On Rad's Radar? - PBX Archives

CloudTC and N-Able Acquired

2013-05-22T13:55:23Z

"Australian-owned IP PBX systems company, Vixtel, has completed the acquisition of Silicon Valley based glass phone developer, CloudTC, for an undisclosed figure," according to news reports. I really liked this phone when it came out. It was ahead of the curve. CloudTC was a Startup Camp Comms candidate.

"Vixtel CEO, Terry Crews, said the acquisition would enable the company to offer Australian businesses a product that brings smartphone technology to the desktop. Crews mentioned the move is also consistent with Vixtel's strategy to own, develop and maintain all technology within its product offering." Those are some pretty strong arguments for this kind of move. How many Hosted PBX companies can say that? Just the hardware folks.

In other news, another Startup Camp Comms winner, VerbalizeIt, was on Shark Tank.

SolarWinds is acquiring N-Able for $120 million in cash. This adds RMM (remote monitoring and management) to Solar Winds catalog of IT services for the small business (sub-100 employees).

Interesting Links for Your Consideration

2013-05-14T17:11:47Z

There have been some interesting articles lately. I can't get to all of them, but here are some good reads.

Death of the Telecom VAR in 2013 - How an entire sub-industry will be wiped out in the next 24 months by Jeff Hawkes. "Traditional telecom VARs or value-added reseller businesses- those that derive the majority of their revenue from the sale of on-premise PBX equipment to business customers- have ridden one of the longest product life cycle waves in recent technological history and combined with an emerging threat from hosted phone providers and a professional background that leaves most ill-prepared to run a business larger than a few employees is threatening to wipe-out or dramatically alter an entire sub-industry in the next 24 months." He writes like me.

Not telecom - but patent law - Monsanto wins a big case. "The court ruled unanimously that an Indiana farmer violated Monsanto's patent on genetically modified soybeans when he culled some from a grain elevator and used them to replant his own crop in future years."

Infonetics scores Comcast, Verizon, 8x8 and XO top North American business VoIP providers. SIP Trunking is the big winner. Revenues are the big loser as SIP trunk is used as a low price dial-tone replacement.

Blair Pleasant is "still not convinced that the cloud is the long-term panacea."

Doug Mahoney reports that HD Voice is Experiencing Unprecedented Growth globally.

YorkTel's VideoCloud integrates with Microsoft. So I wonder how Skype feels about that.

lastly....

The Cash Cow is Dying: Mobile Networks Face Bleak Future (based on SMS and LD revenue). Lucky for cellcos that Metaswitch just released Clearwater, an IMS implant.

One Deal And One Bullhorn

2013-05-09T19:36:31Z

UNSI has been in the news lately. It was originally American Broadband, reselling DSL nationally. Then it changed its name to United Network Services, Inc. and became a facilities-based carrier, with 18 Points of Presence (PoPs) and interconnections (and NNIs) to over 150 carriers in the US (including cable, DSL, wireless, CLEC and ILEC). "UNSi's partners are able to leverage the relationships with these carriers, paired with the cost savings and convenience of working with a single partner, under one invoice."

In 2012, UNSi acquired IPNetzone, a nationwide MPLS network provider, adding an advanced backbone network to capabilities. They partnered up with their Derby Capital teammate RapidScale. Yesterday, they decided to acquire Airband in an all stock merger. The combined entity will be named UNSI and generate about $60M in revenue. This will add fixed wireless and Hosted PBX to the service offerings. The biggest competitors UNSI faces are EarthLink, MegaPath, Masergy and AireSpring which all play the same game - MPLS and HPBX.

The bullhorn is the re-emerging noise around tw telecom being acquired. A few months ago CenturyLink's stock took a hit when their bankers floated the balloon that C-Link would buy twt. C-Link is sitting on a boatload of debt - $20.6 Billion. To buy twt would only add to the debt. It would hamper C-Link from its integration of Savvis-Qwest-Embarq and its plans to "leverage those synergies".

