There is an interesting article on Business Insider about Facebook making switches and routers for themselves. But now a number of telcos globally are trialing the gear. That doesn't help Cisco at all.
At the same time, the carriers and just about every other managed services provider is offering SD-WAN. These deployments are white boxes. Cisco, Juniper, ADTRAN and others are being replaced at the edge of the WAN by white boxes.
It is also hurting VADs like Tech Data, because these boxes are NOT going through distribution. They are being distributed by the carriers like EarthLink and TPX directly.
ADTRAN is making moves to stave off extinction with hardware as a service, managed wi-fi, and SD-Access.
It's interesting because Amazon's Chime is competing against Webex on the collaboration space. Carriers are competing on the WAN CPE space. It's VAR channel is modeled on hardware sales and installation. Selling software is not nearly the same business model as hardware.
This is just an observation - and it will be interesting to watch as these things shift.
]]>Deloitte acquired most of the assets of Day1 Solutions Inc., a cloud consulting firm to provide deeper cloud expertise. CIO Magazine explains, "Deloitte needs Day1 for the same reason Accenture needs Genfour, Genpact needs Rage Frameworks and Infosys needs Panaya. The problem for Deloitte and for every traditional services company is that their clients do not believe they have the digital skills to lead the digital transformation journey the clients want their business to undertake."
Think about that yourself. Do you provide proof of your digital chops to your clients? Would they be comfortable coming to you for cloud migration plans or strategy or advice?
Item 2:
The Lookout Breach Report: "With over 1.45 billion compromised accounts, emails, social security numbers, dates of birth, and other data types, March was the biggest month for exposed data this year." Yes Cyber-Security is indeed needed. I personally am tired of all my data being hacked from companies that don't protect it.
A 451 Research survey on Security Pain Points and Concerns showed that "User Behavior is a top concern across companies of all sizes - while other issues such as Endpoint Security present a bigger problem for smaller companies. In contrast, Cloud Security and Data Loss/Theft pose a greater threat for very large organizations."
Item 3 is SD-WAN announcements
Coredial and Cincinnati Bell are the latest Velocloud wins. I find it funny that Zero Outages re-branded as the first SD-WAN company at their mostly unmanned booth.
Windstream is wholesaling SD-WAN now. Probably Velocloud. At this rate SD-WAN is already a commodity and Cisco/ADTRAN need to be afraid. The CPE isn't coming from them any more. It isn't being distributed by Tech Data either!
Westcon-Comstor Adds Viptela's SD-WAN Portfolio
Item 4: M&A:
After buying Hunt Telecom and Uniti Fiber scoops up pure-play fiber company, Southern Light to move itself away from just being dependent on Windstream. UNITI also bought Tower Cloud and PEG. Maybe Alpheus or FiberLight will be next.
Item 5: More M&A:
Broadvoice bought a company to add in analytics and user experience. "XBP's core strengths is in deep reporting and analytics integration, enabling customers to better understand user behavior. For example, tools like Advertising Analytics allow users to measure and follow through on outreach campaigns, from local to nationwide. Other tools like voice recording on-demand and voice-to-text conversion provide solid, searchable data that enhance successful client relationships."
]]>What do you do when a $60K MPLS network is replaced with a $40K SD-WAN network? And when some of those Internet links are not even on the carrier's network?
What do you do when 10GB trans-continental private lines are so ridiculously low?
Well, the management has to re-adjust their reality for the sales team. It isn't the salespeople's fault that price is eroding fast. That is an industry wide executive decision. There are no safe havens for high margin. Even SD-WAN which was hyped just a year ago has fallen under the I Will Save You Money banner (already).
Much of the merger mania is based on synergies - or that at scale the same amount of people can take care of more revenue, which adds margin. A few of the mergers are due to a debt burden that becomes due. That was Intermedia's problem in 2001. No one learned that lesson. Avaya faces that problem today with a debt load that cannot be serviced by its revenue.
But direct sales, channel managers and partners face declining revenues across the board. This means less commissions, less margins, less profitable quarters.
