An interview with Grasshopper Group CTO and co-founder, David Hauser about virtual phone systems, entrepreneurs, Chargify, Grasshopper and the Ambassador of Buzz.
]]>The small business market size is more than 40 millions lines, says Robert Rosenberg, INSIGHT Research president. That will mean even more hosted PBX seats since lines and seats are not 1 for 1. "Our study suggests that thus far, small businesses haven't quite latched on to this new technology so the revenue today is only in the range of one-half billion dollars, but by 2015 hosted services will be nearly a $1.2 billion market and the adoption rate of the hosted services by small businesses will accelerate," Rosenberg concluded.
If the US Hosted PBX space is just $500M, I think that they have calculated wrong or at least not taken into account the hundreds of smaller providers with less than 5000 seats. Phone.com, Pingtel, Flat Planet Phone Co., FreedomVoice, PBX-Change and many, many more providers that you find at ITEXPO and elsewhere.
All the research I have seen states that Comcast is hands down the winner in the US Hosted PBX space with about 300K seats.
8x8 is now reaching $100M in revenue with ARPU of $244 on its 27,000 business customers.
Smoothstone is now West IP Communications after a $120M bid. Smoothstone is probably at $40M in revenue.
M5 Networks, recently acquired by ShoreTel, is doing $48M in revenue.
Telesphere, a member of the Broadsoft-based Cloud Communications Alliance, is doing about $30M.
Admittedly, most Hosted VoIP companies are doing less than $4M in sales, but if you add up hundreds of them at $4M or even $1M, you get to $500M fast. I already listed over $300M in revenue, so that $500M might be low. Still even if it was $1B in pales in comparison to US wireless revenue of $335B in 2012 or fixed network voice revenue that is about $132B or even the $38B in broadband access revenue. [carrier revolution from TIA study]
]]>And one last plug for the CMO SUmmit next Tuesday at ITEXPO with this link: CMO's To Increase Spending On Social Media But Integration Still Lacking
]]>An interview with Grasshopper Group CTO and co-founder, David Hauser about virtual phone systems, entrepreneurs, Chargify, Grasshopper and the Ambassador of Buzz.
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At IBM's Lotusphere this year (Feb. 1), IBM rolled out strategies for Cloud and Social Media.
IBM identified 5 ways that partners could benefit from the Cloud. They are as follows:
These are ways for VAR's to stay in the business of providing applications and associated services.
According to some PR sent my way, " IBM is the largest consumer of social technologies. As a company, IBM takes social networking seriously - to develop products and services, to enable sellers to find and stay connected with clients, to train the next generation of leaders, and to build awareness of Smarter Planet among clients, influencers and other communities. IBM will showcase how it is poised to help clients exploit this transformation of a social business delivering new software, services and skills resources to help organizations adopt best practices, policies and software to transform their businesses, including: (1) New Cloud software and services that delivers a cloud-based office productivity suite; (2) New software to help companies and governments socially enable their business processes using the most successful mobile devices, including tablets, such as the iPad, iPhone, Google Android, RIM's Blackberry and Nokia devices."
See how they worked Cloud and social networking into that press release? Google Juice!
"IBM intends to offer a cloud-based version of LotusLive Symphony, an office productivity suite that will give organizations a social platform that enables them to simultaneously collaborate on documents in the cloud. LotusLive Symphony in the cloud complements IBM's on-premise, free of charge, office productivity suite, IBM Lotus Symphony." I didn't know IBM offered free office software.
In its collab suite, IBM will turn the inbox into the Activity Stream that feeds in twitter, LinkedIn, Facebook and SAP through the Social Business toolkit. (Yeah, it says SAP in the release.)
Meetrix is an IBM Partner that offers IBM's enterprise-class Sametime Server in the Cloud. "Combining Meetrix with Broadworks Connector provides unique capability for Broadworks operators to deliver a full featured, over the top Unified Communications and Collaboration (UC 2) offering to business-class customers." Simple Signal is using this service. Meetrix is the only partner for Hosted Lotus Sametime presently, which allows Meetrix to offer "businesses access to enterprise-class UCC features such as instant messaging, chat, presence, awareness, document and presentation storage and sharing, audio and video, web conferencing and e-signature capabilities through SAAS." Note: digital e-Signature. [pr]
I'm guessing that this will compete against Microsoft Linc. I'm also guessing that the marketing and branding of this will take some time, which they don't have. The key may be the Activity Box and the digital e-Signature capabilities. At least, that's what I would be featuring in my marketing. It should be interesting to see, especially if other Broadsoft CLEC's jump on that wagon.
