I am often asked and wonder myself where the eleventh year will take us. There are conflicting accounts of where VoIP is as an industry. On one hand, the term VoIP is everywhere from newspaper covers to television ads; on the other, market researchers are intent on telling us no one knows what the term VoIP means. They suggest perhaps VoIP is a type of vodka or one of those inexpensive cars China will be sending over to the U.S. by the boatload.
My take? Who cares? Does everyone need to know what VoIP is? No. Certainly information technology departments and telecom managers need to know, but the general consumer may not need to know right away. Each year, I speak in front of thousands of telecom and datacom professionals in the U.S. and Canada, and they all know what VoIP is.
I was reminded of this controversy recently when a young relative of mine (details omitted to ensure a Happy Thanksgiving dinner), who is about as tech-savvy as a typical grandparent, asked me: Rich, what is an iPod? Upon hearing my response, my relative then added, Oh, I would like one for my next birthday. The truth is that my relative neither really wanted, nor really needed an iPod. But, because it had become the in thing, it made sense to have one.
Before the term iPod was born, we called these high-tech music playing devices MP3 players. In fact, MP3 players have been around for as long as VoIP, but until Apple performed its magic on the industry, sales were relatively slow. iPod seems to have replaced the term MP3 player in our vocabulary. If a market research company were to conduct a survey regarding the term MP3, how many iPod owners would not even realize what an MP3 is? After all, they purchased an iPod, not an MP3 player, right?
More specifically, can most people define MP3? I would guess researchers would find the average consumer would think MP3 was a new video game or a late model car from Mazda.
The point is: Do you really need to know how to define MP3 or VoIP to use the service? Probably not.
Consumers are not likely to universally understand the word VoIP any time soon. This is largely due to the division in the market between companies using the term VoIP and those using other terms, such as digital voice, Internet telephony (thank you), broadband phone service, Internet calling, and PC calling. So, if the term VoIP is not fully understood now, does it really matter? It doesnt seem to. Industry initiatives to educate the market on what the term VoIP means are nice but, in my opinion, really dont do anything to help an industry that is growing at such rapid rates. If anything, it will likely be a waste of money that can be spent on service differentiation.
Lets look at some numbers that support my argument. Skype has over 200 million downloads and, between Vonage and cable companies alone, more than five million people are using VoIP service in the U.S.
The last year has just seen such a rapid explosion in VoIP service that I find it tough to imagine higher growth rates in 2006. Yet, if you start to think about it, 2006 may just set new growth records.
CallVantage Reborn?
For some reason, I keep thinking AT&T will be a wildcard in 2006, meaning the company could come out swinging with its CallVantage VoIP service now that the SBC merger is wrapped up. The CallVantage service went dark, for the most part, after the merger was announced and, in my opinion, if the company doesnt spend $50 million on promoting CallVantage in 2006, the future may be pretty bleak for the companys VoIP offering. Where do I come up with such numbers? This amount will be good enough to compete with current Vonage spend levels and, if you are indeed competing with Vonage, you need to spend on par with them. The whole concept of AT&T being outspent by a new entrant to the telecom market was unfathomable just a few years ago. VoIP is, indeed, changing telecom. Oh, and the cable companies have free advertising on their own networks and are unlikely to spend equivalent amounts.
Whats Next?
I am also frequently asked where I see the next business opportunity. I hear lots of great ideas. A few that I have heard more than once recently are hosted PBX offerings that are free for up to five users and then paid, or mobile devices with Wildfire-type functionality built in. But there are two areas that have been coming up over and over lately... They are SIP and IMS. You may have learned about these topics at past Internet Telephony conferences or in this magazine. Sessions focusing on either topic tend to be standing room only at all TMC events, in fact, and I wouldnt be surprised to see either of these technologies outshine VoIP at some point.
You probably know that, here at TMC, we do our best to be innovators. We launched the first magazine in the call center space in 1982 about seven years before the term call center was even invented! Furthermore, we launched the first magazine in the VoIP space in 1998.
The SIP Opportunity
In the tradition of being on the leading, sometimes bleeding, edge, we are once again throwing our hat into the ring in this case, two hats. We are launching, in January of 2006, a publication simply called SIP Magazine, which will be devoted exclusively to the concept of session initiation protocol. It will break SIP news and educate decision-makers on the tremendous opportunities the market offers. The target audience for the publication is developers, enterprise IT and telecom departments, and service providers of all kinds.
The IMS Opportunity
Of course, SIP is mature enough that it has spawned new industries of its own. IMS, or IP Multimedia Subsystems, is a market that uses SIP as a protocol to connect wired and wireless networks. Furthermore, it allows rapid provisioning and delivery of new and exciting services. But this market is confusing. There is too much hype and not enough facts, which is exactly why we need IMS Magazine to help sort through what is fact and what is fiction.
SOA COA Service-Oriented Architectures Come of Age
Another major trend in the market is the move towards Service-Oriented Architectures (SOA). Wikipedia describes it as a software architectural concept that defines the use of services to support the requirements of software users. In a SOA environment, nodes on a network make resources available to other participants in the network as independent services that the participants access in a standardized way. Most definitions of SOA identify the use of Web services (i.e., using SOAP or REST) in its implementation. However, one can implement SOA using any service-based technology.
As telephony becomes an application in an enterprise, IT departments will expect IP PBX vendors to allow open access to their core functions. Sphere Communications, for example, is a company focusing extensively on its ability to allow an enterprise to access call control, stored media, presence, and other features.
MVNOs
Another idea worth exploring is the MVNO opportunity. If you have an affinty group or a unique content offering, you can resell phone service and make good money while doing it. ESPN, Disney, and perhaps eBay are companies we can expect as likely suspects to do well. Imagine if eBay links its Skype acquisition with an MVNO play
SVNOs
Speaking of MVNOs and VoIP, TelTel announced a new concept called SVNO, which stands for SIP Virtual Network Operator, allowing others to resell their VoIP service.
JiTC
I also expect the Just in Time Communications market to do well in 2006. I am fielding a number of calls from companies such as Iotum, Orative, and others touting their growth in the JiTC market and it is pretty exciting. Others, too, play in this space, of course companies like Avaya, Microsoft, and Vonexus.
What is Next...Really
I routinely get calls from VCs who ask me what the future holds for VoIP and I can be nothing but optimistic. Barring unforeseen geopolitical events, it looks like smooth sailing. Indeed, the biggest threat is from free calling eroding business models faster than we imagine.
In the end, if you are in the telecom business selling minutes, you need to find ways to sell more services customers will be willing to pay for. There are going to be many ideas for new services some will do exceedingly well, while others wont make it. But the bottom line is that telephony providers have to continue to look for new ways to generate revenue.
Speaking of the future of VoIP, the first show of the new year will be Internet Telephony Conference & EXPO East, which has grown out of its previous venue and is now in the Ft. Lauderdale Convention Center. It will be held from January 24-27, 2006.
If you havent previously attended ITEXPO conference, you should (and, if you have, you should come back). We have offered a guarantee on our conferences now for four consecutive shows and have had no one take us up on it. As we have been saying for years, TMC conferences are the most educational in the industry. Hopefully, youll come check the show out for yourself. I look forward to seeing you at the show! IT
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