When cablecos stop paying commissions on modems sales (like ILECs did with anything TDM or DSL), what will the channel do? I ask because all the SD-WAN hype is about a branch office utilizing broadband - DSL, cable modem, fixed wireless, 4G, satellite or a combination - for lowered costs but improved performance via that special little white box of SD-WAN.
Also with the shackles off at the FCC, we will see bigger mergers and most likely port blocking will become a thing again. OTT VoIP providers will have to figure out how to circumnavigate the waters pf port blocking on broadband circuits at SOHO, branches and rural locations. It will be interesting.
But that is all down the road. Right now we face consolidation of vendors but price erosion, which may be accelerated by the MPLS to SD-WAN transition. Oh, Goody!
I say this a lot but we have to sell a lot more, faster to maintain.
We need to Land and Expand. Get the pipe but start taking apps and voice, backup, DR, security. It will become imperative to take a chunk of the whole customer IT/telecom budget to survive.
Carriers can help by stopping pushing product and going to a holistic package approach of bundling products into a turn key solution like UC + 4G + Internet + POS + Compliance + backup.
Or savvy partners will start bundling multi-vendor solutions themselves to get more of the pie. The carrier will be stuck being a component.
Co-Selling will be a see-saw. The carriers will like it to protect their own offerings and sales numbers but will hate paying twice one the sales.
We are in for a ride about as smooth as dealing with the airlines! Happy Travels! Back to CP Expo 17 now.
]]>This and some other moves clearly closes the book on the era of the CLEC.
Southern Light got acquired by UNITI Fiber (formerly CS&L which was the Windstream spin-off REIT) for $700M.
The Intelisys division of Scansource finally revealed that they acquired Kingcom, the exclusive Verizon partner that they run their VZ business through. Just bringing it all in house.
There were more announcements of companies picking a SD-WAN partner: OneStream picked Versa; Star2Star chose Velocloud; Nitel chose Versa, too. This is quickly becoming like Hosted VoIP/UC. It will quickly become a commodity, faster than any technology the channel has sold.
AT&T bought Straight Path for a billion dollars for the spectrum. Any spectrum is property with a water view right now.
]]>Think about this: SD-WAN providers use an appliance as the CPE or end-point. This appliance can function as a switch, router and more. It can be a firewall, a wireless access point and more.
Most of the big name LECs (ILEC and CLEC) have added SD-WAN technology to their portfolio. Even lesser known former CLECs like TelePacific, NITEL, Transbeam and AireSpring are offering SD-WAN technology. That means less Cisco boxes being deployed.
Not only is this a problem for the hardware vendors like Cisco, ADTRAN, Juniper, Brocade and Extreme Networks (mentioned because of recent news), but this is a problem for VARs and MSPs.
Long ago, I explained that VARs selling carrier services was like CLECs selling AT&T services - you are fighting against your biggest vendor. Now those same vendors are going to take away the Box Business that floats their business. VARs still make money selling boxes (so do Avaya partners!). The margins have shrunk. The sales have declined a little year over year, but not enough to make many change their lines of business or their model.
EarthLink announced 4000 locations on its SD-WAN as it merged with Windstream. If EarthLink can sell multi-location retail and restaurant chains, the SMB market is in play. The bread-and-butter of the VAR.
I am not throwing around FUD. I'm saying that every industry comes under attack by new technology. The new techis SD-WAN; the legacy business is Cisco and VAR - as this segment moves to a bigger managed services provider and hardware-as-a-service.
Level3 CEO and President Jeff Storey is poised to get a huge prize for selling the company off. Isn't that great? For him, yes. He gets a "$1.2 million bonus after the Broomfield-based telecom's $24 billion acquisition by CenturyLink Inc. closes. In addition to the $1.2 million bonus payout, Storey is slated to receive an accelerated stock grant worth $3 million after the transaction with Monroe, Louisiana-based CenturyLink." Agents, meanwhile, get to wonder what happens post merger. How messed up will the networks be? How convoluted will ordering and quoting be?
After both Transbeam and NITEL announced that they are adding SD-WAN, MegaPath launches SD-WAN aimed at the SMB. That is the same place that SimpleWAN plays. SimpleWAN is up for the 2017 Venture Madness business competition in Arizona.
