If Microsoft Had Designed GMail...

A funny spoof at http://blogoscoped.com/archive/2007-11-20-n35.html

SME VoIP Still a Challenge

Plenty of challenges continue to face successful providers of hosted or premises-based VoIP services. In its most recent survey of IP communications demand in the small and medium business market, Savatar Research found some “good and bad news and some that is disturbing,” says John Macario, Savatar president.

“We were expecting a bump in the market, based on the last three years of work, or at least a growth rate consistent with the past,” he says. “The bad news is that adoption is flat.” There’s not a lot of growth, he says. SME adoption is stalled at about 17 percent.

“There’s increasing frustration among SMEs,” who apparently haven’t yet gotten the message about benefits, which are clear enough based on feedback from executives who have purchased and use IP communications products and services.

It isn’t that SMEs are buying legacy phone systems. They just are not moving. They’re “just sitting on what they’ve got.” And that’s true both for premises phone systems and hosted offerings, Macario says.

All of which suggests many service providers who don’t know how to serve the market, he notes.

Macario says there is some evidence that buying might even have slowed over the last year. For those who have purchased IP communications products or services, “more than 70 percent purchased more than one year ago,” Macario says. “Only 12 percent have purchased between six months to a year ago.”

“About 15 percent have bought last six months,” he says.

The good news is that “the buyers are insanely happy,” Macario notes. About three quarters of respondents say they have gotten economic benefit while 75 percent say the systems are much easier to manage.

About 84 percent say the quality of their IP systems is as good or better than their old systems. The same percentage say the IP systems are as good or more reliable than the old systems.

As you would expect, 82 percent say the IP feature set is far better. Astoundingly, 95 percent say they would recommend or highly recommend the service or system they now use.

They “really are enthusiastic,” Macario says. Among the most-used IP features is the auto attendant capability. For many SMEs, this is the first system that allows them to do so. Half of respondents say they use it. About a third use group-oriented features or informal call center capabilities as well.

About a third use find me/follow me or simultaneous ring, he adds. About a quarter use click-to-dial and the ability to integrate with Microsoft Office applications. “People are starting to explore the feature set and figure out what else they can do,” says Macario.

But it is wireless services of various types that seem to be top of mind and growing in importance. Wireless related services also seem to have huge potential for inducing churn.

Of those who have deployed some sort of IP communications capability, about 71 percent are very or somewhat interested in FMC as a desktop replacement service, if the pricing is acceptable. About 83 percent would be interested in using it as an add-on or replacement for at least some desk devices.

Asked what else they would consider buying from the same vendor who sold the IP communications service or system, about 40 percent indicated wireless was on the list. About one third would buy Web collaboration tools like WebEx or Live Meeting services.

Demand seems to be just as high even for respondents who have not bought any IP communications service or capability. About 75 percent of those who haven’t yet bought are somewhat or very interested in fixed-mobile solutions.

Some 70 percent said somewhat or very likely to switch from their wireline service to an FMC offering and 70 percent said they would switch from their current mobile provider to get the capabilities.

About 71 percent of respondents who haven’t yet bought an IP solution would be interested in mobile desktop replacement as well.

Respondents say they would be willing to consider replacing at least some desktop phones if doing do saves about 20 percent from their total communications bill.

About 35 percent of respondents say they now pay for employee use of mobiles, picking up between 76 and 100 percent of the cost of the service.

Traditional telcos also are getting more traction and mindshare in the business VoIP space, it appears. For two years, traditional phone companies have got a really low share where it comes to SME executive perception about “who” provides business VoIP servicers, says Macario.

This year, telcos moved seven points higher. About 24 percent of respondents now view telcos as providers of business VoIP. Interestingly, 29 percent said cable companies come to mind as providers of business VoIP.

Non-traditional providers fare best at smaller firms. As firm size goes up, telcos do better. In the 50 to 99 employee segment, only 20 percent say non-traditional telcos are logical providers. And note: the cable gets 22 percent of the votes in that segment category.

That might be surprising for CLEC and other executives who think cable will not get traction in the SME space. “When a CLEC or a pureplay provider knocks at the door, they want to know who they are,” says Macario. “Cable has a brand. That helps.”

Cable already has surprising share at the lower end of the broadband access market. In the one-to-four-employees segment, “about half use cable modems,” says Macario.

“Once you get up to five to 19 employees, then 11 percent have T1s,” he notes. “DSL share is 47 percent, 25 percent T1 at slightly larger firms.”

Overall, says Macario, service providers, in a broad sense, aren’t doing a good job of communicating the benefit of making a switch to IP communications.

More Personalized Digital Media

U.S. consumers across all demographics and geographies appear to be adopting digital behavior that is far more personalized, distributed and niche oriented that executives at Avenue A/Razorfish previously had thought. In fact, a recent survey of 475 consumers found that the majority are personalizing their digital experiences and sampling a wide range of niche content.

Those behaviors span recommendation engines, blogs, customized start pages, video consumption, mobile behavior and use of social media. About 60 percent of respondents have customized their home pages, for example. And 82 percent use bookmarks “all” or “most” of the time.

