New Era of Discrete Apps?

Many changes are possible as we move into an era of Web-based applications, built and accessed as Web services. On the demand side, users will be accustomed to a new way of buying and using software. On the supply side, we will see different business models. 

Especially for communications-enabled business processes, we likely will see more reliance on something we might call "discrete applications," rather than the more-monolithic approach we have seen historically, where lots of features were purchased upfront with the buying of a switch solution, for example. 

That doesn't mean every application is efficiently provided discretely. Generally speaking, large scale tends to dramatically tip the scale towards platform-based solutions. Conversely, low volume tends to tip the scale towards hosted, Web-based approaches. 

That is a pattern we have seen for services such as business phone systems, carrier switches and server farms, for example. If a provider or enterprise has high volume and lots of users, buying and owning switches and facilities tends to make more business sense than leasing or renting services or capacity.

Conversely, small entities with relatively low volume demand almost always are better off renting capabilities rather than buying and owning their own infrastructure. 

Roughly the same sort of economic logic should come into play in a new era where more applications are built and intended for use by relatively smaller number of users than in the past. The example already is seen in the broad consumer market.

Consider even broadly-purchased applications and services such as multi-channel video services. In an older paradigm, a single provider might expect 70 percent penetration. In a competitive market, even a successful provider might expect to get just 30 percent penetration. 

That changes the economics of network investment. Where once a provider might build a whole network and expect to get customers at seven out of 10 homes, now a provider has to build a network where ultimate penetration is three homes out of 10. that means shared costs must be borne by a considerly smaller number of actual paying customers. 

In the Web sphere, roughly similar sorts of phenomena are at work: in the vast majority of cases, any single application will have a smallish number of users. The opportunity for any single application will be quite small, compared to an earlier era where most people used a small number of relatively-standard applications. 

The good news is that all of the tools and infrastructure we now have will support robust business models even at relatively lower levels of end user demand. So one of the other implications is that we may be entering an era of vastly-expanded use of "discrete applications," custom built in many cases using pre-built modules or "primitives."

That in turn presupposes new ways of packaging, pricing, marketing, delivery and support, new ways of discovering needs and building solutions to match those needs. This means more discrete apps and fewer of the monolithic sort, even though some apps will continue to be relatively monolithic because they have mass usage. 

Adoption, Not Availability, is the Broadband Problem

What broadband really needs--more than money to build more broadband-- is action on the demand side, says David McClure, U.S. Internet Industry Association president. The reason is that only about one percent of Americans actually cannot buy broadband access if they want to. 

"We can now reach 99 percent of all households in the United States with some form of broadband," he says. "We are in pretty darn good shape."

The issue some policy advocates seem to be concerned about actually is not "availability" but rather "appetite" or other issues. Some potential customers might want broadband, but do not own PCs. Others might want broadband, but can't afford to buy it. Many potential users do not use PCs. 

About 25 percent of the U.S. population does not use the Internet at all, McClure notes. "Worse than that, they don't care if they don't get it."

About 51 percent of the non-users say the Internet is not relevant to their lives, McClure adds. 

It is true that 66 percent of the U.S. population now has some form of broadband at home. But that is a different matter than "availability." Cable modem service alone reaches 19 out of 20 homes in America, for example.

About nine percent of users have a dial-up connection. Of these, the majority cite price as the reason they haven't switched to broadband. 

"Broadband in America is in wonderful shape and if you hear differently, it is a lie," McClure says. "Adoption is the problem, not deployment."

That doesn't mean we should neglect targeted investment in some areas where broadband really is not available or where coverage is spotty, he says. But there are several demand side issues that must be tackled to stimulate more usage. literacy is an issue. PC ownership and training are issues. 

Investments in “smart networks” to enhance the efficiency of the networks and provide for advanced products and services also would be useful. 

"Ask a 'public policy' advocate to name a place where broadband isn't available," McClure says. "They don't know any."