]]>In this 13 minute interview with Dale Frohman of The Frohman Group , we discuss Cloud Deployment in the business.
Deployment of Cloud services is much easier in the small business space (under 100 employees), because typically this is not a complex network infrastructure. The first hurdle to Cloud Deployment is the complexity of the network environment.
Some systems just can not be moved to a cloud platform. Medium businesses (100-500 employees) may have legacy systems (like COBOL) that may take more work than is cost effective to shift to either IAAS or PAAS. Other application systems may be tied to other databases, which may mean moving one will require moving two or more applications or databases. It may be like pulling a string on a sweater.
Jim Meltzer of Ashton Metzler & Associates, says, "In order to successfully deploy Cloud-based services, Communications Service Providers need to develop a detailed business plan, a data center architecture and a management strategy."
Steven Taylor of Webtorials adds, "As we move toward cloud-based solutions, one of the most difficult tasks is defining how the network services that are used to access the cloud-based service and the cloud-based service itself interact. This is especially important and challenging in the definition of an appropriate Service Level Agreement."
Dale Frohman says the first question to ask is "Is it Critical or not?" Decide that before you ask "Can it go to the Cloud?" Your business SLA (service level agreement) may be more stringent than what the Cloud Provider will offer. That could prove disasterous.
I think most strategies will be Hybrid Cloud (like they are now), just because of network architectures, regulations, control issues and proprietary issues.
Speaking of issues, something that can fog up a Cloud deployment is Corporate Culture. As Frohman explains, as an MSP (managed service provider), he saw where employees who were unwilling to change had forces a company to move back to PC's from a Virtual Desktop rollout. Employees have to buy in to this Change in business. You can't gain on productivity when your workforce is blocking it. The future of the office environment will morph, but there are hurdles to how fast that it will happen in every business.
]]>When I analyze the four CLEC components of the new EarthLink Business, I wonder what Atlanta will do with it.
Deltacom had a huge fiber network (IFN) that essentially went under-utilized. In my experience, many employees did not know about IFN. Assets like lit buildings, collocations, colo gear, and the fiber maps are crucial to revenue generation from those hard cost assets.
Essentially, Deltacom was competing on price in the T1 space. It's two core products - Metro-E off IFN and the MVNO - were not marketed well. It's Channel strategy was bipolar - first terminating agents, then out courting them.
Admittedly, I did not have much experience with ONE Communications. Based in the Northeast, it was a regional CLEC that did not have a strong brand; a market differentiator (like Deltacom's MVNO); or a powerful sales force. After the integration of CTC, Choice One, and Conversant, it was touting almost a billion in revenue, 700 collocations, etc. The purchase price of $370M including paying off the $285M of debt means that $800M in revenue sold for $85M. 160,000 business customers went for $85M, which is an acquisition cost of about $531 each.
When ONE talks about 10,000 miles of IOF fiber, it is talking about inter-office fiber between collocations ordered via a favorable inter-connect agreement with the ILEC. Although this IOF does mean that there is a solid network connecting the 700 colos.
STS Telecom was once a large UNE-P shop. Now it is a Broadsoft based VoIP Provider. This purchase by EarthLink was the quietest. STS is supposed to provide $15M in revenue to ELNK this year. It makes me wonder what the New Edge AX partners like Simple Signal do. STS telecom does provide ELNK with an experienced Hosted PBX team. That is certainly something that can be leveraged across the merged entity.
New Edge Networks does an adequate job of sticking to its knitting of DSL. It was shadowed in the last year by the Megapath deal. In fact, it has been all Megapath news that I have seen in this CLEC sector. NEN seems to be missing the boat on G.SHDSL. For a company that relies on its copper plant access, it seems to be missing the boat on Mid-Band Ethernet as a means to jump the T1 chasm and compete in the business bandwidth war.