Now the bankers are floating the Level3 will buy twt balloon AGAIN - for like the 3rd time. How??? I get why - take a fiber player off the table and add revenue. But how?

Level3 is NOT the sum of its parts - parts which include, most recently, Global Crossing. Level3 is horrible at integration. Maybe all telcos are because the Ma Bell umbrella is still a bunch of silos, but come on, integration is not what they do well. And synergies have never been realized from this - or quite frankly most any telecom merger.

I have an idea for Level3: fire the top guys that have been there since they bought WilTel -- all of them. Hire from OUTSIDE the telecom world for a new CEO and a new President. Level3 has all the assets in place to be doing far better than they are. In baseball terms, they are the Yankees with Bucky Dent or Ralph Houk managing. (Sprint, too , btw).

You know how you get out of debt? You sell stuff!!! Then you deploy stuff. Then you keep it running. POOF!! That thing you see is called revenue which will eventually get you to profit if you stop selling on price alone.

Apparently L3 quietly bought a San Fran based fiber provider.

The VoIP Market Right Now

2013-04-29T19:14:00Z

"The market for VoIP services has moved well beyond the early adopter stage to mainstream status in many developed countries. SIP trunking and hosted UC continue to heat things up, fueling growth," reports Diane Myers, principal analyst for VoIP, UC, and IMS at Infonetics Research.

According to the study, "Due to continued demand for enterprise cloud-based services, hosted VoIP and Unified Communications (UC) services revenue grew 17% in 2012 from 2011, the most of any segment."

The reality is that SIP Trunking jumped 83% because VoIP is a cheap dial-tone replacement. Replacing PRI's and other voice circuits (POTS, Integrated T1) is the easiest way to ink a deal - we will save you money! Unfortunately, it is also lowering overall revenues.

Premise based systems are not going away any time soon. "Managed IP PBX services, which focus on dedicated enterprise systems, remain the largest business VoIP services segment, and sales grew 9% in 2012."

Dimension Data and Ovum performed a study on UC&C, "Currently, the US results are in broad accord with our global results: most UCC deployments remain premise-based and are managed in-house. However, US respondents are keenly interested in the managed services model for UCC, in which the technology is based on-premises, but is managed by a trusted provider. Strong interest in managed services indicates a shift from the traditional US 'do-it-yourself' approach to enterprise networking and communications. US firms also expressed more willingness to seriously consider the public cloud as a UCC delivery mechanism than their global peers."

Premise is still selling.

Is The Market Ready for Hosted PBX?

2013-04-18T19:56:31Z

When the hardware PBX companies have hosted PBX divisions, it might be that the market is ready for Hosted PBX. However, like VDI, is the channel ready to sell it and support it?

Big Changes at Broadvox

2013-04-14T21:56:37Z

Just over a year ago, big changes happened at Broadvox. Bruce Chatterley, who was CEO of Speakeasy until MegaPath absorbed Speakeasy and Covad, became President and CEO at Broadvox. As is often the case in telecom, top executives bring in their whole team. Chatterley hired Chris Gellos, who was head of sales at Speakeasy, to be EVP of Sales at Broadvox. Many more former employees of Speakeasy were hired. Broadvox CMO David Byrd left for APNI, where he proceeded to hire Chad Krantz - and other Broadvox employees followed.

Time and again, I have remarked that this kind of thing won't work. Unless the team had knocked it out of the park before, why would it work again? And let's face it: There aren't that many companies knocking it out of the park. Lots of BB, K, and singles. A few people told me that it's more about surrounding yourself with people you can trust.

Both Gellos and Chatterly are moving on from Broadvox, according to an internal memo delivered late Friday. Andre Temnorod will be assuming the roles of CEO and president; Pete Sandrev will be taking over Sales.

Despite claims by analysts and IP phone vendors that HPBX would rock this year, VoIP is selling, just not a lot of Hosted PBX -- or not much more than normal. SIP trunking and other dial-tone replacement are making the most gains for to a number of reasons.

