There’s no debate that VoIP is growing. A recent Infonetics (News - Alert) report found that VoIP and IMS grew among carriers by roughly 30 percent last year, for instance.
But VoIP currently is in a situation where choosing and setting up business service is too complex while, at the same time, it is becoming too commoditized for the liking of VoIP providers looking to boost profits.
“Voice itself is a commodity. There's no loyalty to it. There's no profit in it,” noted industry analyst Dave Michels in a recent VoIP industry roundtable hosted by GetVoIP.
He said providers need to deliver more if they want to keep their customers and increase revenue. More means things like presence, video, mobility apps, and APIs, he said. The cloud is growing so quickly that channels have been getting by with just basic services.
This is the general consensus among the industry veterans on the roundtable, which included analysts and industry-watchers such as Irwin Lazar of Nemertes Research, Blair Pleasant of COMMfusion, Ron Gruia of Frost & Sullivan (News - Alert), and Brian Riggs of Ovum.
“There’s a lot of competition out there, and since many UC platforms are similar, price becomes the best way to close deals,” said Jon Arnold (News - Alert), principal at J Arnold & Associates. “As such, expect to see aggressive pricing, made possible primarily by the attractive economics of the cloud.”
Yet, there also is a countervailing trend toward a increasingly complex business VoIP selection and setup process. The panel agreed this needed to change, but it was a tricky situation since needs vary and VoIP is flexible enough to accommodate all of those needs.
“I think you are already seeing companies move to simplify Web-based ordering or even allow ordering through sites like Staples (News - Alert).com,” proffered Irwin Lazar of Nemertes Research. “But given the complexity, most purchases will require interaction with a sales team (and providers are already differentiating themselves on their ability to provide customized service). In addition, as the hardware providers move to the cloud, they need to maintain their sales channels.”
The consensus is that hosted solutions are making VoIP and UC easier to choose and use, and ultimately that’s probably the future for most businesses looking to opt for IP telephony. But the inherent complexity when you move beyond just voice really makes a difference in terms of rollout.
“The difference between SIP trunking and hosted IPT solutions manifests itself in the length of the sales cycle for the two solutions as well: the average length of the sales cycle for a SIP trunk is only roughly two weeks,” said Ronald Gruia (News - Alert) of Frost & Sullivan. “A business case needs to be made and the enterprise needs to evaluate it before making the decision of whether or not to embark on the hosted IPT path.”
Ultimately, he noted, the future for VoIP providers probably lies with customization.
Customization enables “the VoIP operator to command an extra premium versus the competition,” Gruia noted. “The differentiation also comes via a quicker time-to-deploy, expertise in related cutting edge technologies and proven ability to create value.”
Customized solutions for particular industries could especially help providers avoid the commoditization trap.
“VoIP is very flexible by nature, and you can take advantage of that by developing packages or suites of voice-based applications that cater to a specific type of business,” said Arnold. “For example, medical offices, retailers, or restaurants. By thinking of customers in terms of vertical markets, you can add value to VoIP that’s distinct for their needs, and once you find a niche, you can own it by continuing to add more features.”
More industry insights from the roundtable can be found here.
Edited by Blaise McNamee