New Edge has a good channel strategy with no channel conflict.
Launching the AX platform was a great positioning move. Following the idea of the smartphone apps stores, the AX was a chance for cloud partners to offer services on the New Edge Network in a "private cloud". Much different than the public cloud approach of so many today. It needs to add a number of partners in the data backup/storage space, merchant credit card processing, POS and business applications. I don't mean a connection to Salesforce, but more like practice management software, point-of-sale software, and other applications that are business process requirements for companies.
New Edge has a strong retail presence, showcasing itself as a PCI Compliance expert. It could take this a step further. Taking Skype's idea of partnering with Citrix for conferencing, NEN should partner with Citrix for POS software. Then when the bundle includes POS, merchant card processing, a SIP trunk and video surveillance over the MPLS network, agents can offer a turn-key solution for the retail sector that New Edge Networks already chases.
This integration of 4 CLEC's will be about how well the final entity, EarthLink Business, can leverage its assets: current customers; fiber network; collocation footprint; and channel partners. The back office system integration is another story and will certainly make the rest of this year uncomfortable in many areas: ordering, billing, provisioning, and commissions - while all of it moves to one system.
The future of EarthLink Business depends on whether they come to market with the same old products that ONE and Deltacom struggled to sell or if it develops new product offerings and bundles that will stand out from the CLEC competition. Brand Relevance is the key to the future. PAETEC attempts this with energy and MSP plays. With PAETEC, XO, Megapath, AireSpring, Windstream Business, Broadvox, Level3 and more all clamoring for business, EarthLink needs some unique ideas.
Deltacom hasn't marketed its MVNO play. Moreover, it is a move that Cbeyond was first to market with; now Tele-Pacific is also selling. Yet, it is a start in the business bundle program. The question becomes What next?
Like Cloud, Unified Communications, and Convergence, the CLEC space is filled with me-too offerings. Not just the resellers either. Even the facilities based CLEC's offer the same boring products that they have for years. Calling it a Dynamic T1 or IP-Flex doesn't make it sparkle. At the end of the day it is a T1. And we are near the death of the T1. To the business owner cable broadband speeds are faster and cheaper than T1. Is a T1 even adequate for a business that is moving deeper into cloud apps? And how significant is Internet Access to a business today?
Thousands of collocations when you count Deltacom, New Edge and ONE. That's a large copper footprint for Mid-Band Ethernet to reach a large footprint of businesses (prospects). But what is the Value Proposition?
After spending two days at Enterprise Connect where everyone was shouting UC, Cloud and Collaboration without being able to define it, clarify it or make it concrete in any way, I feel that too often in our industry we forget that we need to stand out - like a Kindle or a Prius - and have a tangible benefit and value to our intended target market. Another example, if your press release is titled Enterprise offering, then you should not be talking about businesses with less than 250 employees. It's confusing.
This is a perfect opportunity for EarthLink as most of the big boys are also integrating acquisition (Windstream, Qwest-CenturyLink, Paetec). It's a chance to be loud and stand out. (By the way, I would love to help you figure it out. I have plenty of ideas how to go-to-market; on bundles; on channel; and on sales strategy. Call my office at 813-963-5884).
]]>So my panel this morning on Trends and Future of VoiP/Telco 2.0: the Emergence of Cloud Telephony with Cbeyond and Dialogic was standing room only. The slide deck is here:ITEXPO-East-2011-Emergence of Cloud Telephony.
We discussed the trend of SMB to move to the Cloud for not just Voice. We hit on deployment, security, Fax over IP, and benefits. One of the big benefits is that Cloud (or Hosted PBX) takes the technology out of the way for small businesses. No upgrades. No hardware. Just buy and use. And you get more from Cloud that if you had premise based, because buying call recording, IVR and ACD appliances is big money.
Why Cloud now? As yesterday's panel explained: ubiquious broadband, economics, lack of tech skills in workplace, and doing more with less - all lead the SMB space to at least look at Cloud. Add in the media buzz and the fact that they already use cloud services like CRM, payroll (ADP and Paychex), Quickbooks online, email, Skype, and banking. The other factor is that sales folks are now asking about apps, something we did not typically do before. How many times has someone called you from Verio, GoDaddy or Rackspace to ask about your server or websites? You can't sell it if you don't ask.