One reason: IP-PBX (premise gear) hasn't experienced declining sales like so many predicted.

Another reason: selling SIP Trunks and replacement dial-tone is the fastest form of sale (order taking).

There is -- and will continue to be - many personnel changes in the telecom/VoIP space in 2013. Wait at see! It will be a wild ride.

This is a tough business - Hosted PBX. It should be about business process improvement, outcomes, productivity -- but most people don't want change. How do you sell productivity when people can't figure out (or refuse to figure out) the new phone system? How do you sell BPI when a majority of people abhor change? Uphill climb.

Still, if you are in the HPBX/UC space, then the key is to put the best team together you can. Find A players. Let them do what you pay them for. What should the C-Suite do? Help the A players perform as best they can. Upper management's job is foremost to remove obstacles. Obstacles get in the way of sales. And it all comes down to sales, right?

Switchvox Team Leaves Digium

2013-04-03T01:53:10Z

Word is that the founders of Switchvox, which Digium acquired in 2007, have moved on to other pastures. Tristan Barnum is going to a Hosted PBX provider in San Diego to be head of marketing. One is staying at Digium for another 90 days. The rest ... unsure.

It's funny about Digium. They used to have this home grown, open source story (similar to Red Hat, a $1 Billion business now) - and then they took on too many ADTRAN folks, who turned it into something like ADTRAN.

Is the Channel Too Lazy to Sell Cloud?

2013-03-29T12:31:56Z

Talking with channel managers lately in the Hosted UC space, well, has been depressing to be honest. No one is having fun - or knocking it out of the park. Yes, there are pockets of success - mostly from verticals or niches (surprise!).

So one CM made the comment that channel partners are too lazy to sell cloud. "It is much easier to sell network or a box than it is to sell cloud." There is some truth to that.

VAR's and Inter-connects have a similar business model that is centered around selling a box, installation and support. So cash flow comes from selling the box. They receive a chunk of money upfront. I am not certain that any of them survive off can recurring revenue yet.

To remedy this, some master agencies and vendors are looking to pay some of the commissions upfront, but this requires risk and financing, which devalues their own companies (and makes an exit harder).

From what I have seen and heard, most channel partners - agents, VAR's, Inter-connects - sell Hosted PBX as a third option after all else fails -- and typically sell it as cheap VoIP.

To me, this means that the service providers and the CM's have done a poor job of training and communicating who the target customer is, why they should buy UC/HPBX/Cloud, and what the value proposition is. Am I surprised by this? Not in the least. Why?

For one, many cloud companies have too many executives from the CLEC world where it has always been about Arbitrage - "Let me save you money!" And, let's face it, CLECs know nothing about marketing or positioning or branding - and neither do most cloud providers.

The other big problem is that most of these companies are enamored with their technology - as if the market gives a crap about their technology. People have iPhones and tablets and a bazillion apps. You think your tech is cooler than that??

This was a problem that ISP's had too. All techies that just like to be techies. The reason that 8x8 has grown is because some where along the way they switched from being a tech company to being a sales and marketing company. Most cloud providers are not there yet.

It is also very challenging to sell cloud services, especially UC, with its myriad pieces and components. What channel partner is going to remember all the stuff about your UC product and about the other 10-12 services that he also offers???? Um, not very many.

The flip side to this is that most cloud providers don't really sell direct. They dapple in it because it is expensive. However, if you haven't sold it, you don't know how to train or coach others to sell it either. You don't have the sales process and questions in place as tools for the channel partners.

There is another challenge right now: sales sizes are too small to cash flow for the provider or for the channel partner - so that will grind things to a halt sooner rather than later.

My CM pal also mentioned that partners don't want to explain all the features of HPBX/UC, do an ROI or TCO, check the WAN and LAN, etc. It is far quicker to just sell network or a box - and move on.

The reason that UC is stuck is because it is not exactly like what people have now. So there is training and education needed to the customer and her employees (as well as to the channel partners). This could be fixed IF the channel would actually eat the dog food. Not many channel partners actually use cloud services. If you drink the kool-aid how do you sell it to someone else? (Sales is about the transfer of emotion - if the partner isn't excited about your product, why would the customer be?)

