paging products from Cyberdata and SIP cameras from Mobotix and the cost of sophisticated UC deployments becomes even lower.

If our published cost is somewhat inaccurate, it's because we overestimate cost. Our pricing is all based on the MSRP of our products and those of our Objectworld Connect™ Interoperability Program partners for gateways, media cards and SIP telephones. Server pricing is based on recent on-line pricing from Dell's web site and includes the cost of Microsoft Windows Server® 2003 R2 Standard Edition. And, as we all know, most businesses can usually get a better deal than MSRP. An Objectworld solution may even be a fair amount less than what we estimate.

As a business, Objectworld is committed to delivering the best value to its customers, because we believe that that's the best basis for a successful business model. But can we be successful with this model? Of course! What customer doesn't want the best value for money that he or she can buy?

What do you think? Have a look at our pricing tool and let us know!

In a recent survey, Steve Taylor and Larry Hettick (Network World, 06/09/2008), found that respondents showed a serious demand for UC closely integrated with a Microsoft environment. Over 93% rated Microsoft integration with their unified communications solution as important or very important. Over 84% said Microsoft integration was more important than compliance with open standards. What the survey also found was that respondents just don’t see UC as a bolted on solution (i.e., as a hardware solution or a solution that lives outside of the data center). Not such great news for incumbent PBX vendors or network-based PBX replacement vendors, but good news for Objectworld and good news for customers.

The article took me back to 2005, when Objectworld was just set to release Objectworld Unified Communications Server, our flagship product. In the years previous, we had systematically rethought telephony. Dave Schenkel, Objectworld’s CTO, is the kind of engineer who has always innovated by making things simpler, more efficient, more practical. So, we asked practical questions. How could we make “telephony” more efficient? How could we integrate it into the Microsoft ecosystem? Why wasn’t telephony just like a database or ERP software or e-mail?

We decided to build a unified communications solution that would include unified messaging, call control, fax, text-to-speech and we integrated it with Microsoft Active Directory so that any IT professional familiar with Microsoft could easily administer the system. No more truck rolls for moves, adds and changes — everything would be done from a desktop, even remotely. It was about shifting not just telephony but how we think about voice communications away from devices and towards users. Only four years ago, this was still an enormous paradigm shift.

When we thought about positioning the approach and the resulting products in terms of a product category, we were at a loss. It wasn’t a PBX: it was an entirely software solution. Unified communications didn’t enjoy the ubiquity it does today, and more important, UC didn’t describe the end-to-end nature of our approach (and it still doesn’t). Calling it a phone system didn’t work either, since it was much, much more than just dial-tone. It wasn’t just VoIP.

In short, we didn’t have an available product category. There was nothing like Objectworld Unified Communications Server at the time. So, we came up with IT Telephony (we even trademarked it).

So, what is IT Telephony? Many of you who follow unified communications press and media will know that “IT telephony” is becoming an increasingly common phrase. Not as common as unified communications has become, but increasing nevertheless. But what is “IT Telephony” and what makes it different? Why did it stand out for Objectworld?

In our minds IT Telephony was necessarily a Microsoft software application fully aligned to the Microsoft ecosystem. Microsoft owns upwards of 90% of the world’s desktops and servers and that Active Directory is a wonderful management and administration tool. IT telephony reconsiders from the ground up (or from the PSTN connection in) the use, deployment, installation and administration of voice communications the needs of desktop users and IT administrators.

IT Telephony deals with the three most important aspects for broadening the appeal of unified communications and VoIP: a software solution that was easy for anyone to use and administer, integrated with the Microsoft ecosystem, that offered customers real choice over peripherals and services (like phones, PBXs, paging systems, ITSPs) with the assurance that it would all work together.

In some basic senses, Objectworld Unified Communications Server was a PBX-replacement, but in any meaningful sense, it was the opposite of a PBX. Where the PBX was closed, proprietary and inflexible, IT Telephony is open, integrated, flexible and interoperable. Where the PBX is difficult and arcane, IT Telephony is straightforward and uncomplicated for anyone familiar with any Microsoft-based software. Where the PBX requires a complicated and arbitrary sequence of numbers to be punched in just to accomplish the most basic functions, IT Telephony provides a point-and-click Windows-based interface that anyone can understand.

In short, where the PBX sat in the corner of basement to be managed only by specialized professionals, IT Telephony sits in the middle of the data center, on the desktop of every user, and on the phone of every customer and partner, and opens voice communications to anyone and everyone.

Today, a number of higher profile companies have picked up the phrasing. A few others have started to refer to their products as “Unified Communications Servers”. Companies that are hardware vendors are now software vendors. The market is more confused than it ever has been, and one can understand why: just imagine unboxing your newly purchase “software” solution to find that it’s just another hardware device just like your last PBX!

We’re glad these companies are trying to catch up, but at Objectworld, we’re already planning the next big thing.

Chief Technology Officer

As Chief Technology Officer, Mr. Schenkel oversees the overall technical direction of the company and its product development plan. Mr. Schenkel is also responsible for the establishment of customer satisfaction through the use of continuous improvement processes for the delivery of both product and customer support. To achieve this mandate, Mr. Schenkel draws on over 25 years of experience relating technology convergences and market direction to corporate goals and processes.

Prior to this present venture, Mr. Schenkel was the CTO of Mobile Knowledge. In this position Mr. Schenkel provided strategic product direction, and significantly improved the quality of the Company's operations, including IT, manufacturing, professional services and customer support. Mr. Schenkel was also Director of Technology at Peregrine Systems and Loran International Technologies Inc where he held similar responsibilities. Throughout his career, Mr. Schenkel has worked in large organizations such as Nortel and Mitel and has also been a successful technology entrepreneur as one of the founders of Plaintree Systems. He holds a Bachelor of Applied Science (Hon) degree from the Engineering Science Program at the University of Toronto.