Velocloud raised a series D round for $35M. Many startups will look at this (and the SNAP IPO yesterday at $26B) and think that doing a startup is like buying a lottery ticket. In a sense it is, but building a business -- even to sell it quick -- still requires hard work, execution of an idea AND a plan, and sales. Velocloud is signing up partner providers faster than a PR firm can add them, but that doesn't result in meaningful sales for a long while!
You can learn from failure. #startup stories.
In the heat of SD-WAN, I wonder if people realize how shaky Cisco (and other router manufacturers like Juniper and ADTRAN) are? The SD-WAN white box is not a Cisco. It is an OEM that can be a router, a firewall, an access point, a Cradlepoint, darn near anything because we just push the software update to the box and either install the card/WIC or activate the card/WIC. The white box is replacing the traditional gear. Cisco and ADTRAN are in the box business. So are VARs. What happens next? Pay close attention - it will be a lot like the PBX Business, but decline a little faster.
Satellite ISPs OneWeb and Intelsat are merging. Consolidation in every sector of the ISP market - MSO, ILEC and now sateliite.
Verizon wins top honors from Frost & Sullivan for capturing more than a quarter of the North American VoIP and SIP Trunking Services Market.
CenturyLink makes changes to its Alliances and Strategic Partnerships programs.
In the EarthLink-Windstream merger, the ELNK channel chief, Olen Scott. emerges as the new channel head. "Jason Dishon, Windstream's former channel chief, has left the company to pursue other opportunities." It is a constant state of musical chairs in telecom.
]]>
Just as they are getting acquired by Windstream, EarthLink finally gets its stuff together. ELNK announced that in six months they have deployed SD-WAN functionality to about 1700 offices for 41 customers. That is pretty impressive but the technology (SD-WAN) is best deployed at small offices, rural and branch locations. It is where the tech gets the best ROI.
FYI... SD-WAN, like WebRTC, is a technology NOT a product. Stop trying to sell the tech!!!
IPO's are on the horizon. Fuze got another bag of VC cash and hired a CEO to take them to the public land. I hear that Star2Sar is thinking the same thing.
Speaking of cashing out, my client, Hunt Telecom in Louisiana, got acquired by CS&L aka Uniti Fiber. Congrats to Jason, Kevin, Robert and Troy!!!
LUMOS Networks got grabbed by investment firm EQT for $950 million cash.
One weird acquisition: Atlassian spent $425 million on task management provider, Trello. Altassian owns Hipchat (a Slack competitor) and JIRA. It seems like a good combo.
A head scratcher: Fonality got bought by Netfortis. Asterisk and Genband.
ARRIS is buying Ruckus from Brocade because "Every carrier will need to be in wireless."
TelePacific is coming into 2017 with its acquisition of UC provider DSCI. They will be re-branding the new nationwide managed services provider at the Vegas CP show. Yesterday at a partner event, TelePacific CEO Dick Jalkut told the room that they had spent $500K on ITx and UCx demo centers around the country as well as building out a SOC (security operations center) in St. Louis. Any current TelePacific partner can visit the SOC. You might want to ask if they will pick up the airfare. TelePacific isn't giving up on network - it is what made them the regional giant that they are - but all bets for the future of the company lie with the strategic products - like security, managed IT, Office365 and a Broadsoft UCaaS offering - that DSCI strengthens with their own experience and products in those areas..
OTT UCaaS provider, Panterra, has inked another distribution deal; this time with VoIP Supply.
]]>Wood corrected that Velocloud decided not to sell direct but to use a variety of service providers as sales partners. These partners could be VARs or MSPs or LECs. Many providers formerly known as CLECs, like TelePacific, Mettel, EarthLink and Global Capacity, have chosen VeloCloud. So has AT&T.
Wood says each provider is rolling out SD-WAN by adding Velocloud to its own network sauce. Personally, I don't think that helps the SD-WAN term gain definition, but we'll see.