There are a number of reasons that UC isn't selling. (Another is too many providers that all look the same.) As my brother tells me, "But, bro, Lync is selling!" Sure as part of Office 365 or to Fortune 100. And mid-sized businesses with more than 250 employees are buying UC, but are they buying it from the channel or from one of the top carriers?

Another trend is that smaller, unknown cloud providers are losing deals to better known companies - like Comcast, EarthLink, etc. WHy? Trust factor. Brand is a trust factor. So it comes back to marketing.

So is the channel too lazy to sell cloud? Or have the cloud providers just done a really poor job of picking partners and/or marketing?

BTW, there are certainly channel partners selling cloud, but they are dedicated to doing so. They drink teh cloud kool-aid.

The UC Space Right Now

2013-03-26T14:09:48Z

I was chatting with another industry blogger recently. We were discussing how there are a lot of VoIP Providers out there. I estimate it at over a thousand. However, I don't see the Hosted PBX space making huge strides. Before VoiceCon, the numbers showed that premise based PBX units were the stagnant -- not decreasing.

My associate says, "Everyone has a similar platform and features; sales are predicated on relationships and lacking that price. Key system emulation is big for VSB" (very small business = less than 10 employees).

In Icarus Deception, Seth Godin describes the marketplace changes that we are living in with the decline of the Industrial Age. Godin says that we live in the Internet fueled Age of Abundance.

"We do have an abundance of choice, an abundance of connection, and an abundance of access to knowledge. We know more people, have access to more resources, and can leverage our skills more quickly and at a higher level than ever before. This abundance leads to two races. The race to the bottom is the Internet-fueled challenge to lower prices, find cheaper labor, and deliver more for less. The other race is the race to the top: the opportunity to be the one they can't live without, to be the linchpin we would miss if he didn't show up. The race to the top focuses on delivering more for more. It embraces the weird passions of those with the resources to make choices, and it rewards originality, remarkability, and art." [Seth Godin]

So why isn't UC selling?

People suck at selling it. Companies suck at marketing it. Companies stink at deploying it.

I know that is harsh, but how many businesses ask for UC? Um, none. They want a cheap phone system and their smartphones.

If Apple made a UC platform, everyone would buy it. Why? It would be user friendly. It would be a little different from all the rest. It would be branded and marketed well.

No one even does anything cool with the IP Phones! Those full color screens on those tiny computers that run XML and have numerous soft buttons that are useless.

The Broadcore Connect UC bundle includes voice, video, messaging, conferencing and mobility solutions with various connectivity options. How is that any different than XO's or any other Broadsoft BroadCloud BroadOne?

Everyone is offering a bundle - ANPI, VoIP Innovations, everyone! It's worse than the allergy aisle at the pharmacy!

"Successful organizations have realized that they are no longer in the business of coining slogans, running catchy ads, and optimizing their supply chains to cut costs." - Seth Godin

VoIP in 2013

2013-01-17T17:26:10Z

It's January and people are still making predictions about 2013. Dave Michels wrote a nice piece about the history of Level3's 3Tone service, which I was pretty familiar with due to four of my clients rushing into the void to sign up - just as Level3 was aborted the service. I view this move by Level3 as one reason that I don't see Jim Crowe as the visionary others do.

Today, we see VoIP Innovations rolling out a complete wholesale private label VoIP service. It might be too late for another entrant in the space, but I think the wholesale Origination/Termination space is flat with low margins, so it's a pivot towards higher margin and new prospects.

Most predictions about VoIP center on two things - mobile and video - just like they have for the last few years. If you really want business VoIP to take off, you need more inter-connection, in order for HD Voice and Fax over IP to work across NNI's. Remember the VoIP Peering Fabric?

