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March 2000

Rich Tehrani Three Years In, We've Got An Industry

BY RICH TEHRANI

Go Right To: New Name, Same Great Content

This issue marks the beginning of the third year of publication for INTERNET TELEPHONY, and in the past two years we have seen the market go from nothing more than a promising young technology to a serious industry with the support of every major telecom and datacom company in existence. We at TMC, the parent company of Internet Telephony magazine, have seen and heard some amazing things in these last few years, and we've been in the center of many opposing viewpoints on the future of Internet telephony.

Many longtime (datacom and telecom) industry analysts said that IP telephony was just a pipe dream. Convergence, they said, would never happen because there would be no need to combine two networks that work well alone, into a single one. Publications in the datacom market would often write stories about how convergence couldn't happen in our lifetime. The story was that there was not enough end user support and the quality of service was awful.

Yet throughout this turmoil and the threat of government regulation, a group of hardworking people knew in their hearts that telephony was destined to travel over IP networks -- whether they be the Internet, intranet, extranet, or any other network. This group of people includes my own coworkers here at TMC who bring you magazines in the communications space as well as the various segments of the market that worked together, regardless of outside skepticism. These people were visionaries and deserve the success they are enjoying today.

Although I don't like to point to the stock market as a barometer of success for any industry, the fact is that Internet telephony stocks, whether they be carriers or hardware providers are doing extremely well. Examples of such stocks include iBasis, which climbed from an IPO price of about $16 in mid-November 1999, and broke $70 as I wrote this Outlook. ITXC, Net2Phone, and deltathree.com are also doing pretty well for themselves. In fact, ITXC has a market capitalization (the total number of a company's shares multiplied by the current price per share) of close to $3 billion while Net2Phone and deltathree.com have market caps of $2.5 billion and $1.1 billion respectively. A look at Internet telephony equipment stocks such as Clarent and Natural MicroSystems shows that these sectors are also doing very well.

Perhaps the best indication that the Internet telephony market is doing well is the fact that there are record earnings being announced by every sector of the market. I am not kidding Every step in the chain of the Internet telephony market is doing very well.

Enabling Technologies
Natural MicroSystems is a pioneer in the IP telephony market as they were the first DSP resource board provider in the traditional computer-telephony space to see the burgeoning IP telephony market's potential. Natural MicroSystems did have some trouble in the past year, missing earnings, but they have come back with a vengeance. In fact, NMS recently announced record revenue for the fourth quarter with a whopping increase of 43 percent over the corresponding quarter in 1998.

AudioCodes also had a record quarter with a whopping 182 percent increase in Q4 earnings versus the prior year. What is even more impressive is that AudioCodes has shipped close to 1 million voice-over-network channels in 1999.

Gateways
A step up in the value chain we have the equipment providers, those people that take the enabling technologies and package them for resale to corporations and service providers alike. One of the Internet telephony gateway providers making the biggest splash as of late is Clarent, and in the latest quarter, Clarent saw an increase in revenue of 215 percent over the prior year's corresponding quarter. This comes as a result of a total of 44 new customers signing on, bringing the total customer base to 220.

Service Providers
The number of minutes that Internet telephony service providers are carrying is growing exponentially. iBasis has exceeded 150 million minutes on their network in 1999 alone, and as pointed out earlier, the typical new Internet telephony service provider (ITSP) has a market capitalization in the range of one to three billion dollars.

After two years of involvement in the Internet telephony market, it is comforting to see that we are moving into the deployment phase of products and services. After reading untold articles over the years from "industry experts" about how there was no need for convergence (nothing to be gained), it is great to see that the people who had the vision to pursue building converged networks have succeeded and those that argued against it are silent.


New Name, Same Great Content 

We are more excited than ever to bring our first ever COMMUNICATIONS SOLUTIONS EXPO (formerly CTI EXPO) to our nation's capital for the second year in a row. This event is the first under our new name and we can't wait to host it again!

As the communications market as a whole begins to embrace Internet telephony, our new name -- COMMUNICATIONS SOLUTIONS EXPO -- is a natural progression for an event that captures all facets of communications, from the service provider, to the developer, reseller, and corporate end user.