ITSPs (VoIP Providers) are also rolling out SD-WAN. Some are using Velocloud (Vonage and Mitel); others are using other vendors including SimpleWAN. It improves call quality measurably.
In the case of Vonage, they are using Velocloud technology to leave a box on-site to perform MOS scoring and monitor the call quality in the first month. Then Vonage can go back to the customer to say that the Internet performance is the issue and with SmartWAN (Vonage brand name) the call quality will improve starting now. (The white SDN box is already on-site doing monitoring and testing. Now it just gets turned up and billing begins.)
Quality + Transparency + Monitoring is what Velocloud is offering. Analytics will come later.
Velocloud has 600 customers through 150 partners, but not all providers are past the pilot stage, so Wood tells me it is more than 4 deals per partner.
Wood said that EarthLink is spinning the SD-WAN story different with its SD-WAN Concierge service.
The story of SD-WAN has to be more than spun. It needs clarity of value and differentiation. Wood pointed out that Cisco has moved into the space (iWAN) as a vendor to LECs and as a provider. Also, WAN Optimization specialists like Riverbed are spinning into the space - but without really evolving.
The benefits of SD-WAN extend from simple WAN management to zero touch provisioning to SaaS/App Performance. In between, there are features for remediation, leveraging economical broadband, and mu;ti-path/best link path determination (packet traffic cop). The MOS scoring agent is what the ITSPs like. The features don't change; it is all about how the provider packages the software (Velocloud or Broadsoft). The new year will bring more buzz and more spin. Stay tuned.
]]>
Today, VeloCloud is selling its SD-WAN software to anyone who will buy it. They are having a problem selling it direct. Correction: they took the BSFT route of selling only through providers.
I have called UC a garbage can term often. Everyone has a definition for it. There is little agreement on that definition. It has a variety of other names: Hosted VoIP, Hosted PBX, UC&C, UCaaS, etc. It consists of many different components / features: voice, video, conferencing, collaboration, UM, etc.
SD-WAN is following suit. Load-balancing, packet shaping, circuit bonding, et al are all being re-framed as SD-WAN. It is becoming a garbage can term for a white box with a variety of functions.
As a buzzword takes off, every marketer wants to jump on-board. However, all it does is make the buzzword meaningless to the buyers. And we have to ask: Are there in fact buyers? If you had a hard time selling your box with Function A, what makes you think adding Function B and the hastag #sdwan was going to make it more appealing?
One thing to think about is product-market fit. The other is a clear value state to the defined target market. If you say 1-500 employees or 1-1000, you have no clear product-market fit. I have no idea what you told your investors about the market but it is likely a lot smaller than you think. It also will be segmented like crazy.
Some businesses will make great use of UCaaS or SD-WAN, others not so much. The sooner you identify who benefits most, the easier it will be to sell. Who benefits the most and why.
Note: If you are selling through an indirect sales channel AND you do not have a rock solid USP and target market, THAT is why it isn't selling (not because of the channel).
VeloCloud responded to this HERE.
]]>Jeff Ponts of Datatel; Emmett Tydings of AB&T Telecom; and Chris Palermo of GCN joined the podcast this week to talk about the M&A in the industry and what partners can do to mitigate risk in 2017.
It has been a turbulent year with a lot of mergers and acquisitions. It makes people anxious.
Jon Arnold is a fellow blogger who recently saw Guy Kawasaki keynote Nextiva's event. The one thing lacking in telecom is Innovation. As partners, WE need to innovate to the tune of adding new skills, being creative, thinking through problems and cross-vendor solutions.
Give this podcast a listen - and leave your comments.
If you can't see the flash mp3 player, you can listen on SoundCloud HERE. Or you can download the mp3 HERE.
]]>AT&T with its DirecTV buy and its grab for TW is basically following Comcast's playbook. Comcast bought NBCU, is becoming an MVNO (cellular reseller) and has a $6B Comcast Business division that is going to chase enterprise (much to the dismay of CenturyLink and Windstream).
Verizon is busy selling off wireline assets and buying up as much spectrum as its AMEX card will allow in a heavy bet that 5G and IOT will solve all of their revenue and cable issues. In a move bizarre move, VZ bought up AOL and Yahoo as content plays. This playbook is solely Lowell C. McAdam's.