According to Frost, "Approximately 42 percent of non-cloud unified communications users intend to deploy hosted phone systems in the future." Well, seeing as how the Hosted PBX market is still smaller than Centrex that didn't require much of a crystal ball. As the RBOCs delete copper, Centrex will die too. (Seems strange that they would be so quick to get rid of POTS and Centrex service since the margins on those are big.) Most of that Centrex business should convert to Hosted UC systems. The only thing stopping this conversion is the sales teams of the cloud comm companies. If ever you were going to invest in your sales teams, NOW IS THE TIME!

Why? People are not buying the same way as they did 4 years ago. The services being sold are not the same as 4 years ago. However, the sales people ARE the same as 4 years ago!!! Get the disconnect???

Will the mobility piece be a hurdle for some Cloud Comm companies? Maybe. I think that the SP (service provider) that can sufficiently integrate their MVNO with Hosted Exchange and their Hosted PBX offering will have an advantage. I would say be a big winner but to win, that SP would need a great sales team and other elements of the organization at the peak of its game (billing, customer service, deployment, on-boarding).

Congrats to Vidtel for scooping up Alex Doyle as VP of Marketing. Doyle had a long run at Broadsoft before a short stint at Polycom. Expect big things at Vidtel, a video conferencing company that doesn't rely on hardware as a crutch.

On that note, ACT Conferencing, one of the leading conferencing service providers in the US, is announcing a partnership with Vidtel to deliver cloud-based video conferencing. ACT will be a channel partner of Vidtel selling the Vidtel MeetMe service. Just an example of the ongoing shift in video conferencing towards cloud applications (from hardware).

One last trend I am seeing is that a lot of SP's are leaning heavy on the channel for sales in 2013 - FreedomIQ, Vidtel, Panterra and EarthLink among them. [Note: ELNK just laid off 15% of its workforce.] How effective that will be depends on a number of factors that not all these companies have figured out yet. The glaring hole in that strategy is that if you have issues - with the service, the channel program, tech support - the channel will abandon you. Even if you fix the problems, you have to regain the trust you lost. It's a tough road.

I think 2013 is a year of opportunity for any cloud services. I just don't know who the winners will be.

The Pivot to Attractiveness

2013-01-17T17:06:51Z

I spoke with Mike Cassidy at SUTUS this week. SUTUS is finally seeing success after years of trying to find its niche in the SMB PBX space. SUTUS had a couple of pivots along the way - and usually a new CEO to go with each pivot.

Now they are on the path to success due to stumbling upon a vertical.

When you are in a hyper-competitive market like SMB phone systems or better yet Hosted PBX, you have two choices: you can chase everyone as a potential customer or you can tell a better story to attract the right customer to you.

Most of the Hosted PBX space spends dollars and days chasing low hanging fruit instead of compiling a database of good clients within one or two verticals.

What is so special about a vertical? At least three things. Less competition, more word-of-mouth, and you learn the inside language to provide valuable, specific benefits to the vertical.

I hate to say that VZ was the first one to take a step in that direction by launching VCE with Google Apps integration but the fact is: it's true.

The Cloud Comm Alliance has a meeting come up in Tampa Bay on Feb. 4. I hope that I will hear a couple of stories about a pivot or two where these service providers have decided to attack a vertical to hack some growth like SUTUS did.

Predictions for 2013

2012-12-19T19:15:00Z

CenturyLink Biz has an ebook out with predictions for 2013 and beyond. M2M, mobility, cloud - all just mind blowing stuff . It's prediction time obviously. Let me say that 2013 can go a couple of ways - DC gets its collective act together to improve the financial situation or it doesn't. The economy will swing with either path - good or bad. We have already seen layoffs and threats of more. The only positive I see is bankers actually being penalize for fraud. That said what is in store for 2013?

Well, the FCC's pace for any case is slow and slower, so they will likely not get to the copper clipping and IP transition until 3Q2013 at the earliest. meanwhile, CLEC's have to be vigilante to document cases of copper clipping, because all the money that they - Integra, Megapath, TelePacific, XO, Windstream - have invested in EoC doesn't work without said copper. I think they will be fine until 2014 on this.