"U.S. broadband infrastructure is ranked fourth in the world and rapidly improving," he says. "U.S. broadband adoption is ranked at 15th in the world and not improving."

The important point is that "we are 15th in terms of adoption, not availability."

36% of Social Networkers Want Access from TVs

A recent survey of over 1000 households conducted by ABI Research found that 36 percent of those who currently use social media on a regular basis say they’d like to access their networks on the TV screen.

Younger consumers were more interested in engaging with their friends through chat and messaging, while middle-aged respondents were more likely to be interested in more passive social networking behavior such as checking status updates. 

The most popular potential application for those over 50 who expressed interest in TV social networking was being able to see what their friends were watching on TV.

Not a Good Day for Arizona Cox Customers

Both broadband access and voice seem to be down across much of the state.

Time Warner Cable Grows Revenues 8% in Recessionary Year

How does Time Warner Cable perform in a full year of recession? By growing revenues eight percent, or $1.2 billion, over full-year 2007, to reach $17.2 billion. Subscription revenues were up eight percent($1.2 billion) to $16.3 billion. Video revenues grew four percent ($359 million) to $10.5 billion, benefiting from the continued growth in digital video subscriptions and video price increases.

High-speed data revenues rose 12 percent ($429 million) to $4.2 billion, driven by continued high-speed data subscriber growth. Voice revenues climbed 36 percent ($426 million) to $1.6 billion.

The rate of revenue units added slowed later in the year, though. That is in line with past recessions, when customers delayed adding more enhanced services. 

Still, Time Warner faces a problem in its legacy video business that telcos face in their legacy voice business. Time Warner Cable is losing "basic video" subs, as telcos are losing voice line customers. Time Warner Cable lost 119,000 customers in that category when some analysts anticipated 27,000 to 46,000 or so basic cable customer losses. 

Keep in mind, though, that these losses would likely have occurred even without a recession, as market share shifts away from cable and to telco video services are a secular trend that was underway before the recession. 

60% of Workers Use Social Networking Sites

About 60 percent of working Americans (18 years old or more) used one or more social networking sites at end of 2008, according to Compass Intelligence. About 35 percent of working Americans say they use Facebook, while 29 percent say they use LinkedIn.

About 60 percent of working Americans not using social networking say they don't use them because "it's not a good use" of their time. 

Conferencing Now the Lead UC Application, It Seems

I've been speaking on, and running, panel sessions on unified communications for some time, as have many of my other associates who follow UC. I've noticed a shift early this year: people now are talking a lot more about conferencing, and less about integrating voice, instant messaging,email,  mobile and fixed services. 

What that suggests is that "what is selling" is conferencing. It might, or might not, suggest a certain sluggishness of buyer response to the more-traditional pitches. 

Jill Taylor, product marketing executive for Verizon Business, says  "conferencing is becoming the lead product for UC." That's a switch. 

Verizon Business is one of the first global service providers to integrate audio and Web conferencing services across multiple leading IM services, including IBM Lotus Sametime Unified Communications and Collaboration, Microsoft Office Live Communications Server  2005 and the Cisco Jabber XCP, says Taylor. 

"I don't know that it is the economic climate solely, but it plays there," she says. The idea is to use a presence-based client to escalate into an audio or a net session, making the meeting experience more intuitive, instantaneous and flexible, Taylor says.

Sametime, Lotus, Jabber are supported. Also some additional integration: leader can launch other features such as Web moderator, a call management tool that allows you to visually see who is on a call, record a session as well. Better integration from the desktop. Lots more intuitive. 

The push for Jabber conferencing came from the finance and pharmaceutical communities, which are key Jabber user verticals.

The new tools are available immediately for U.S.-based organizations and are scheduled to be rolled out internationally later this year, along with Verizon audio and net conferencing integration with Microsoft Office Communicator 2007. 

