As a former investment analyst, I remember the feeling when stock market screens turn deep red. Such days turn one’s stomach upside down on a dealing floor. But even from the outside, such days are unnerving. The big question in the telecoms markets making the rounds at present is how the current market turmoil will affect the telcos. The 2008 financial crisis might provide some clues to what we could expect in 2011 and 2012, albeit in a less-pronounced fashion:
Consumer spending on communications will remain pretty stable. During the last financial crisis, spending on communications remained largely untouched by the consumer. We do expect a slight migration towards flat rates for customers with the desire for greater cost certainties and towards prepaid by customers with the desire to lower their communication expenditure. One obvious danger in times of turmoil are price wars between service providers. They can offer only short-term growth relief, but at a high cost. Resulting poor margins will be felt for a long time.
Businesses will put nonessential IT projects on hold or water them down. We have not yet seen evidence that COOs and IT departments have tapped the brakes on their tech buying, but they certainly have become more cautious. If the economies of the US or Europe go into recession — a possibility, but not our baseline forecast — that will hit IT budgets, as happened in 2008 and 2009. I am hearing from telecoms providers that their enterprise sales pipelines are already under pressure as customers slow their IT investments and look for ways to reduce their telecom services spending. Projects that support end-users with their sales efforts, e.g., sales force automation projects, are likely to be less affected than others.
What does this mean? Mobile, video-communicating, iWorkers will be able stay connected easily and affordably later this quarter when all of these components are generally available. Using the PC client, a very portable codec (about the size of a half-notebook at 8” x 5” x 1”) and camera, and a hosted bridging service, these iWorkers can connect to many standards-based, open video endpoints at HD resolutions. The required components are:
LifeSize Connections service - $360/year.
LifeSize Passport Connect codec and camera - $1,000 up front.
Mirial ClearSea client account - $480/year (this is available today, and it worked well when I tried it).
Customers expect the same experience every time they interact with a company — whether it be when researching a product, completing a sales transaction, or getting customer service — over all the communication channels that a company offers. They also expect companies to have an understanding of their past purchase history and prior interactions. Finally, customers further expect that each interaction with a company adds value to their prior interactions so that, for example, they do not have to repeat themselves to a customer service agent when being transferred or when migrating from one communication channel to another during a multistep interaction.
How many companies can deliver a consistent service experience in this scenario?
Three fundamental elements are needed to deliver a consistent customer experience across all communication channels:
A unified communications model. Companies need to queue, route, and work on every interaction over all communication channels in the same manner, following the company business processes that uphold its brand.
A unified view of the customer. Each agent needs to have a full view of all interactions that a customer has had over all supported communication channels so that the agent can build on the information and experience that has already been communicated to the customer.
Unified knowledge and data. Agents need to have access to the same knowledge and the same data across all communication channels so that they can communicate the same story to their customers.
The acquisition of Skype puts Microsoft into a commanding position in the consumer UC as a service market. To date, Microsoft has had little to say when Skype, Yahoo, AIM and others talked about enabling IM and adding voice and video. Their Microsoft Messenger voice services were less well known and less widely adopted. Today, Microsoft turned the tables, paying $8.5 billion to acquire Skype and its 170 million customers who value the “free” in free voice/video services so highly that they are willing to accept variability in quality of service and a service level agreement that specifically spells out, “Skype cannot guarantee that You will always be able to communicate with other Skype Software users, nor can Skype guarantee that You can communicate without disruptions, delays or communication-related flaws or that all Your communication shall always be delivered to other Skype Software users. Skype will not be liable for any such disruptions, delays or other omissions in any communication experienced when using Skype Software.” So, what did Microsoft get?
· 170 million customers whose online communications connections were one of the first social communications communities, and who are loyal to the Skype experience
· A worldwide peer-to-peer network that is proving increasingly able to deliver usable voice and video streams to PCs and increasingly mobile devices
· A portfolio of P2P technology media encoding algorithms with proprietary, non-public specifications
Forrester just published our latest forecast for the US market for business and government purchases of information technology (IT) goods and services (April 1, 2011, "US Tech Market Outlook, Q1 2011 -- Building a Springboard For Even Stronger Growth in 2012"), and we have raised our 2011 and 2012 outlooks: we now forecast 8% growth in the US in 2011 (up from our 7.4% forecast in January) and 10.3% in 2012 (compared with a 9.3% forecast earlier). For the broader ICT market (information and communications technology, adding in telecommunications services), 2011 growth will be 6.8% compared to a 5.1% rise in 2012.
Today, Microsoft begins life as a real competitor in the enterprise voice space. It has slain dragons (like enabling call access control and E911), faced mighty jousters (Miercom has called Lync a resilient, feature-rich, scalable UC system in their review), and emerged triumphant to compete for enterprise accounts looking for unified communications and collaboration (UC&C) solutions. Microsoft has amassed an impressive list of early adaptors — of both Office Communications Service Release 2 (OCS R2) and Lync — that includes large and small deployments with varied features/capabilities enabled.