]]>The changes are effective for all orders issued into Verizon's legacy system after 1/1/2011.
Commissions have moved from a Residual and Acquisition structure, to an all Acquisition (up-front) structure.
Commissions for all products will be capped, being paid as if they were 1-year-term deals.
Commissions are due to be paid 90 days after service completion date.
For commission purposes, Verizon is differentiating between customers that have no service at all and additional services sold to existing customers. New logo customers will receive a new logo incentive on Strategic and Foundational products.
Product Categories are:
The following products are now non-commissionable:
This means Agents will likely have to sign on with Granite Telecom or MetTel or another POTS CLEC.
To get paid for Dynamic T1 services, Agents will need to look to CLEC's.
For Frame or ATM, I would suggest offering MPLS from a number of carriers including AireSpring, XO, Level3, MegaPath and ACC Business.
For Dedicated LD, Global Crossing, Qwest and AireSpring (and other IXC) would love that business.
This follows the path that VZ is on to become just a Cloud and Mobility company. So if you aren't selling Cloud or Mobility, VZ is not the place for you. And even if you were selling Cloud with all the changes that VZ makes to the Indorect Channel, it probably still isn't the place for an Agent.
You know who really wins here? Comcast, Bright House Networks and TWC who are actively looking for Business Voice and Broadband bundles as well as Enterprise Voice via SIP Trunking.
]]>Bramson suggests that "People also increasingly are comfortable configuring their own solutions and are used to getting support from user communities. ... in many cases, "first line" support can be handled by FAQs, online chat, discussion forums and so forth." Personally, I find that most peopel can't even use Google or realize that web search engines can provide many answers. As an agent for over ten years, all calls start with me - billing, repair, FAQ - so perhaps the agent channel won't be eager to take up the sales of providers that will not be providing Tier 1 support.
I agree with Bramson when he says, "Customers can get their own bandwidth. What they can't do is pick the right cloud-based solutions." Most small business customers get broadband for Internet Access, which is not always the appropriate choice due to "best effort" service and the lack of SLA. Then an agent will sell them on Cloud, perhaps saturating that pipe. The calls will start.
This is the problem that the ISP's have dealt with years: anything attached to the Internet including unprotected computers, become the responsibility of the ISP. Now it will also become the duty of the agent.
Bramson, do you know why most agents and service providers chase the medium and enterprise space? It takes the same amount of time to close a sale; the sale is bigger; and these companies can take care of their own minor issues. This has been the issue with the mass small business space for quite a few years: expensive to support at rock bottom dollar. Few Agents can sell a cloud service and walk away. How much commission is there in cloud services to support even one phone call per week from the customer base?
For the last two years, I have been preaching that our industry has to get away from we-will-save-you-money, so I agree with him here: "We now talk about business problems."
"What will have to change is demarcation point, as well." Historically, service providers have not wanted to operate on the other side of the demarcation. They didn't want the truck rolls and the support burdens. That was why other businesses, such as the value-added reseller and interconnect business, arose. Those sorts of companies specialize in managing, supporting and fixing things that might break on the other side of the demarcation.
The question becomes will the commissions on cloud services be enough for the Indirect Channel - agents, VAR's, interconnects - to make a living while becoming the sales force, the provisioning department and Tier 1 support.
]]>Lowest price is about scale. And as we have seen, just getting to 10K customers has taken most providers a long time (like 6-10 years). So lowest price - and the accompanying we-are-going-to-save-you-money speech - just won't cut it today. It isn't about revenue. It's about margin and profit.
A&P Grocery chain filed for BK today. It has been around 150 years. It ran on 2% return since 1998. It had bonds out there paying 8%. That won't work.
You would expect a 150 year old to know that. Apparently not. But they aren't alone. Many telecom/ITSP companies just want to book revenue and subscribers. That's like counting Facebook fans. What does it get you?
Some of your newer ITSP companies are doing unique things.
