All of the Factors are Here…

VoIP Supply colleague Cory Andrews pointed me to a posting by Andy Abramson, on the “untapped business VoIP market”. I could not agree more with Andy’s findings, based on this ZDNet Report, that 2007 and 2008 will be the year Business VoIP explodes. Since 2004, we have seen heavy growth in the residential VoIP, and to a certain degree the hosted VoIP sectors, mainly fueled by aggressive marketing by VoIP service providers chasing early adopters. Over the past six months though, the amount of inbound inquires from networking integrators, VAR, consultants, and vendors about business VoIP, has increased ten fold, further asserting the “interest” in the technology has finally caught up with the “implementation” aspect of the technology.

Provided that hardware vendors continue to develop easy-to-use and easy-to-implement solutions, coupled with reliable, high quality voice from service providers, there is no doubt that inthe next 12 -18 months we will see a mass migration to VoIP from businesses across the globe.

Cable VoIP Subscribers Nearly Doubled in 2006

Russell Shaw points us to an In-Stat study that shows cable providers nearly doubled the number of telephone subscribers. I for one, do not see this trend slowing anytime soon. According to the study, of the 9.4 million cable telphone subscribers in North America, 6.6 million are VoIP, that is an alarmingly high adoption rate, especially if you’re a residential VoIP pure play offering service through VoIP adapters.

According to Mike Paxon, In-Stat analyst, “In a growing number of markets around the world, cable TV operators consider telephony service to be an integral part of their telecommunications service bundle.” That means the triple and quadruple “plays” will continue to be heavily pushed and marketed to an existing customer base, and potential customers. With a “communications monopoly” the cable providers will be able to offer outstanding pricing, and the convenience of billing consolidation, which could spell big trouble for pure play VoIP providers, who other than offering an even lower price (and smaller margins for themselves) will barely have a leg to stand on.

Could the rest of 2007, and 2008, be the period that cable kills the pure play residential VoIP provider?

Skype Looking For Beta-testers For Their Enterprise Offering

Skype announced yesterday that they are looking for companies with a 1,000 or more employees to test an enterprise class version of Skype. According to the release, Skype Enterpirse Edition has all of the standard Skype features, in addition to:

• Enterprise Network Compatibility
• Company-owned Skype Name Creation
• Customisable to Corporate Requirements
• Direct Skype Technical Support
• Maintenance

Although this sounds like an excellent proposition, I wonder about the load that using Skype will take on an enterprise level data network, especially one that, presumably, was built to only handle PC related traffic. While it seems that Skype *may* have built some sort of technology into the enterprise client to alleviate this concern via their “enterprise network compatibility”, I know of 50-100 person companies that use Skype, who struggle with issues related to to voice/video calling on their PC data network.

If the load can not be adequetely handled by the enterprise network, it is fairly certain that latency, jitter, and packet loss will occur resulting in a less than favorable calling experience, and more than likely poor results from the Skype for enterprise program.

Microsoft’s Response Point Platform Has Many Shaking In Their Boots…But Should They Be?

Iotum CEO and blogger Alec Saunders has an excellent post about the impact that Microsoft will have on smaller players in the small medium business phone system marketplace with their release of their Office Communications Server, Office Communicator, and the Embedded Microsoft Response Point PBX. Alec makes some solid points in regards to Microsoft’s moves into this space and why small medium phone system vendors should be worried. The two most important points to consider?

Voice as just another application, and Microsoft is the KING of software.

I could not agree more with Alec’s points, but if I was a small business phone system provider, I would not as worried about Microsoft, as would with hosted service providers. Think about this for a second. If voice is just another application, and the current trend with applications is to have them hosted in “the cloud”, it makes sense that eventually there will be no need for a premise based phone system. Furthermore, as unified communications transitions to become unified business, the hosted service providers become hosted solution providers, delivering every business application; voice, erp, crm, etc. over an IP pipe. That is true unification within your business.

With the aggressive decline in the cost of bandwith, and the aggressive increase in bandwith pipe size, the reality of this scenario is very real, and is very scary for premise based phone system providers.

Why is the Hosted Model So Scary?

Because business and the way we work, is changing. The idea of a nine to five day is no longer. We work when we can. We need to utilize the “working moments” wherever they may be (home, hotel, car, plane, etc.) and premise based equipment DOES NOT allow you enough flexibility to truly leverage these moments. However, when your business tools are all hosted in the cloud, your office, your desk, becomes wherever it is that you happen to be. The hosted model is one that better suits our emerging work culture. In many respects the premise based is already dead – I use Skype more than my desk phones.

So yes, Microsoft is a threat to phone system vendors, but the even bigger threat to phone systems vendors is our emerging work culture, which revolves around working moments, that are only truly leveraged with flexible, accessible, on-demand, solutions which are only truly usable when hosted in the cloud. If I was a phone system vendor, my strategy would be to fight off Microsoft Response Point, and hosted solutions, by offering hosted-hybrid solutions that leverage both the benefits of a premise base solution and that of a hosted solution.