This article originally appeared in the December 2010 issue of INTERNET TELEPHONY.
The economy has been the overarching theme for all industries in 2010. But despite the challenges that it created for many businesses and individuals, there were many important and positive developments this year on the communications front in general, and related to VoIP and unified communications in particular.
Douglas Page, manager of global sales at Interact, which provides IVR application development and online charging and prepaid rating solutions, says the economy is still a factor. In this environment, he says, time to market is even more important. He adds that while many companies are trying to gain an advantage in this environment, others are sitting still.
Here’s a look at the movers and the shakers in the communications space, and the new solutions and initiatives they spawned and moved forward in 2010.
Tablets Blow the Lid Off Computing
This year started off with a boom when, in late January, Apple unveiled the iPad.
“iPad is our most advanced technology in a magical and revolutionary device at an unbelievable price,” said Steve Jobs, Apple’s CEO, in introducing the tablet computer. “iPad creates and defines an entirely new category of devices that will connect users with their apps and content in a much more intimate, intuitive and fun way than ever before.”
The $499 device, which features a color 9.7-inch touch screen, can enable users to browse the web, read and send e-mail, enjoy photos, watch videos, listen to music, play games, read e-books, and interface with other applications.
But because the iPad looks like a bigger version of the iPhone (and without calling capabilities) and doesn’t have any capabilities (except the touch screen) not already found on your standard laptop, it led many industry pundits and other observers to scratch their heads and wonder whether this new device really had a particular purpose – or, more importantly, a market.
The market quickly answered at least the second question as sales of the iPad went through the roof and other high-tech companies including Avaya, HP, Samsung and others scrambled to bring their own tablets to market.
According to Gartner, the iPad will propel the worldwide sale of media tablets to 19.5 million units this year. The research and consulting firm expects tablet sales to increase 181 percent to 54.8 million units in 2011. Gartner and IDC also have indicated that the rise of the tablet may be putting a damper on PC sales as both consumer and business users debate whether to buy personal computers or to instead embrace the tablet.
“I’ve had lots of discussions with people about what iPad can be used for in organizations, but very few of them involved a well-defined business case,” Gartner’s Nick Jones blogged in October. “As I’ve said before, the current iPad is functionally feeble relative to a decent laptop; there are many things you just can’t do adequately on one. They’re more content consumption devices than content creation devices. So the number of employees for whom the iPad is a viable laptop replacement is small. There are certainly some people who could use an iPad as a PC substitute, maybe students, doctors, sales staff, and so on. But these are minorities in most organizations. For 95 percent of employees with PCs it makes no economic sense to buy and manage a third device in addition to a smartphone and a laptop.
“However, this will change if organizations continue to shift applications to the cloud, because then the endpoint becomes increasingly irrelevant,” he adds. “So over time iPads and similar devices will become more viable PC replacements.”
Beyond that, Steven Johnson, president of Ingate Systems, says that the introduction of the iPad and similar devices is another step toward unified communications.
The iPad, and the iPhone before it, also have pushed companies throughout the communications space to re-examine their solutions and try to focus more on products and interfaces that are both intuitive and fun to use.
“It used to be about function,” notes Ernie Wallerstein Jr., president of Zeacom. “Now it’s also about form.”
Christian Von Reventlow, vice president of new products at Avaya, says that using fun products and user-friendly interfaces to collaborate can make such interaction a pleasure.
That was the goal of Avaya when it set out to build the Avaya Flare Experience, which is the interface for the Avaya tablet and is expected to be used on other devices in the future.
Another interesting and potentially important development in 2010 was Microsoft’s introduction of PBX functionality within its Office Communications Server 2007 R2 product. While the software giant in unveiling this capability didn’t put the emphasis on the fact that it could ultimately kill off the PBX as we know it, that point was not lost on many news organizations and industry analysts.
This quote, which Tom Keating of TMC/INTERNET TELEPHONY delineated in his blog earlier this year, puts that possibility in stark relief: "Office Communications Server 2007 R2, debuting just one year after the Microsoft unified communications launch, highlights the pace of innovation that is possible with software," said Stephen Elop, president of the Microsoft Business Division at Microsoft. "This new release puts Microsoft on a rapid path to deliver voice software that does much more than a network private branch exchangeand with much less cost."