Alteva is betting on Microsoft with its Hosted OCS/Linc/Sharepoint/Exchange offering. It is so betting on that Hosted UC type offering that Alteva is wholoesaling that option to other ITSP's. Alteva thinks video will be disruptive, especially what comes out of the MS LINC integration. At the same time, Alteva is also betting on Broadsoft Hosted PBX and software integration. "Apps are stickier" is what Alteva CIO William Bumbernick told me during an interview. He also told me about some big college wins of 22K and 65k seats - without naming the colleges. The bonus was that these were agent sales, which ties in with Bumbernick stating that the ideal agent had bigger customers/connections. Hosted UC isn't for the small business, which is why they target more than 100 seats.
Hosted UC, especially video, needs more bandwidth. (See latest FCC report about broadband speeds.) Companies now looking for Hosted UC are medium sized according to AMI-Partners. Likely that means they have a CIO-type person who can roadmap the integration required for Unified Communications.
In other sectors of VoIP, we have Google Voice testing Call Recording. Sure, it has limitations, but then Google Voice has it's own impediments for many business. But Call Recording that is integrated into the Hosted VoIP offering, like PBX-Change offers through its CTI equipment, is what businesses are looking for. Plus it is that feature that becomes advantageous - and sticky.
Leasing is another advantage. Cisco has its program where it is helping ITSP's that use all Cisco products. (And Cisco Capital is telling VAR's that this is the new normal.) PAETEC and Tele-Pacific are CLEC's touting their own leasing programs.
Other areas of VoIP that can lead to a market advantage are zero-touch provisioning that Cbeyond and IBM are working on; translation service that Telcentris is rolling out; and SMS Integration (that's text integration), so your inbox looks more like your smartphone inbox, is something Telcentris is also working on.
What else are buyers looking for?
Basically, integration and simplicity. By that I mean, Google Apps integrated with Salesforce and other apps that the user needs.
Security. McDonald's customer data was hacked this month. Customers expect that data will be secure - until it isn't. That could be the cloud over cloud -- How reliable and secure is that Cloud Provider?
The one thing that will be a liability for ITSP's and VoIP Providers: not owning the network. We are knee deep in the Net Neutrality debate and it doesn't look good. Plus the Duopoly has stated that if the CLEC's don't like the pricing deal: Hey, go build your own network then!
It's more than just the pricing. Without owning the network, providers have to pay extra for quality of service. That raises the rate or takes away from margin. We'll see how this plays out, because unless the ITSP is integrated into the business processes of its customers to the point that the ITSP is a technology partner, pricing will be a factor - and network operators will win more deals, albeit with thinner offerings.
To win against cablecos who are fast becoming very large providers of digital VoIP, customer service and integration with marketplace advantageous features will be required.
]]>The rural ILEC strategy has not been about Innovation or Fiber or Layer 7. It has not been about being a Community Technology Leader. (Well, in words, as the executives surrounded by digintaries hands over a check to a charity, but not in deed. An example would be how TWC and Embarq fought Wilson, NC so hard over the Greenlight FTTX project.)
So many missteps. LUS spent over $500k of taxpayer money fighting BellSouth and Comcast over its muni fiber project. I am confident that Duopoly spent close to $4 million with lobbying, misinformation campaigns, and legal battles. I'm not saying I am supporting muni fiber projects. I am saying that in both cases - LUS and Greenlight - it would have been a far better move to work WITH the community than to fight it. That's what I mean by Community Technology Leader.
It's not even about being a Technology Leader, because ADSL is not the best technology out there. In fact, Qwest and CenturyLink are both having troubles with DSL. CenturyLink only added 29,000 total and Qwest lost 52,000 DSL users.
Gary Kim writes that Telcos are poised to take more IT spend. From who? Would you move your IT services to a company that keeps shedding talent and knowledge? To a company that is far from a technology leader? Who will outsource it?
Look, the ILEC's HAVE to get into new revenue streams because they have mounting debt. Qwest has net debt of $11 billion. CenturyLink currently has about $1.2B in debt. Windstream has $6.6B in debt. VZ and Ma Bell have a combined $100B in debt. So does the Cable Industry. That's a lot of debt.
A couple of things to consider: new housing starts are down; foreclosures also mean bad debt for the Duopoly; about 65% of households already have broadband; 20-25% don't see the value. In other words, the growth may not be there as the pie - like the TV pie, the voice pie, and the cellular pie - is a zero sum game.
