Is UC Still Relevant and Growing?

IP-based communications often has not developed as its supporters have forecast. Suppliers thought it was an "enterprise" product, but VoIP erupted in the consumer space. That actually has been the rule, of late, not the exception.

Email, the Internet, instant messaging, text messaging, search, social networking, broadband and mobility all gained traction in the consumer space and then were forced upon enterprises.

Has unified communications now been superseded by social media and mobile devices? For many enterprise executives, that is a rhetorical question, though it might not be so rhetorical for smaller organizations or individuals.

Contact centers remain the province of enterprise-class unified communications solutions and nearly all office environments, as well as for traveling workers who need access to home office communications features.

Global businesses likewise benefit from enterprise-grade unified communications more than small, local businesses and organizations.

Since supplier organizations tend to mirror the organizations they sell to, that means many large suppliers of unified communications believe in its value because they themselves are large, far-flung organizations in best position to leverage UC and other collaboration tools.

What is not so self evidently clear is that the same level of benefit is obtained by smaller, more localized user organizations and firms.

"These customers aren’t worried about presence and a unified portal," says David Burnand, a former Siemens enterprise communications executive. In fact, "many of them run their business using mobile handsets, simple PBXs, social media, Skype and Google Voice."

Many use elements of unified communications, including single number services, video-calling and instant messaging. They just don’t call it unified communications, or use those tools because they are "unified." They use point solutions because they solve real problems.

The point, says Burnand, is that "old school" definitions of unified communications do not hold.

UC is no longer about managing a desk phone, mobile, Windows PC and many other devices. The smart phone has made that view redundant for all except the power users, he argues.

Instead, it is evolving into skinny applications for low-end users and specialist applications for power users, mixed with a dose of social media, a splash of video and a few Web-based collaboration tools.

That will be an unsettling view for many unified communications or collaboration suppliers, as it suggests the "UC market" is far smaller than many would have predicted for hoped for.

Global Voice Penetration Really is a Miracle

By the end of 2009, there were an estimated 4.6 billion mobile cellular subscriptions, corresponding to 67 per 100 inhabitants globally, says a new report from the International Telecommunications Union.

Last year, mobile cellular penetration in developing countries passed the 50 per cent mark reaching an estimated 57 per 100 inhabitants at the end of 2009. Even though this remains well below the average in developed countries, where penetration exceeds 100 per cent, the rate of progress remains remarkable.

Indeed, mobile cellular penetration in developing countries has more than doubled since 2005, when it stood at only 23 per cent.

Not many will recognize this success for the great achievement it really is. Policymakers of the 1960s, 1970s and 1980s would be, and probably are, shocked at what has happened. In days past, the thinking was that getting phone service to people who had never made a phone call would be stubbornly difficult. I do not recall anybody suggesting mobile technology would do the trick.

The broadband gap, though significant, also is showing dramatic progress, and again because of mobile networks.

There is a "problem" people and organizations who "solve problems" often have: they cannot recognize victory. Many difficult problems actually get fixed. When they do get fixed, rejoice and move on.

Getting voice services and now broadband broadly adopted throughout the world is a huge, miraculous success.

Enterprise Workers Ready to Ditch Their PCs for Smartphones?

Something rather unusual seems to be happening in the enterprise mobility space. According to a recent survey taken by iPass, 63 percent of mobile employees prefer to use a smartphone, not a laptop, as their primary mobile device, for trips of any length.

For trips of up to five days, 59 percent of respondents prefer to carry a smartphone, while 41 percent prefer a laptop. For trips lasting longer than 30 days, 64 percent prefer a smartphone to a laptop.

That likely is testament to the high value traveling workers place on voice and text communications, as well as the increased capabilities smartphones now offer, including email and Web access.

But the findings also suggest that some enterprises are over-investing in laptops and software and might need to look at scenarios where mobile or traveling workers can get along just fine with smartphones.

There is another and possibly darker view here as well. Industry suppliers have been touting mobility investments as a driver of productivity. As it now appears, enterprise workers do not even want to carry laptops with them when traveling. So what is the value of all those investments in remote access?

Granted, most enterprises likely are trying to get a better handle on mobile phone expenses, so indiscriminate replacment might not be wise. But the survey also suggests the near-universal embrace of the BlackBerry has "soft" support from users.

According to the iPass survey, while 32 percent of mobile employees ranked the BlackBerry smartphone as their mobile device of choice, 54 percent of BlackBerry smartphone users would switch to an Apple iPhone if it was supported by their enterprise.

"Mobility" also once was an issue of supporting traveling workers. Today every employee
is a potential mobile employee, iPass says. While many mobile employees have some business travel, many more are logging in from home.