That said, CLEC's have to accelerate their plans for OTT services like cloud and Managed IT. When the copper plant disappears, wholesale (from fiber providers and cablecos) will get expensive. The money will be in Layer 7. I have often said that it was going to be Layer 1 or Layer 7. Without a network that you own, it will be a fight for apps and services. Everything will look like Office 365 - where 42,000 Microsoft partners are selling it for very little margin.

Here's the thing: more businesses are moving to the cloud for so many reasons - mobility just being one of them. Some CLEC's, VARs and even Agents will migrate to a cloud services brokerage model. That will work for slinging Hosted Exchange, SharePoint, CRM, simple backup, even VPS. Network will become a separate sale and negotiation.

I'm still shocked that no one has rolled out vertically based integrated bundles yet.

So mobility will still be huge in 2013, but with the new shared data plans, the monthly bill will be increasing, so businesses (and consumers) will be looking for alternatives. Wi-fi will be significant. When you add in mobile data caps and consumer cable caps - and metering - there will be a net effect on cloud services and OTT services.

When you examine the backlash yesterday on the Instagram privacy gaff (right after Facebook finished acquiring them for $715M), you have to wonder how much longer the online phenomenon continues. Privacy is non-existent. You have to be off-the-grid and paying with cash to be beyond corporate and government spying. I think we will see a little more backlash in 2013 - enough that FB and other companies see a dip in usage and corresponding advertising sales. Have FB and twitter peaked?

The companies to watch in 2013:

RIM and Alcatel because they are re-inventing;
Avaya because of its crushing debt;
Bright House due to its Telovations acquisition and to see if it is the first cableco to chase business outside of its region;
8x8 and similar OTT Hosted PBX players like FreedomIQ;
the Cloud Communications Alliance, especially the members who have not been acquired yet. If Hosted PBX doesn't explode in 2013, it never will;
Sprint because Clearwire+DISH+Softbank = a big ugly mess with Hesse;
Verizon but specifically its OTT hosted PBX service, VCE;
Dell as it continues its shift to cloud services from hardware;
Tech Data - between TDmobility and the Microcorp deal - 2013 will be telling;
AirWatch since MDM is huge and they are being sued;
Master Agencies that have to figure out relevancy in 2013.

For Agents and VARs, 2013 is the year they have to put a plan together. No more waiting. Too many VAR's are already jumping on the telecom/network bandwagon and not nearly enough Agents are jumping into the Managed Services and Cloud space. For Agents, 2 resolutions for 2013 would be (1) partner with a VAR or two; and (2) cross-sell services to grab more of the total wallet share of your customers. Look to revenue per customer and lifetime value of each customer as the most important metrics. (Mainly because they are.)

For VAR's, they have seen some big changes from Microsoft - Small Business Server's end of life as well as the way Office 365 was sold. VAR's also witnessed CLEC's - like Cbeyond and EarthLink - make a big splash in launching managed services and cloud offerings. In 2013, VARs will need network/telecom to make up for the revenue dips. Locally in Tampa, we have seen some Microsoft partners go to programming and integration services in place of the old model of SBS and Exchange. For all of cloud adoption, Integration is the key to any business process outcomes. There aren't nearly enough programmers to do all the necessary integration.

In the Google world, there are companies making money supporting and integrating Google Apps. Backupify, Batchbook, Insightly are just 3 companies that integrate with Google Apps for CRM and backup. As this ecosystem becomes more complete, Microcorp's deal with NeoNova could prove brilliant.

It is this type of package or bundle that most businesses want. Do they want stand-alone Hosted Exchange? Notsomuch. They want a complete package of inter-working software - the Hosted PBX integrated with Outlook and the browser - like they have on their smartphone!! It confuses me that the smartphone is more integrated than a laptop, Mac or desktop.

They want their CRM to integrate with all of it too. If Xobni can pull in all that social data, why can't a plug-in for CRM?

It's this complete solution that is needed. No idea what company will roll it out first or if it will be in 2013.