Also, Verizon Business is calling the new features "spontaneous collaboration." The linguistic shift is important. "UC" is a reasonable provider-side description. But it doesn't necessarily resonate with end users. "Spontaneous collaboration" is better. From an end user perspective, it better describes "something I can do."

More 3G, But Majority of Users Don't Use Broadband Features?

Use of smart phones with full HTML browsers that offer a true Internet browsing experience increased steadily in 2008, according to comScore. 

So mobile browsing  grew 34 percent during

the year. But users on 3G networks grew 43 percent from November 2007 to November 2008.

So the percentage of 3G users using the mobile Web did not change over 2008. In fact, the percentage of 3G users who do not use the mobile Web might have slipped a bit. 

More Data, Though Impressionistic, on Small Business....

It has been my contention over the last several months that no matter what enterprises might be doing, small businesses are behaving in quite different ways. Trent Johnsen, SMB Phone executive, says he is hearing from Canadian VARs and business phone specialists that business is pretty much where you would expect it to be, at this month of any year, and over the last several months.

Microsoft Response Point executives say they are hearing the same things from their talks with U.S. channel partners.

Curious, isn't it? There are indications, some impressionistic, some more structured, that small businesses in North America are behaving in counter-intuitive ways. Sure, they'll be careful.
But there is some evidence of consistency and stability in their hiring of people, expansion of business and buying of communications technology solutions.

Nobody's safe anymore!

It's actually very funny to watch a dinner table full of bloggers whip out their mobiles and start tweeting and posting when somebody at the table says "hey, any of you guys ever heard of this company? They've done some really savvy stuff."

First of all its a dark room and then all of a sudden the backlit screens come up. Then the thumb typing starts.

Nobody's safe anymore!

Just a Couple of Compliments....

I have taken some ribbing this week at the IT Expo (nice job, Rich) on account of my tanned complexion, earned at the Pacific Telecommunications Council and while giving a couple of keynotes for the Alaska Telecommunications Association meeting (Well, most of the ribbing came from Andy Abramson, I'd have to say...some people just thought I looked relaxed...)

I will say a couple of things about our Telco 2.0 panel at PTC, where I shared a stage with Network IP (Jaduka), MetaSwitch and IntelePeer.

First, I have maintained for some time (and reiterated from the stage) that Network IP is the most underestimated company in the IP communications space. As far as vision, they get it. As far as company effort to make that vision a reality, they are doing more than is apparent on the surface. I like "old time" telephone industry companies that grew up on voice and now are trying really hard to make sure voice is even more relevant in the future.

I believe Network IP/Jaduka will startle some people, soon.

I got a chance to work with IntelePeer again at the IT Expo, and likewise continue to be impressed with how much thought the company has given to "a la carte" approaches to voice and communications applications. If you knew the company five years ago, you might not recognize it today. But more important is the thinking behind ways new applications using voice can be created in non-monolithic ways.

Finally, at least one or two people might have been surprised to see MetaSwitch on the Telco 2.0 plenary panel. But, likewise, I have known this company for a while. It is among the firms firmly established in the "old" business that are working really hard to be even more relevant in the "new" business. I believe we will see further signs of that effort this year.

There are some people who continue to say that old legacy telco companies will not survive the world that is coming, or should not. Well, that remains to be seen. But I suspect some people underestimate their ability to change.

Human creativity and grit are not to be found only among the ranks of the bleeding edge "Web" companies out there. Lots of people in the old "legacy" business are quite capable of leading a transformation and transition to something that will look quite different.

I also will say that my time with the ATA members points out just how demanding this sort of work is. One has to adapt to the advanced technologies, while at the same time gearing those tools to be used by service providers and their customers who might not care a whit for the coolness and cleverness demonstrated at the leading edge.

Silliyo.com

Those of you who are technical, check this out, when you finally can. Courtesy of Thomas Howe. For those of you who don't think you can start a new company like the one you just left, in 48 hours.