Qwest, CenturyLink, Windstream - all lack a cellular play. US Cellular, Metro PCS, Cricket or Leap would make for a smart acquisition- if the market would lend them the money for that purchase. (Of course, I have <a href="http://blog.tmcnet.com/blog/rich-tehrani/broadband/should-centurylink-be-focusing-on-wireless-not-copper.html"mentioned this before).
Following the Clearwire example of going Wholesale, maybe these ILEC's need to loosen up the way they deal with CLEC's. The revenue is less, but the margin is higher. Why? No sales & marketing effort; no customer support; and they still get to bill them with errors to make about 10% more annually.
The ILEC's want to be all things to everyone - residential, small business, enterprise, Fortune 5000, government, TV, broadband, big pipe, voice - and now IT support, managed services, cloud, collocation, hosting, and SAAS. As you continue to slash employees, how exactly does that work? When your company cannot even turn up a 100MB MIS circuit without three levels of escalation, how in the owrld would I think, "Yeah, I'm going to move my data and apps to them." Or I'm going to count on them to keep my office technology running. Huh?? There is a serious disconnect from the boardroom to the streets.
Cbeyond can integrate up the vertical because they already position themselves that way. It fits the brand. It fits the customer base that they target.
Everyone is thinking about how they can make money in the Cloud, but your biggest cloud players - Google, Amazon, Salesforce - stick to the knitting of cloud computing platforms. The ILEC's would have to make more acquisitions in the MSP/Cloud/Hosting space, integrate it enough to be billed on one bill and handled by a single sales force, but tech support will be a loo-loo.
Scale for the sake of scale is a bankers move. It's about numbers, money, looks good on paper. The next move the ILEC's make has to actually look good on the streets of the marketplace.
]]>If you are a VAR or telecom agent about to pick out a strategic partner to be the VoIP Provider that you work with, here are some things to ask the execs.
Are you a CLEC? It isn't a requirement to be a CLEC to deliver VoIP. However, if not, E-911 and porting will be done by a third-party. Find out who. This brings up the other similar questions:
Can they port numbers? Most businesses don't want to lose their phone numbers or toll-free numbers, so ask if (and where) they can port numbers. Many VoIP Providers back-end into Level3 who does the porting and hands them DID's (phone numbers). But you need to know the territory that you can sell in. Plus who is the RESPORG for transferring toll-free numbers? Maybe how is E-911 handled?
What is the Disaster Recovery/Business Continuity plan?
How do they handle Fax over IP? T.38 works for the two-page occassional fax, but if the business does a lot of faxes (lawyers, mortgages, etc.), TDM is the name of the game. T.38 requires a compatible fax machine, IAD, and network.
How is NAT Transversal handled? If some employees work from home behind a Duopoly broadband connection, how will the IP Phone connect to the LAN?
Not every IP-capable PBX can connect to every VoIP Provider. Some do Inter-operability testing. Some don't. A duct tape solution is to do PRI conversion of the SIP Trunk at the customer premise, but that will be messy. PRI is a standard with just two configurations in any class 4 or class 5 switch. However, SIP is a collection of about 30 RFC's - or think of it is 30 compromises that were never standardized for the industry. So you have to ask about inter-op between the SIP switch or SBC and the hardware before the order.
In a similar thread, you might want to ask how some special features that you are used to are implemented (if they are). For example, overhead paging, call park, message light, and other key system features. If they are important to the client (due to what I call Blinky Light Syndrome), you want to make certain that you explain the implementation to the business BEFORE you order.
Finally, how do you maintain Quality of Service for the VoIP packets? Is this On-Net via Private Line or MPLS? Or does this service ride the public Internet?
One for the Geek Squad:
What codec to they use? Important only so that you can talk about it with the geeky prospects, but also so you have a handle on the upstream bandwidth needed. FYI: G.711 (64 kbps); G.729 (varies); and G.722 (HD).
Obviously, there are questions about the VoIP Providers commitment to the Channel; how quotes and orders are processed; commissions; and the like, but those are the same questions you would ask a cableco, cellco or CLEC.
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