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October 11, 2006

ITEXPO West 2006 Powers Up, State of the Industry Discussed

By Richard Grigonis, Executive Editor, IP Communications Group

The INTERNET TELEPHONY Conference & Expo being held at the San Diego Convention Center began picking up steam yesterday.

In addition to the keynote speeches and sounds of booths being assembled on the Expo’s exhibit floor, the IP Communications Business Summit was held on the convention center’s Mezzanine Level.

Moderated by Marc Robins, chief evangelism officer for Robins Consulting Group (RCG), an IP Communications firm specializing in marketing, consulting and research, a series of panel discussions and Q&A sessions with the audience were conducted.

Yours Truly was part of the first session, “Focus on the Corporate and Government Enterprise Marketplace,” along with Jon Arnold, principal of J. Arnold & Associates, a new market-research firm, and Ronald Gruria, Frost & Sullivan’s principal analyst for telecom, specializing in emerging communications.

“The three of us have seen the transition of communications technology from analog to digitial and digital to IP,” Robins started off. “We’re here to talk about the world of IP Communications for the enterprise sector, including corporate and government enterprises.”

Robins selected some talking points that represented the leading trends in the market, such as IP PBXs, open source, IP trunking, videophones, etc. He went down the list as each panel participant commented on market drivers, controversies, features and functions that are meaningful to businesses, and also what the investment opportunities might be in each of these sectors as they relate to the enterprise space.

“Overall the enterprise space is really coming into its own,” said Robins. “Originally, when the first 4-port analog IP board appeared out there, the enterprise was what was targeted. It was originally assumed that that's where the technology would stick and grow. As it turns out, the service provider market adopted and embraced IP communications, and VoIP in particular, and about three years ago the traction really began into the enterprise space, and all the prognostications that were made eight or nine years ago are finally coming true. It’s gotten to the point where, if an enterprise is looking for a new communications system and they don’t look at IP-based solutions, then they’re not doing their company justice. In 2005 the number of IP phone sets outnumbered legacy TDM phonesets. So, at some point IP communications will completely replace legacy TDM in the enterprise.

Jon Arnold asked for a show of hands from the audience, it was revealed that about 70 percent were from or sold to the enterprise.

“Service providers finally kicked in as more and more computing power became cheaper and cheaper,” I said. “Years ago, you had computing platforms that were expensive but not terribly powerful. To implement computer telephony applications such as IVR systems, fax servers and service bureau environments, was difficult. But with greater computing power and cheap broadband now available, things are slowly becoming evenly divided between service providers and enterprise IP installations in terms of staking out the enterprise space.”

As for open source, Robins said: “Competing with the ‘legacy IP PBXs’ if you can imagine such a thing, are the open source telephony solutions from companies such as Digium (News - Alert), PingTel and many ohters. What I’m hearing is that if there's a prospect out there looking for an IP communications solution for their business with 300 or 500 seats, Cisco could come in and quote a price of say, $200,000. But companies offering open source Asterisk (News - Alert)-based telephony solutions can up with a far lower price. We’re hearing about very large deployments of Asterisk, particularly in campus enviornments. The Nortels and Avayas of the world have something to worry about.”

At one point, Arnold said: “It took years to sell a million IP phones, then six months to sell the next million, then a couple of months to sell another million. There’s a real hockey stock growth pattern, and a lot of it is driven by the fact that we're now seeing economies of scale and pricing has come down. And Cisco has done a great job of bringing the IP phone to the mass market in the enterprise space, to make it affordable. But now open source is the next level of threat. There’s a disruptive notion out there for the PBX (News - Alert) vendors that, the sooner they realize that they’re in the software business instead of the hardware business, the better chance they'll have to survive, because the open source stuff, the do-it-yourself movement, the movement to browser-based applications, shifting basically from a hardware world to a software world and now from a hardware world to basically to an Internet-hosted browser based environment, is upon us. And this is the Web 2.0 space that's coming into play here. Open source has a way to go, but it proves that there are alternatives out there so that, if you place enough faith in technology and are willing to get your hands dirty a bit, there are tremendous options. An an exciting part of this stuff is the features, the way you can really juice these things up to customize their own environment.”

Guria, in answering an audience member who asked if video communications would require more infrastructure, said: “If you look at the old G711 codec, it’s about 64Kbps with a bit over overhead, which doesn’t generate that much data traffic per phone call. However, Cisco tells me that for every dollar’s worth of voice infrastructure upgrade made in the world today, there's a pull-through effect of three dollars on the data side. So I imagine the multiplier for video is five or six to one. Video communications will no doubt spur new expansions and upgrades to the world’s communications infrastructure.”

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Richard Grigonis is an internationally-known technology editor and writer. Prior to joining TMC, he was the Editor-in-Chief of VON Magazine from its founding in 2003 to August 2006. He also served as the Chief Technical Editor of CMP Media’s Computer Telephony magazine (later called Communications Convergence (News - Alert)) from its first year of operation in 1994 until 2003. In addition, he has written five books on computers and telecom (including the Computer Telephony Encyclopedia and Dictionary of IP Communications). To see more of his articles, please visit his columnist page.

(source: http://voipforenterprise.tmcnet.com/feature/service-solutions/articles/3043-itexpo-west-2006-powers-up-state-the-industry.htm)

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