About 68 percent of iPass survey respondents did not travel during the last quarter of 2009, but  45.8 percent of mobile employees logged in from home at least twice a month, and 16.8 percent logged in more than ten times a month.

Excluding home and the office, mobile employees most often log in from hotels (42.6 percent), airports (27.2 percent), retail outlets and restaurants (27 percent).

According to the iPass survey, while 32 percent of mobile employees ranked the BlackBerry smartphone as their mobile device of choice, 54 percent of BlackBerry smartphone users would switch to an Apple iPhone if it was supported by their enterprise.

Telco Choice is Not "Dumb Pipe" or "Service Enabler" or "Service Provider"

There's no question that the fundamental business underpinning of the entire global telecommunications business is undergoing a fundamental change from "voice driven" to "broadband driven," and, to a certain extent, from "services" to "access."

That leads to a fear that the future is one of "dumb pipe" access services providing modest revenue and slimmer profit margins than any existing provider can tolerate, without significant downsizing of operational cost.

Many observers suggest service providers will gradually take on more "application enabler" roles, supporting third-party business partners.

At the same time, there is debate about the degree to which any existing video or voice service provider will be able to continue doing so in the future.

But those three choices are not mutually exclusive. For better or worse, "dumb pipe" access is a permanent foundation for every telco, mobile, cable, satellite or fixed wireless provider. That is precisely what "broadband access" is; a simple "access" service.

That does not mean "only" access will be provided. There likely will be some permanent role for managed video, voice, storage, backup and other services. At some combination of value and price, users simply will prefer to buy such "services" rather than use comparable applications.

At the same time, it is likely service providers will find ways to grow the percentage of their revenue earned by supplying services to business partners. That might include billing services, location and device information, hosted processing or storage services.

"Dumb pipe" access is not the only business of the future, but it is foundational, and permanent. In addition to that, though, today's service providers necessarily will have to grow the proportion of revenue they make from "enabling" services, as they manage a likely decline of "services" such as basic voice communications or multi-channel video.

And it is not necessarily that those services decline because of a shift in user demand. The simple existence of capable competitors means market shifts will occur, irrespective of any conceivable shifts of demand. In other words, one does not have to make a definitive bet on "over the top" voice or video to plan on lower revenue from existing voice or video sources. One simply must assume that capable competitors will take some amount of market share.

In other words, at the level of discrete enterprises, cable executives have to anticipate declining video customer base and revenue contribution, while telcos have to assume declining gross voice revenue. No shift of demand to online video or VoIP need be assumed.

To be sure, those forces likely will be factors. But it is not the case that a stark choice must be made between the "dumb pipe" access provider and the "service enablement" or "service provider" roles. All three will remain parts of the overall revenue stream.

Apple Plans "Big, Bold" Steps, Says Jobs

Apple Inc. CEO Steve Jobs says Apple is holding onto $25 billion in cash to take “big, bold” risks. That should be an immediate concern for any company that competes with Apple or thinks it might have to compete with Apple.

Whatever else might be said, Apple already has reinvented itself. Apple used to be thought of as a "computer manufacturer." These days, sales of Macintosh computers probably represent about 18 percent of the company's equity value. The iPod, which not so long ago was the rising company star, now represents about three percent of the company's value.

Even the new iPad, which has just launched, represents four percent of the company's value.

These days, Apple has suddenly, dramatically, become a "mobile handset" company. Sales of the iPhone now represent about 52 percent of the company's equity value.

The iTunes and iPhone App Store represent about 5.6 percent of company equity value.

So what about Apple's purchase of Quattro, a company providing mobile advertising for Apple, Android and other smartphone devices?

Apple probably is less interested in profiting from ads than in making the iPhone the most attractive device for developers to build applications. And money might have a lot to do with that. Right now, eighty to ninely percent of app store downloads are of "free" apps. That isn't such a great business model for a software developer.

Eighty percent of the three billion downloads from Apple’s App Store are free, for example. By offering a way to sell ads, Apple can help entice developers who will have another way to make money, other than selling software.

Apple executives said recently during their quarterly earnings call that the firm had no idea whether mobile advertising would develop as an actual revenue stream for Apple or whether it would simply help reinforce its App Store operations.

"I honestly don’t know," says Peter Oppenheimer Apple CFO. "We will have to see."

App Stores Very Valuable for Handset Suppliers and Users; Maybe Not Developers

App stores have been a huge boost to smartphone perceived value. What they haven't yet proven is that they are an effective way for software developers to sell applications.

About 80 percent to 90 percent of app downloads are of the "free" rather than "paid" variety, according to AdMob.

Ironically, Low Prices are a Barrier to Mobile VoIP

SK Telecom says it has no plans to allow its smartphone subscribers access to VoIP calling, saying it will deal a blow to its revenue, reports the Korea Herald.  That's true, but also likely unsustainable. All it would take is for Korea Telecom to allow it and SK Telecom would have to relent.

