February 2000

Unified Messaging + DSL = Killer App

BY BRIAN STRACHMAN

The computer telephony industry had such high hopes for unified messaging … and why not? When it created unified messaging, the industry did exactly what it set out to do. It integrated. And the result — sometimes called integrated messaging — combined disparate methods of communication into a single, clean interface.

Unified messaging was seen as a product that would truly converge the worlds of voice and data by making voice messaging as easy to use as e-mail, and by allowing the user to sort and prioritize both mediums simultaneously. Unified messaging, if its supporters were right, would inevitably push computer telephony to the head of the class, where it would win the sort of attention usually lavished on that other wunderkind, the Internet. Ultimately, unified messaging would win both popularity and piles of money.

Unfortunately, unified messaging fell short of expectations. It never earned a gold star. Instead, it seemed destined for remedial work.

MISCALCULATIONS
Industry analysts have predicted unified messaging revenue in the billions, but as we have seen, the analysts have been far too optimistic. A case in point is the study undertaken by the Radicati Group, which was commissioned by Lucent about a year ago to study the relative cost savings a unified messaging system would accrue. When the study pointed out significant savings in both employee time and administration costs, the computer telephony industry waited for a tidal wave of business that just never arrived.

Dividing The Indivisible?
It’s possible the analysts erred by attempting to separate unified messaging from the other products that make it useful, voice mail and e-mail. In reality, unified messaging is more of a feature than a discrete product, and tracking its revenue is comparable to asking the auto industry how much money is spent on power windows. More often than not, it is included in a high-end voice mail package, and sometimes just given away as a sweetener to push a deal through. This makes the revenue difficult, if not impossible to track.

Underestimating The Negative Reception?
Another problem with unified messaging is its implementation. It’s exceedingly difficult to convince already overworked IT managers to add something else to their plates. And even when they agree to the increased responsibility, the ultimate deal breaker is usually price. Unified messaging systems are typically more expensive than standard voice mail and e-mail packages, and the only justification to paying more are the time saving benefits gained from accessing a single message directory, as well as simpler system administration.

SERVICES IN THE EQUATION
Given the hassle costs, implementation issues, and probable forklift upgrades, some people in the industry have turned their attention to service provider unified messaging. The idea is that it is simpler, easier, and just plain better to have a service provider handle both a company’s (or a consumer’s) e-mail and voice mail.

The Pluses
Wouldn’t it be easy to simply type in a URL, log on to the system from anywhere in the world, and have visual access to e-mail message, voice mail messages, and sometimes even faxes, all on the same screen? On-line unified messaging would be a product that would appeal to both consumers and businesses. Consumers could easily access their messages from their home computer, and businesses would save money on costly equipment as well as prevent the IT manager from installing anything else on the desktop. It would all be done through a standard Web browser. It sounds great, but as usual the devil is in the details.

The Minuses
The problem is bandwidth. How many businesspeople in today’s world use file transfer protocol (ftp) to share their spreadsheets and slide presentations? The answer is almost no one, because it’s simpler and faster to just use e-mail. For most offices, e-mail is the de facto method of document transfer.

Unfortunately, the business demographic most likely to make use of a service provider unified messaging system is the small to medium office, the same demographic least likely to have a high speed Internet connection. The same goes for home consumer users in that the downloading of voice messages takes just a bit too long.

For most consumers on a dial-up connection (the vast majority), it takes upwards of 30 seconds to download five minutes of voice mail, depending on the type of compression being used. That’s just too long, and what’s worse is that most people will have to turn on their computers, wait for Windows to load, dial-in to the Internet, and then finally deal with the download time. It just seems quite a bit easier to slap the big button on the answering machine with the flashing light.

THE ANSWER
The answer is DSL, which is also known as digital subscriber line. DSL is a method of delivering increased bandwidth, and sometimes extra phone lines, over standard copper connections while maintaining the ability to carry on a voice conversation.

For consumers, DSL means a super-fast Internet connection without any fancy new wiring, which won’t interrupt standard telephone service, thus eliminating the need for an extra phone line. For businesses, DSL means multiple voice lines at a fraction of T-carrier pricing, and bandwidth that can be dynamically assigned for data.

The availability of DSL is very limited at present, but Cahners In-Stat Group has forecast DSL line growth at a CAGR (compound annual growth rate) of 63.7 percent over the next five years. DSL is coming, and with it the opportunities for new revenue.

The first, best opportunity for a service complimentary to DSL is unified messaging. DSL will initially find its way into the small business and home consumer market, exactly the demographic that would find service provider unified messaging appealing. DSL solves the problem of bandwidth lag-time when downloading voice messages in the home or office; its high-speed connection will make the messaging seem instantaneous.

The same philosophy applies to e-mail document transfers. Although the files may be traveling through the service provider, DSL service will create the illusion of sending files across a high speed LAN.

SUMMING UP
DSL solves the age-old answering machine versus voice mail dilemma. People like answering machines because people are impatient, and they don’t like having to wait even a few seconds to check their messages. Because DSL is an always-on technology, the computer can be left on to receive messages 24 hours a day, and the lazy consumer has to only peek at the computer screen to see any e-mail messages, voice mail messages, or faxes. For these reasons, DSL is an outstanding medium in which to deliver unified messaging, and paired together the two truly make a killer-app.

Brian Strachman is industry analyst, Voice and Data Communications, Cahners In-Stat Group. To correspond with the author, please send your comments to brians@instat.com.