Frontier, Fairpoint, CenturyLink and Windstream are RLECs looking to get out from under a heavy debt burden without cellular assets and without a content play. Each has its own playbook.
Windstream buying EarthLink almost makes sense especially at a $1.1 Billion all stock deal. (This move doesn't hurt the channel since both providers were pro-channel.)
CenturyLink buying Level3 is not only surprising; it is disheartening. Level3 has its problems certainly. Yet its management understood the business it was in and what it took to win business. For a partner, that is a plus.
To fuel that $34B deal (total value of stock, debt, etc), CenturyLink is selling its data center business (Qwest and Savvis) for $2.1B to a coalition of PE firms headed by the former CEO of Terremark. This coalition is also buying 4 cyber-security firms to build a global cyber security business. Partners are curious if they will still get paid on deals already sold. And what the future holds here.
FPL getting acquired by Crown Castle also makes partners worry about commissions, since CC doesn't have a channel and doesn't retail its fiber.
The CLEC industry is practically gone now. After nearly one trillion in investment money dating back to 1996 or so, most of the CLECs we have come to know and sell are pretty much gone.
What does that leave the Channel? IOT, Cloud, UCaaS, SD-WAN, security - basically selling managed services. Network is going to be tough to sell and make a living on as prices continue to erode. SD-WAN for the win!!!
Network is easy to sell and there is demand for it. You really can't say that for any other product in the portfolio.
Data center is still alive and well. Long live colocation!
]]>It wasn't UCaaS after UCaaS after UCaaS. It was broken up. UCaaS/VoIP is still big - and there are still too many vendors for not enough sales - but it didn't seem like every booth. At the CSNG event, it was wall to wall VoIP. It looked like the starting line for the Great Race, with teams in their matching colored shirts from almost every VoIP provider - DSCI, Panterra, Jive, Fusion, Momentum, Net2Phone, Nextiva, Vonage, Star2Star and a few others.
TelePacific is closer to finishing its merger with DSCI, which will be good for all partners as this CLEC pops out onto the national scene as a Managed Services Carrier. TelePacific will have a new line of managed services launched soon in conjunction with DSCI. SD-WAN will just be one of the new services that partners can sell nationally.
SD-WAN is making a ripple. Verizon brought the full team to its hot dog and beer session on SD-WAN. Very competent people explaining the different ways that VZ can deploy managed SD-WAN either from Cisco or from Viptela.
Ecessa is excited about the opportunities that the channel is bringing them. Both Ecessa and Aryaka told me that right now it is about education - both to the customer and to the partner - about what SD-WAN is and what it can do for the networks and productivity of the customer.
Polycom wasn't prominent at the show, but neither was Yealink. A few UCaaS providers told me that more and more UCaaS seats are beings old without phones. Jabra and Plantronics are picking up business. (I wonder if ScanSource distributes those lines of headsets?)
Level3 is still going through integration issues according to two different partners.To be expected I would imagine as they try to merge networks with TWTC and add SDN.
Quite a few carriers spent more than a little time explaining that they WERE indeed embracing the channel.
IOT was talked about, but I still don't get how channel partners will make money at it. Verizon went from $455M last year to $800M this year in IOT revenues, which is a blip in their coffers.
A lot of talk about the ScanSource/Intelisys deal. The X4/Sandler merger didn't even get to spend a week on anyone's mind. Everyone is wondering if this will be a trend. There has to be at least two deals in the pipeline right now. We'll see.
Not much else to say. Safe travels.
]]>I want to thank Velocloud, Edgewater Networks and Ecessa for joining the Blab to discuss SD-WAN and the channel.
One question I asked was how would a channel partner get his/her feet wet in SD-WAN.
SD-WAN consists a number of features, such as packet-shaping, QoS, load balancing, WAN optimization, WAN bonding, application acceleration, monitoring, analytics, IP-VPN and more. Not every vendors offers ever feature (a la UCaaS); and not every customer will need or want all features. These features do identify a pain point that SD-WAN can solve.