The potential savings should make this solution interesting not only to the large enterprises for which Microsoft has noted the product is targeted, but also to small and medium businesses, according to analysts. The fact that the solution is all software based also should help usher in a new age of unified communications.
Zeacom President Ernie Wallerstein Jr., says that’s great news for companies like his that are working to push IP technology and UC forward.
“Microsoft getting in now will make the industry much more application centric,” he adds, opining that the entrance of Microsoft in this space will have an even more earth-shaking impact than did Cisco’s move before it.
Gurdeep Singh Pall, corporate vice president of Microsoft’s Unified Communications Group, recently predicted that in the next three years UC will become the norm in business communications, with more than half of VoIP calls at work including more than just voice, “and your communications client will enable UC with more than 1 billion people.
“Three years from now, new applications written by corporate developers, system integrators and software vendors will be communications-enabled by default,” he added. “We predict that three out of every four new business applications will include embedded communications.”
Collaboration, Social Networking & UC Take Hold
That theme dovetails nicely with the themes of collaboration and social networking, which INTERNET TELEPHONY sources say took hold even more strongly this year.
“Even though voice is the No. 1 app, being able to do IM, chat, etc. so people can message back and forth to get a problem solved is critical,” says Bill Soto, sales manager for the U.S. and Canada at Xorcom. “Collaboration is big.”
Huw Rees, vice president of business and channel development at 8x8, agrees, adding that in 2010 he saw increased adoption of UC and hosted PBX services in the enterprise and federal government markets.
Joe Staples, chief marketing officer at Interactive Intelligence (News - Alert) Inc., adds that social networking is becoming a key component of our interactions, both in terms of our personal lives and, increasingly, in the business world.
He notes that 77 percent of 18 to 24 year olds have profiles on social networks. For those in the 25 to 34 age bracket, that percentage is 65 percent. And just more than half of the population between 35 and 44 are into social networking. All told, 139 million people have Facebook profiles – that’s a whopping 44.7 percent of the population.
That probably explains why so many top brands are on Facebook too. Staples said that list includes Xbox (with nearly 3 million Facebook fans), Best Buy, JCPenney, Playfish, Southwest Airlines, Taco Bell, Verizon Wireless and Walmart.
Even more shocking is the fact that there are 160 million Twitter accounts worldwide, says Staples. There are about 90 million tweets a day, which is a huge jump from the million tweets a day about two years ago, when only 5 percent of U.S. consumers had any knowledge of Twitter.
Staples says that he, like many of us, thought Twitter might just be a flash in the pan.
“I was so wrong,” he said. “It’s amazing to see how it’s become part of our vocabulary” and way of life.
“It is really here to stay,” he continues. “So how do we as businesses harness it, use it to our advantage, and not turn into a disadvantage for us?”
Video on the Verge
Videoconferencing is expected to the next big thing in unified communications.
It’s already gotten bigger and better through the introduction of telepresence solutions from such companies as BrightCom, Cisco/TANDBERG, LifeSize, Polycom, Vidyo and Vu TelePresence.
At the same time, video has become more accessible via desk phones introduced by some of the above-mentioned organizations and others, including snom; the availability of mobile videoconferencing applications from some of those same companies as well as Apple, which delivered the FaceTime video application with the introduction of the iPhone 4 this year; and video calling services from such companies as Skype.
Jim Cantalini, president of High Speed Video, which offers ClearVision, a standards-based videoconferencing service, says videoconferencing is expanding beyond the executive suite and beyond conference rooms. He calls it the “democratization of videoconferencing”
Steve Vonder Haar, research director with Interactive Media Strategies, adds that interest in business video and demand for video-enabling technologies continued to grow in 2010.
“As illustrated by Cisco's acquisition of videoconferencing giant Tandberg, large technology companies began investing more heavily than ever before in developing and delivering video-based communications solutions to the enterprise,” Vonder Haar says. “Continued sluggishness in the economy did not hamper investments in video technologies during the year. Indeed, pressures on travel budgets combined with the need to enhance work day efficiency prompted expanded use of communications platforms incorporating video.”Most notable was the growing demand for telepresence solutions, as “a variety of vendors jumped onto the telepresence bandwagon, offering a range of solutions designed to make telepresence more affordable and – for some – making the potential of desktop telepresence a reality,” he adds.Roger Farnsworth, senior director of VSG solution strategy at Polycom, says it’s interesting to see the slow growth and appreciation in video. While videoconferencing has been introduced to great fanfare in the past, he adds, he believes its time has come.