Oddly enough, it appears low prices are a problem. An SK Telecom executive says that AT&T and Verizon can afford to allow VoIP because both those carries make enough money with their broadband and voice tariffs to allow cannibalization of legacy voice revenues by VoIP.

Oddly enough, this is a case where higher prices would lead to more innovation. U.S. carriers are moving about as fast as they can to create broadband-driven revenue streams so voice can be cannibalized.

Mobile VoIP is a sensitive issue for SK Telecom precisely because its tariffs are low. "Mobile VoIP will destroy our profit-making structure," Lee Soon-kun, senior vice president of SK Telecom, says. At the same time, Korean mobile providers face mounting pressure to lower tariffs on legacy calling.

Under the "per-second" scheme, which will take effect on March 1, 2010the carrier will charge for every second, instead of every 10 seconds. Under the current system, consumers have to pay for a full 10-seconds of calls, even if they have not been connected for all of that time.

The revamp is expected to lead to a tariff cut of 700 won and 800 won per subscriber on average, SK Telecom said, adding that all of its 25 million subscribers would be able to save a combined 201 billion won ($1.8 million) a year.

SK's move put its rivals KT and LG Telecom under growing pressure to follow suit.

Broadband prices that are too low--basically unable to support the entire cost of running a mobile network--would seem to be a problem for widespread mobile VoIP in the Korean market.

Not Every Telecom Market Did as Well as U.S. in 2009

The U.S. telecommunications and network-based video entertainment markets (cable, satellite, telco) grew revenue in 2009, largely on the strength of performance by the large incumbents that account for most of the industry's revenue.

That was not the case in all markets, though, as the Columbian market, for example, declined about eight percent in 2009, according to researchers at Pyramid Research.

The Columbian market also is in major deregulation shift, so new competitors are expected, especially in the wireless area. Pyramid Research does not think any such new competitors will be able to alter the current market structure, though. Incumbency has its advantages, it seems.

23% of U.S. Business Sites Now are Fiber-Served

What percentage of U.S. business locations would you suggest now have optical fiber connections available to them? According to Vertical Systems Group, just 23 percent of U.S. sites and 15 percent of sites in Europe have optical access.


While most large enterprise locations in the United States and Europe are fiber-connected, small and medium business sites generally are underserved with fiber from any service provider.


"The good news is that overall accessibility to business fiber has more than doubled within the past five years," says Rosemary Cochran, Vertical Systems Group principal.


The challenge ahead is to extend fiber connectivity to remote business locations. Of course, not all smaller business locations need the fiber that typically supports gigabit-per-second bandwidth. Given that 1.544 Mbps connections are the mainstay for most smaller and even many mid-sized businesses, many customers might be quite satisfied with speeds in the tens of megabits per second.

Consumer Price Points for Recurring Subscriptions are Fairly Clear

One might infer from average pricing for a variety of services ranging from fixed telephone service to broadband access, wireless and multi-channel video service that consumers have price sensitivity for any single service above $50 a month.

According to researchers at Pew Research and the Federal Communications Commission,  fixed voice costs about $48 a month. Wireless costs about $50 per user, while multi-channel video costs about $60 a month and broadband access costs about $40 a month.

Some of you immediately will note that your own spending is higher than these average figures suggest, with the greatest variability occurring in the mobile arena, as that is a service bought a person at a time, where the other services are bought household by household.

That's worth keeping in mind when surverys suggest there is robust consumer demand for just about any new application or service. Very few products ever have gotten mass adoption at prices above $300. Very few subscription products ever have gotten mass adoption at prices above $50 a month.

That doesn't mean it cannot be done; obviously it can. It simply is to point out that getting lots of consumers to buy a new recurring service at prices ranging from $5 to $10 a month is a big deal.

That's the reason so much consumer-focused content is advertising supported.

37% of Broadband Users Want Streaming Video to TVs

Nearly 37 percent of broadband households in North America are "extremely" or "very" interested in viewing over-the-top video content on the home TV, according to In-Stat.

Streaming should be easier in the future as more TVs, Blu-ray Players, digital media players and set top boxes support Internet connections.

By 2013, In-Stat predicts that nearly 40 percent of all digital TV shipments will be Web-enabled devices. Across all categories, there will be over half a billion Web-enabled consumer electronics devices in operation worldwide by 2013.

Shipments of such Web-enabled devices will see a compound annual grow rate of nearly 64 percent between 2008 and 2013, In-Stat predicts.

It always is hard to tell how well consumer input of this sort will translate into actual behavior, especially when spending on one category of purchases has to be shifted from some other existing category of expenses.