A Little Bit of Tuesday News

2012-12-18T17:11:46Z

365 Main returns to the data center space with its completed $75 million acquisition of 16 data centers, in the US from Equinix. Some Equinix execs came along with the acquisition. The data centers - located in Buffalo, Chicago, Cleveland, Dallas, Detroit, Indianapolis, Nashville, New York, Philadelphia, Phoenix, Pittsburg, San Jose, Seattle, St. Louis, Tampa and Washington D.C. - seem like the former Switch & Data facilities. It was a great deal for 365 Main (and thier VC backers).

An interesting thing is happening, 8x8 has seen its stock increase in just the last six months from $4.25 to $7.40. What gives? Some of it is the hype around cloud. A good part of it is that the company is really hitting on all cylinders. The financials are looking good. It broke $100 million in business VoIP revenue. That's a milestone. The third reason is the PR - scoring a couple of patents and the Gartner Magic Quadrant. The final reason is that 8x8 is a good takeover target.

Sprint is busy with M&A activity. After Japan's Softbank agreed to invest $20 billion for a 70% stake in Sprint, the cellco bought some spectrum and customers from US Cellular. Now it has finalized a deal to acquire all of Clearwire. The $2.2B deal has been backed by TWC and Comcast - 2 of the three cablecos that own stakes in Clearwire. (the third is Bright House). So if all goes as planned, Sprint will own Clearwire and its spectrum, but will still have a spotty network that it needs to build out - AND will still be a distant third in the US cellular market. Another fine Hesse deal.

Cbeyond rolled out its own Broadsoft based Hosted PBX service. I have no idea how that meshes with their previous hosted Asterisk server in a cloud container. I also don't know how that will go over with its indirect channel. Cbeyond becomes just one more company to roll out Hosted PBX. Is there anyone NOT offering HPBX? The only interesting one so far is - and I hate to say it - VZ with its Virtual Communications Express. The interesting part is that it is OTT (over-the-top) and integrates with Google Apps for SMB. Thus, targeting the 4.5 million SMB's using Google Apps. Who else does that?

Cloudy Math

2012-12-11T03:10:14Z

There is a lot of talk about the big money that Agents and VAR's can make if they just switch over to sell Managed Services and Cloud Services. Here are some facts about cloud.

M5 had the highest ARPU (average invoice per customer) when ShoreTel bought them - at $2000. Most other cloud communications providers hint at lower ARPU - maybe around $1000 per customer. However, 8x8 and Cbeyond are public and their cloud ARPU sits at between $200 and $250.

When you examine the "cloud services" of many carriers, it is just Hosted Exchange, Sharepoint and maybe some backup. That's $9 + $10 + $20 = $39 per user per month. Add in a Hosted PBX seat at $30 and you are now at $69 per month. For 20 employees, that's not a bad billing invoice for Agents, but it is also an unlikely sale. What small business will pay $1380 per month for phone and email? A PRI at $550 plus maybe $100 for the PBX lease and $50 per YEAR for Google has you covered. Add in some Dropbox and Bingo!

This isn't to discourage you. It's to put a pin in the hype balloon, which is starting to annoy me.

You will have to sell upmarket. There are 83K businesses in the US with 100-499 employees, according to the 2009 US Census (the last year data is available). With 1000 cloud service providers in the US that will be a fun Red Ocean to swim in.

There are only 17,500 business with more than 500 employees. That 's the spot you would like to sell in but you would need to be connected or a white elephant hunter.

That leaves Agents chasing 20-99 employees - since that is a majority of the businesses in the US. Let's call the average 40. If you sell that business the full boat: Internet, Hosted voice, email and backup - the ARPU is worth it. The sales cycle will be longer. The deployment will require more input and project management than Agents are used to. (In fact, it is more than most carriers have ever had to do!!!) Post-sales support will also be required. So overall, it is a lot more work for a stickier client with more ARPU than you are used to. Are you up for that challenge?