“Maybe this time it is different,” he says, noting that he’s seen people on video calls at the airport using tools like FaceTime, but that videoconferencing can also help some business people stay away from the airport and in their own offices to conduct meetings with far-flung colleagues.
“At Polycom we’re going to focus on unified communications, we’ve been talking about that for a while,” he says. “We’re walking the walk now with voice and video being combined.”
Pulling Together Through Federation, Interoperability
Of course, communications and connectivity can only go so far if they exist on technological islands. To get to mass market you need the ability to connect and communicate with a broad community of individuals, networks and, preferably, endpoints and other gear. That’s probably why we’ve heard so much about federation and interoperability this year.
In late summer, a handful of vendors came together to form the Unified Communications Interoperability Forum, whose aim is to unify what they say is a fragmented but vibrant UC ecosystem.
As companies like Polycom push the benefits of HD voice, we also saw XConnect announce an HD voice peering federation in an effort to make wideband audio a mass market phenomenon.
Another important development on the interoperability front is the SIP Forum’s (News - Alert) work on SIPconnect, which specifies a reference architecture for SIP trunking, narrowing implementation rules and guidelines around SIP implementation. Ingate’s Johnson says that the release of SIPconnect 1.1, which is expected by the end of 2010, will be a big step toward standard SIP trunking implementations.
On the carrier Ethernet front, 2010 saw various companies, including startup CENX, Equinix and Telx, launch carrier Ethernet exchanges. Nan Chen, CEO of CENX and president and board director of the Metro Ethernet Forum, explains that CENX offers a portal through which members can see what carrier Ethernet services, at what speeds and other parameters, are available, so other carriers purchase connectivity where and when it’s needed. And CENX does translation mapping between different tags or classes of service.
Jim Theodoras, director of technical marketing at ADVA Optical Networking (News - Alert), says that the launch of CENX was great validation of the MEF’s carrier Ethernet specification, but that as a result Ethernet services will become commoditized.
M&A Makes a Comeback
But for many carriers and equipment companies, simply banding together through industry groups or individual partnerships was not enough to meet their aspirations for broader reach. That led many this year to do mergers and acquisitions.
The Wall Street Journal recently reported that telecommunications this year has been the busiest market for M&A, followed by the financial services sector.
As discussed in last month’s INTERNET TELEPHONY cover story, combinations of business-focused telephone and data service providers looking to expand their fiber assets and service portfolios have been widespread this year. On this front, 2010 saw CenturyLink announce plans to buy Qwest for $10.6 billion; PAETEC move to capture Cavalier; Lightower Fiber Networks buy Lexent Metro Connect and Veroxity Technology Partners; the combination of Covad, MegaPath and Speakeasy; the merger of Airband and Sparkplug; Windstream’s acquisition of Q-Comm subsidiaries Kentucky Data Link and Norlight, as well as its purchases of Iowa Telecom and NuVox.
There was also a fair bit of M&A action among telephony/UC cloud providers.
For example, this fall Broadvox, in an effort that appears aimed at helping meet its cloud-based aspirations, announced plans to merge with Cypress Communications, which is known for its UC- as-a-service offerings. Around the same time, BroadSoft signed a definitive agreement to acquire Casabi (News - Alert), a provider of cloud-based content and messaging applications for the consumer market, for approximately $1.95 million.
Private equity firms also are expanding their communications-related holdings these days via acquisition. In October, Carlyle Group agreed to buy Syniverse Technologies Inc. for $2.6 billion and CommScope Inc. for $3.9 billion. The Carlyle Group is a private equity firm with more than 900 corporate and real estate investments in its portfolio, including Ethernet in the fiber mile equipment company Actelis Networks, mobile messaging and marketing outfit Air2Web, Internet business exchange business Equinix, and several other communications-related holdings. Syniverse provides mobile roaming, messaging and network solutions to more than 800 mobile operators, cable and Internet providers, and enterprises in more than 160 countries. CommScope sells wireless and wireline infrastructure solutions to business and service provider network operators.