Doubtless the stated intentions are closer to reality when there is no incremental cost to view such content, and drops fairly predictably as the price of doing so raises above "zero."

50 Million Tweets Every Day

Twitter now has reached 50 million tweets a day, excluding all spam, says Twitter analytics staffer Kevin Weil.

Folks were tweeting 5,000 times a day in 2007. By 2008, that number was 300,000, and by 2009 it had grown to 2.5 million per day, he says. Tweets grew 1,400 percent last year to 35 million per day. "Today, we are seeing 50 million tweets per day—that's an average of 600 tweets per second," says Weil.

Tweet deliveries are a much higher number because once created, tweets must be delivered to multiple followers. Then there's search and so many other ways to measure and understand growth across this information network. Tweets per day is just one number to think about, he says.

Still, as with Skype's "concurrent users" metrics, it is a milestone.

Wal-Mart to Become an Online Video Service Provider

What do you do when you are one of the top retailers of DVDs in the United States, and the product starts to face serious substitution from a newer product?

You start selling the newer product. Or so Wal-Mart thinks.

The retail giant, according to the New York Times, has agreed to buy Vudu, a three-year-old  online movie service built into an increasing number of high-definition televisions and Blu-ray players.

Wal-Mart’s move is likely to give a lift to sales of Internet-ready televisions and disc players, which generally cost a few hundred dollars more than devices without such connections.  Nor is the move the first attempt by Wal-Mart to figure out a way to make a transition from sales of packaged media to online forms of video consumption.

Wal-Mart dabbled in aq Netflix-style online DVD rental several years ago, but sold the operation to Netflix after getting 100,000 to 250,000 subscribers. Wal-Mart also attempted to get into video rentals with HP in 2007, but it gave up on that project after a year.

The Vudu acquistion would instantly make Wal-Mart a significant force in the video streaming business, and would make the company a direct competitor to Netflix once again.

Vudu initially entered the market with a set-top box that offered access to its video streaming service, but gave up on building its own hardware, and started offering its service as a software offering that could be integrated into other consumer electronic devices.

That might make more sense, as Wal-Mart also now is one of the leading retailers of consumer electronics.

Of course, Wal-Mart also has to position its electronics sales against Best Buy, a major competitor that likewise  is working with CinemaNow to enable streaming video services on its own consumer devices.

Cloud-Based Services Will be Lead by Enterprises for Next 5 Years

It is highly likely that enterprises will drive most of the $9.5 billion in cloud-based mobile applications that Juniper Research believes will be bought by 2014, but consumer revenues are likely to overtake enterprise-generated revenues after five years.

 Juniper Research predicts that enterprise applications will account for the majority of revenues over the next five years, with businesses increasingly seeking to capitalize on platform services that will be used to provide scalable, flexible data storage solutions and device agnostic, synchronised office services.

But consumer-oriented apps will comprise an ever-larger proportion of total revenues over time, derived both from time-based subscriptions to services such as mobile online gaming and advertising from cloud-based social networks.

While the onset of a cloud-based ecosystem may further erode the strength of the mobile operator-to-customer relationship, cloud computing offers operators the opportunity to develop new revenues streams as well.

100 Mbps "Can't be Done"

I learned long ago that when somebody says something "can't be done," it is best to understand that claim as "I can't do it." I think we also have learned that even when somebody says something can be done, they might mean "it can be done so long as not that many people want to do it."

And that might be the case as cable operators prep broadband access services capable of running at speeds as high as 250 Mbps, at least so long as most people do not desire to buy services running at such speeds.

Broadband Reports says cable operators will start talking about a 250 Mbps service sopmetime later this year, though nobody will be able to buy it. Comcast also says it will be offering 100-Mbps service to about 25 percent of its potential customers by the end of 2010.

Comcast should be congratulated for that move, though it is not clear what might happen if lots of people actually bought it.  The rub is that providing 250 Mbps requires bonding of about eight standard 6-MHz channels.

The issue there is the same problem satellite operators have when providing downstream bandwidth. There are finite numbers of channels available, so cannibalizing bandwidth for data services reduces the amount of bandwidth available for video services.

The point is that some providers--particularly cable operators--will be able to claim speeds of at least 100 Mbps, at least in terms of what is commercially feasible at low penetration. it isn't clear any network can support 100 Mbps at high penetration, at least not at prices in two, rather than three digits.

Still, it is a reminder that when somebody says something "can't be done," one has to consider the source. Just because one company can't do it does not mean all companies cannot do it.

The other relevant observation is that "hero" devices and services are feasible. What is not clear is whether "mass market" availability is possible.

http://www.dslreports.com/shownews/Comcast-Exploring-250-Mbps-Service-107002