As you may know, what separates TMC events from others is the quantity of live educational events that you will find on our trade show floor, free for all to participate in. We realize there are many trade show choices, and we make it easy for attendees to choose TMC events as the first place to go when looking for solutions in the communications marketplace.

ConvergeNET
One event that I think is most exciting is our third ConvergeNET, a multi-vendor interoperable IP telephony network right on the show floor. Having successfully demonstrated IP telephony interoperability through ConvergeNET at our last two events, we are very excited to add new companies to the interoperability mix. In fact this ConvergeNET will be the largest IP telephony interoperability demo at any event ever, hosting more than 20 participants. Before you make any purchase decisions in this market, make sure the companies you work with are interoperating with other industry players. In fact, be sure to look for the ConvergeNET seal of interoperability before making a short-list of vendors.

Internet Phone Center
One of the areas of the show floor that received a great deal of attention at our last show in Las Vegas in the Fall of '99 was the Internet Phone Center, a special area of the show floor equipped with multimedia PCs and the latest Internet telephony gear from Quicknet. Visitors to the Center will be able to use the Center to make Internet phone calls anywhere in the world, utilizing the networks of a variety of ITSPs (Internet Telephony Service Providers). The Center will provide attendees with the unparalleled ability to compare the quality and service of each ITSP - while enjoying FREE global calling.

Learning Centers
Perhaps the single event that embodies TMC events consistently since our very first CTI EXPO is our Learning Center(s), objective areas on the show floor demonstrating leading-edge technologies. There will be six such centers at this event with the most pertinent being:

ASPs: Consider the benefits of normalizing your monthly expenditures, utilizing network resources on an as-needed basis, and being free to concentrate on the networking chores that more concern you. ASPs, otherwise known as Application Service Providers, can accomplish all this (and more) for you. ASPs are a hot, new class of service provider that lets you "netsource" data and communications solutions. Find out more about this booming market at this brand-new Learning Center.

E-sales/E-service: Techniques for selling products over the Internet are becoming more and more sophisticated as Web integration technology advances. This technology also helps to improve service over the Net. Now, live agents can help during a customer's entire purchasing process, whether it is by chat, via a Web call-through button to a company's call center, or by many other methods. Check out how advancements in e-sales and e-service have revolutionized how buying decisions are made.

IP Telephony Testing Tools: With the perpetual explosion of the Internet and the continuing standardization of the IP protocol, new breeds of testing tools have arrived. Now, you can test how well a VoIP call performs, whether you're evaluating latency, PSQM scores, or other important voice tests. There are even Fax-over-IP testing tools available. Leading companies such as Hammer Technologies, Ameritec, Zarak, and Hewlett-Packard will test many aspects of IP telephony functionality. In this Learning Center, there will be enough diversity for users of any level to get a feel for this latest testing technology.

Next-Gen Wireless: IP is already becoming the universal wireless networking standard, and it also won't be long until Palm-based products merge with cell phones. In addition to telephony, IP wireless devices are becoming more and more sophisticated. Soon, they will allow you access to e-mail, the Net, GPS, a database of contacts, and myriad other features. Come see how far wireless technology will take us in its next generation of products.

TAPI 3.0: Advanced products, such as voice/data switches and PC-PBXs, use TAPI so that a PC can control most telephony and voice-mail functionality. You can dial, transfer, and conference calls from your PC. You can even play your voice mail from your computer. And all of this is just the beginning of what will soon be at your disposal. With the release of this latest version of TAPI (3.0), even more advanced communications solutions via the telephone, the computer, or even PDA devices may become as mainstream and easy to use as call waiting.

Of course, there are so many other reasons to come to COMMUNICATIONS SOLUTIONS EXPO (April 26-28 in Washington DC). For example, we are giving away dozens of valuable prizes such as Handsprings, digital cameras, and of course, a Jeep (courtesy of Cincom). I hope to see you at COMMUNICATIONS SOLUTIONS EXPO. Please register online immediately and save yourself the $50 onsite entrance fee.







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