Service Provider Pool Contracts, Expands
While M&A has been big among service providers, which would seem to shrink the number of companies hawking communications solutions to businesses and consumers, VoIP and the prevalence of broadband have at the same time lowered barriers of entry, enabling new providers to join the fray.
Indeed, Aculab’s Ian Colville, product manager, notes that there’s a new breed of service providers, including twilio and Voxeo, delivering communications as a service. And growth in SIP trunking, he adds, makes the move to hosted IP PBX or other hosted voice services easier.
Tom Skidmore of BillSoft adds that newer, non-traditional entrants in telecom services also include companies Best Buy and Walmart. Best Buy announced earlier this year plans to sell its own branded version of Clearwire 4G broadband services. Walmart sells prepaid services from all the big U.S. cellular providers and this fall announced plans to introduce a Walmart-branded post-paid cellular offer.
Prepaid Wireless Is So Money
But while Walmart is expanding to post-paid cellular, there’s a wireless movement toward prepaid, according to Dan Dooley, president of Sprint Wholesale.
He says 2010 saw more prepaid than post-paid subscriber additions, which he attributes to the challenging economy and availability of better prepaid phones.
The Move to 4G
Speaking of wireless, 4G – the latest version of broadband wireless technology – made some significant gains in 2010.
Verizon Wireless, the LTE poster child, expects to go live with LTE in as many as 30 major metropolitan areas by the end of this year. But it was MetroPCS Communications that grabbed headlines this fall when it was first to market with an LTE network launch.
AT&T, meanwhile, has been involved in trials of LTE this year, and recently disclosed plans to launch LTE commercially.
And Clearwire continues its rollout of WiMAX-based 4G services and reportedly is taking a look at LTE technology as well.
LTE is expected to be a game changer not only because of the higher bandwidth it delivers, but also because it’s entirely based on IP technology and is expected to avail service provider networks to the web developer community on a whole new scale.
Virtualization Creates Data Center Shift
As the rise of smartphones and tablets, the launch of more capacious networks and the move to cloud-based services move more applications onto servers at the data center, businesses and service providers have pushed for ways to host and manage those apps and infrastructure more efficiently. One important recent advance enabling that is server virtualization.
As noted by F5’s Alan Murphy in this month’s Virtualization Reality column: “According to IDC, 2009 was the year when virtual workload deployments exceeded physical workloads and 2010 saw a projected 28 percent increase of virtualization deployments. With enterprise IT adoption of virtualization bordering 50 percent for production use (according to some hypervisor-based statistics), there’s no denying that 2010 was the year virtualization became mainstream.”
The rise of virtualization has led many players in the IP telephony and unified communications space to join forces with virtualization specialists. For example, ShoreTel recently announced it has achieved VMware Ready status, which means its solutions can run in embedded VMware environments. That means ShoreTel customers as a result can further lower their total cost of ownership by reducing server requirements, and saving energy and space, notes Kevin Gavin, ShoreTel's vice president of marketing.
VoIP Rebuilds Its Rep
As discussed in the October issue of Unified Communications Magazine, a sister publication to INTERNET TELEPHONY, ShoreTel is just one of the many companies in the VoIP/UC space that registered good gains in 2010 despite the challenge economy.
Joan Citelli, director of corporate communications at 8x8, adds that VoIP is no longer “a four-letter word” to the investment community.
Of course, VoIP got a black eye on Wall Street several years ago as a result of the Vonage IPO, which was widely considered disastrous.
That’s starting to change, according to Citelli and Rees at 8x8, who note that this year BroadSoft also went public and that Skype in August filed for an IPO. Rees adds that some companies in the VoIP space, like 8x8, are starting to make some pretty good profits.
INTERNET TELEPHONY’s own Rich Tehrani earlier this year blogged about the planned Skype IPO, saying “I think the IPO route makes more sense for a number of reasons. You see the company is a perfect play for this economy – it lowers long-distance costs and also allows video, rich IM and social networking.”
Edited by Stefania Viscusi