Let's go back to the 8x8 example at $256 of ARPU. That's about a 9 employee shop. So you sell them 8x8 voice, cable modem AND another broadband service (like DSL or 4G or fixed wireless). You offer them Google Apps for SMB via NeoNova for some small change. Add in some Mozy Pro back-up (or Carbonite or other backup service that pays you). Next you try to get the cell phones - there has to be a couple that are corporate owned -- for a few more dollars. Don't forget the 4G data plan.

So you wrapped up the Internet Access, mobility, voice, some DR (disaster recovery), backup, email and office suite. After that, what software do they use? How about Conferencing? Do you see? You have to grab the whole wallet (or you can't make much money).

It has to become a lot like McD's. What do they do? A call center hits you first in the drive-thru with, "Would you like to try our ______ special today?" No. "okay. Order when you are ready." But don't forget "Do you want fries with that? or can we Super Size that for you?" It sounds cheesy but you are going to have to do it.

CenturyLink, XO, MegaPath and quite a few other carriers offer transit, Hosted voice and cloud services. It will all be on one bill, with one carrier to blame, with one throat to choke. It makes it easier to sell --- check boxes on an order form or site survey.

You better hurry because the MSP's like MindShift and others are already out there doing this.

When you consider that Parallels AS platform allows hosting companies - like Intermedia.Net - to sell, bill and deploy these services (Hosted PBX, email, storage, office) with a click on an online order page, spend this month - the last month of 2012 - deciding what your plan is going to be for 2013. While I hate the hype, many of your competitors are already targeting your customers. Selling them a T1 will be easy after they sell them VDI or backup or Hosted PBX. Then what do you do?

Again, you have to do it but I wanted you to have a realistic view of what it was going to be like. You have vacuum up the services - all of them - heck, sell them office supplies if someone will pay you for it! Managed Print anyone ;)

It's About Stats and Studies

2012-12-04T16:34:50Z

Here is a collection of some stats and studies for your reading pleasure.

(1)

Mary Meeker's 2012 Presentation On The State Of The Web is a good read despite being heavily mobile. She spends quite a few slides pointing out how SO many industries have been disrupted side-swiped by technology, especially Internet enabled apps.

(2)

"The worldwide Ethernet switch market, which had grown in large part due to the adoption of 10 Gigabit Ethernet technology in the data center, contracted in the third quarter, with revenue dropping 4.4 percent, according to analysts with IDC." [eweek]

(3)

Survey Finds 'Death of the Landline' as Most Disruptive Force to US-based Communication Services. I would have to agree. That copper plant impacts a lot of telecom.

(4)

"According to a recent market study made by Infonetics Research, the third quarter of 2012 saw a few positive changes in the leading business PBX telephony systems. Cisco was found to be the leading PBX business phone system vendor (for the 5th straight quarter), followed closely behind by Avaya." [source]

"the high roller in the Unified Comminications (UC) market is Mcrosoft, with a rise in revenues of approximately 40% over second quarter profits." You have to read it carefully. It's just about revenue growth. Diane Myers continues: “UC applications have been a real sweet spot. The demand for tools that aid employee productivity and flexibility is fueling growth in this segment, and Microsoft’s Lync has been the primary beneficiary, enjoying over 40% sequential growth in the third quarter.”

"Revenue is declining at a faster rate than shipments: for the first time, the average revenue per PBX line slipped below $200." This is globally in the whole IP-PBX space.

(5)

Frost & Sullivan's new report "North American VoIP Access and SIP Trunking Services Market 2012: Broader Market Acceptance Drives Robust Growth" to their offering. This couldn't be more obvious. SIP Trunking and VoIP are growing. No kidding. The PSTN is closing and copper is clipping. Cable Voice is all VoIP, even the PRI's. Try to buy a TDM PRI sometime, Frost & Sullivan. Oh, and there was consolidation in this space in 2011. See what I mean?

(6)

Garrett Smith on the video conferencing market.

(7)

Lastly, a beautiful infographic from GigaOm on the state of the US Broadband market!