BlackBerry and iPhone: Winning Hearts and Minds

There's good news and bad news about user affinity for BlackBerry, iPhone or other devices. The good news is that such devices have made an intangible product--communications--quite tangible. 

To the extent that users "love" their preferred devices, there is a real bond, of sorts, with the experiences that in turn drive revenue for service and application providers.

It might be better, from a service or app provider perspective, if the emotional bond were more directly related to the "service" itself. But I doubt few human beings are emotionally attached to the provider of their "bit stream." 

So far, mobile devices are the closest thing the communications industry ever has developed to fragrances, clothing brands, auto brands, golf club brands, or just about any other item for which there is an important and compelling human attachment. 

It is an important breakthrough, which service and app providers then must surround with additional features that make the experience even more entertaining, fun, useful or easy to use. There is some distance to go, to be sure. 

But one should not discount the importance of the breakthrough: for the first time, there is a personal, tangible, "fun" and engaging expression of the value of the communications service. 

People use telephones and PCs. But they now "love" particular devices. This is a huge and important change.  As furntiture, street addresses, certifications, degrees, customer references and other tangible elements are proxies for what a potential buyer can expect in terms of "quality," so now devices are becoming proxies for what users can expect in terms of "personal" communications. The difference? Getting beyond "utility" and approaching "brand affinity." 

There are revenue and margin implications, as there always are when a brand can establish itself as representing some key value. 

Most Important Consumer Technologies: Not PCs or Mobiles

Though we sometimes forget it, the devices we rely on most are not mobile phones and PCs, but cars, clothes washers and dryers, air conditioning and other mundane things we don't even typically think about as "technology."

Someday, though, mobile phones and PCs probably will  be in the category of things we use everyday but don't necessarily consider to be "technology."

Right now, even air conditioning in one's automobile and TV sets rank higher on technology "needs" than PCs or mobile phones, though. 

What iPhone Has Done for AT&T

If surveys of ChangeWave Research members are any indication, the Apple iPhone has paid big dividends for AT&T, essentially allowing it to overcome a perceived “satisfaction” and “dropped calls” gap compared to Verizon Wireless.

But there also are signs the “Apple effect” might be waning, as stated buyer intentions are trending back in Verizon’s favor, possibly suggesting a saturation of the obvious iPhone market as Verizon brings functional substitutes to market. 

The December 9-15, 2008 survey of 3,800 respondents shows a very-close market share between AT&T, with 31-percent share, and Veizon with 30-percent share. As you might expect, Sprint Nextel has not yet fully solved its churn problem, showing a 10-percent share decline since the last survey, with T-Mobile unchanged at 10-percent share.

But Verizon handily leads all the others in customer satisfaction. Some 49 percent of Verizon customers say they are very satisfied with their provider. About 30 percent say they are very satisfied with AT&T. About 27 percent of T-Mobile customers say they are “very satisfied.” About 25 percent of Sprint Nextel customers say they are very satisfied. 

But there seems to be some movement in the churn area. Verizon had been the clear leader among users who indicated they were going to switch providers, and were thinking Verizon was the carrier they would defect to, at least until the introduction of the iPhone.

Since news of the iPhone introduction, the roles have reversed and it is AT&T that has had the upper hand in the race to win defecting users. But Verizon seems to be gaining momentum again. 

About 27 percent of respondents still identify AT&T as the firm to which users are thinking they will move. But intention to switch to AT&T is down four percentage points  from September 2008. 

At the same time Verizon, reported by 22 percent of respondents as the carrier to which they are inclined to move, has gained three percentage points since September 2008, a net swing of seven percentage points. 

There is encouraging news for Sprint Nextel on the churn front, as five percent of respondents indicated they were inclined to switch to Sprint Nextel, a gain of two percentage points since the last similar survey. 

T-Mobile, though, seems to battling a headwind, as five percent of respondents indicated they were leaning to switching to T-Mobile, down two percentage points from the last survey.