]]>I have written about the massive amount of personnel shifting going on in the industry. I would like to think that all this change would mean, well, change. But it doesn't. It means a lot more of the same.
When chairs are being removed, who is going to take a risk? Not many. Most will hunker down, hire friends who will help cover their backside, and aim for the center of the road, playing follow the leader.
I see it with features, product lines, messaging, compensation (SPIFFs) and partner agreements. The sameness is like drowning in a pool of vanilla yogurt.
As we head to two back to back channel shows, I am packing with no visible enthusiasm because for the most part, there isn't anything to get excited about. The sameness is deafening.
There will be "newness" in the form of the re-branding of merged entities. And there will be a new term bantered about: SD-WAN.
There will be some new faces in familiar logos and familiar faces in new logos. There will be parties. (It looks like drinking is the main reason to hit DC this August - and I don't mean because of the presidential candidates).
This industry that is hoping and praying and dreaming of moving to cloud services is in major need of a colonic.
In the UCaaS space, premise based PBX has not disappeared. The handset / desk phone has not gone away either. Cisco and Intel are still shipping boxes and chips. Laptops are still being bought (more of them by Apple than the old PC guard). The laptops come with hard drives and O/S still, not dummy cloud terminals yet. Virtual Desktop or Desktop as a Service is not on fire in North America. All those analyst predictions were WRONG!
Most discounted one big thing: No one wants change AND selling Change is Hard! Cloud is change. And it isn't even assured change. If you have ever been involved in software deployment, you know that most of the time the desired outcome is far out of reach. In short, software deployment falls short. That doesn't bode well for a transition from a controlled environment (NOC, servers) to a rental model (SAAS).
Are people moving to cloud? Absolutely. If you want to include Salesforce, Office365, dial-tone replacement sold as Hosted VoIP and SIP trunking as cloud services.
Telecom spend is down from 2014 to 2015. A lot of that is due to price compression. Cable voice is about $10. Some Hosted VoIP providers are selling seats at $10. This happens for two really different reasons. Cable gets to raise bundle ARPU by $10 to give you voice. It is a win for cable. Triple play sales plus $10 extra. For the VoIP player, it is revenue, any revenue. Please someone buy my services!!!!
One Broadsoft provider dropped about $3M to get to 12,000 seats. The high end is Vonage and 8x8 with just over 500K seats each. Not even a million seats after 10 years! Meanwhile Windstream has 1 million SIP trunks on its Broadsoft platform - and XO has 2 million.
It used to be that voice went to the ILEC. Then IXCs came along to rob some LD minutes and then some toll-free minutes. Then CLECs got into the game. Even at its heyday, no CLEC had more than 60K customers, except maybe some UNE-P players before they crashed. Today, voice is replaced cellphones, cable voice, SIP trunks from OTT and CLECs, Hosted VoIP by ITSPs and apps of every variety. Everyone is fighting over a voice pie that is going to ZERO.
This is the main reason why when selling UCaaS, you have to look at the whole system and not that you are selling voice. Businesses have to be omni-channel now. That is why cloud contact center is hot. That is why CPaaS is hot (twilio IPO and Vonage-Nexmo deal and my podcast with Zilkr.)
While this shift is happening, it seems no one is noticing because the talk is the same. We push products at people who don't care because it is all the same. It is transactional. At least everyone knows the difference between a Big Mac and a Whopper.
If you think a new SPIFF for your HPBX offering is going to swing the tide, it better be larger than 7X MRC because that is the new table stakes now.
Well, two conferences of vanilla pudding coming up with a noise level that should have me drinking by noon. Let's meet for coffee. It's easy just get on my schedule.
If you want to be green jello in the midst of all that vanilla pudding or even better, a brownie or piece of cake, give me a shout. I have a bunch of thoughts on the subject.
PS
Next year at this time SD-WAN providers - meaning just about every LEC - will be in the same boat as the UCaaS folks unless something changes, besides the people keeping a chair warm.
]]>If you can't see the podcast player above, you can download the mp3 or listen over at Soundcloud.
]]>