Lync required Lighthouse accounts to use a wide array of services at significant scale, so I expect to see big accounts like Marquette University and the Dominican Republic Ministry of Education join current OCS enterprise voice users like Shell, Intel, AT Kearney, and Sprint on Microsoft’s “Customer Success Stories” page. In talking to many early adopters, I heard very few complaints about voice quality or reliability of the solutions, and:
Almost every firm using Lync is connecting employees together using Lync AND other Microsoft products.
Improved voice quality and reliability drives customer satisfaction and makes Microsoft’s story more credible in delivering UC&C solutions.
What do Umi, FaceTime, Qik, and Skype have in common? No, they are not failed attempts to win at Scrabble; they all are solutions for delivering consumer videoconferencing/calling with significant announcements in 2010.
10/6/2010: (today) Cisco announced Umi, a home telepresence offering using HDTV and cameras, and go-to-market plans with Verizon.
6/11/2010: Apple launched iPhone 4, touting FaceTime via Wi-Fi as a mobile consumer video calling solution; it announced continued go-to-market activities with AT&T as an exclusive carrier.
6/04/2010: Sprint announced the first 4G phone in the US, the HTC EVO and demonstrated the use of the Qik application to enable real-time video calling.
5/18/2010: Having announced partnerships with LG, Panasonic, and Samsung, at CES 2010 to enable embedded Skype video calling capabilities on consumer TV, Skype delivered the HD video camera that completes the solution offer.
It was common knowledge that Microsoft was releasing a new version of its communications and collaboration suite this year, but behind the traditional development cycle, the Microsoft marketing machine was operating at full speed as well. The name “Communications” has been replaced by “Lync” broadly across the traditional OCS product line, reflecting in my opinion, the fact that enterprise communications and collaboration is all about linking the people, processes, and thoughts that drive creativity. I am fond of saying that there is the verb “to collaborate” (what humans do to create new and better ideas together) and the noun “collaboration” (what many tech vendors sell in the form of collaboration platform software). By adopting the name Lync, I believe that Microsoft is taking to heart the requirement for communications software to link people, processes, and ideas, while SharePoint remains the place where those ideas are stored and shared on enterprise networks for companies that have adopted Microsoft’s unified communications and collaboration (UC&C) products broadly.
Beyond the name, I believe that the most compelling news is that Microsoft is now getting serious about its Microsoft Lync Server being ready to replace the private branch exchange (PBX). Many Microsoft execs — from Gurdeep Singh Pall, corporate vice president for the Office Communications Group, through BJ Haberkorn, OCS senior product manager responsible for voice — have spent extensive time telling me about the reliability and scalability of Microsoft’s voice services within its UC&C solutions. Microsoft continues to expand its feature set to compete robustly with other communications vendors. New capabilities of the Microsoft Lync Server include:
Rich presence providing access to things like location or user skills.
Today (August 9, 2010) Microsoft and Polycom made public their future-looking plans to continue to work together to develop and deliver unified communications and collaboration (UC&C) solutions. The two companies have worked together for some time in the UC&C market, for example:
Polycom has long designed and sold universal serial bus (USB) and voice over IP (VoIP) phones tuned for Microsoft’s Office Communications Server (OCS) server.
I’ve just returned from ShoreTel’s Partner Conference in San Diego, and while the weather was uncharacteristically gray, the executives were exceedingly bright. ShoreTel continues to capitalize on its SMB momentum with its “Brilliant Simplicity” tagline, emphasizing the ease of deployment of its solution for IT administrators, users, and buyers alike. ShoreTel executives were exuberant about their five straight quarters of revenue growth and committed to investing heavily in R&D and sales, highlighting current products (including the announcement of ShoreTel 11) and future directions for the company. Here are several significant items that ShoreTel stressed:
ShoreTel for IBM Lotus Foundations. Already available on the market for four months, this self-healing UCC appliance is easy to deploy, configure, and maintain. IBM has had problems developing market momentum with other partners — Mitel, NEC, and Nortel — but current CEO John Combs stressed that the value of the solution combined with the strength of ShoreTel’s partners would set it apart. I believe this appliance will be a winner.
ShoreTel Virtualization. Ed Basart, chief technology officer spoke about future ShoreTel deployments having the ability to be centralized or distributed depending on the customer’s unique communication patterns and needs as the software for server and switch components is ported to run on VMware. I think ShoreTel will do well to capitalize on the market interest in virtualization, and that capability will provide a calling card for ShoreTel at potential enterprise accounts as it continues to increase the potential scale of its solution.