But there is less use of more participatory features. About 18 percent subscribe to Really Simple Syndication feeds “all” or “most of the time.” About 39 percent read “most popular” or “most emailed” links “all” or “most” of the time.

Only about 12 percent use tag clouds “all” or “most” of the time.

According to the survey, nearly 70 percent of consumers read blogs on a routine
basis, and 41 percent have their own blog, or post frequently to blogs. In fact,
46 percent of consumers who responded to the survey read four or more blogs
on a regular basis. All of that blog activity is significantly cutting into the
reach of traditional media outlets, Avenue A/Razorfish notes.

Some 91 percent of consumers rely on the Web to get current news or information, vastly eclipsing more traditional outlets such as television, Avenue A/Razorfish says.

The growing use of niche content also can be seen in respondent consumption of music and video consumption as well. Some 67 percent of consumers watch videos on YouTube or similar sites on a regular basis and 42 percent purchase music online. Avenue A/Razorfish executives conclude that online video not only is becoming more pervasive but also is affecting offline consumption.

For example, 85 percent of consumers have watched a movie preview online before going to see the film at a theater. Some 58 percent of consumers have used a service to download (iTunes) or order (Netflix/Blockbuster) films online, and 71 percent have watched a TV show online.

Consumers also appear to react positively to recommendation engines and personalized services: 62 percent of respondents have made a purchase based on personalized recommendations (by retailers such as Amazon.com) while 72 percent find such services helpful.

Broadband Changes Just About Everything

Broadband might not change everything, but it changes an awful lot for communications and content service and application providers. For starters, broadband drives a tripling of user time spent online, says Nate Elliott, Jupiter Research senior analyst. That means users already spend more time online than with print media.

To the extent that service and application providers support their business models by advertising revenue, that means more revenue for Web sites and applications, less for print vehicles.

Where a typical user might spend three hours a week with print media, users in western Europe routinely spend four hours a week online. But there’s a huge difference. About two thirds of users who are 65 or older spend more than five hours a week with print media. Users between 15 and 24 are more than 400 percent less likely to do so.

By some recent measures, user involvement with content sites has eclipsed use of the Internet for communications. At least, that’s what the Online Publishers Association says.

Jupiter analysts say that does not mean “news” is dead, or that newspapers are necessarily dead, yet. News is the top type of online content, and users are 300 percent more likely to consume news than sports or video content. And rates of consumption of print haven’t changed in four years, Jupiter says.

Without a doubt, online video consumption is getting to be quite mainstream. Last year, 22 percent of Americans and 11 percent of Europeans reported watching video regularly, with 18 percent of French respondents saying they do so regularly, says Jupiter.

Overall, the video audience has doubled since 2003, and Jupiter estimates viewership will double again by 2011.

But something might have happened over the last year. A recent survey by the Pew Internet and American Life project found that 57 percent of all Internet users, and 57 percent of users between 30 and 49, have watched online video. In the oldest age demographic, 39 percent have watched an online video.

Possibly 10 to 18 percent of older users report watching video every day, the Pew research finds.

About a quarter of younger users between 15 and 24 say they watch online video regularly and are more than 12 times more likely to watch video as users who are 55 or older. That doesn’t necessarily mean those viewers have substituted online video for legacy TV, though, as reported TV watching hasn’t changed.

The intensity of involvement might be questionable, however. About 27 percent of users say they regularly multitask, using multiple media at once.

And while some surveys suggest communication activities are decreasing, Jupiter researchers say users “spend most of their online time communicating.” Compared to dial-up users, broadband users are 57 percent more likely to use email regularly, 147 percent more likely to use instant messaging regularly and are 125 percent more likely to blog.

More than 10 percent of European users visit social networks regularly and more than 40 percent visit such sites daily. In the U.S. market, use of social networking sites is spreading to older age groups. About 35 percent of social network users are between the ages of 35 and 54.

The thing about social networks is that they are in many ways substitutes for other activities such as email, instant messaging, texting, calling or entertainment sites and applications.

And while most new online activities are disproportionately engaged in by younger users, just about every new type of activity is being adopted by older users as well.

Big Future for Location-Based Services?

Location-based services might not be a big mass market business yet, but it seems almost inevitable that they will be. You don't get the likes of Nokia and Google placing such big bets on location-based services without something developing.

ABI Research expects personal navigation devices (PNDs) will grow to a global sales volume of more than 100 million units by 2011. While dedicated PNDs will remain the preferred form-factor for use in cars, GPS will increasingly be an expected ingredient in handsets, portable media players (PMPs), ultra-mobile PCs (UMPCs), and other mobile devices, ABI forecasts.

Handset-based GPS will grow strongly in North America, reaching a sales volume of 21 million units by 2012, ABI Research forecasts.

In-Stat reaches very similar overall conclusions, though it adds digital cameras and even handheld games to the mix of devices expected to include GPS. In-Stat predicts that sales of mobile devices with integrated GPS will grow from 180 million units in 2007 to 720 million units in 2011.

In fact, mapping-related and location-related Web apps might be more commercially attractive than entertainment was expected to be. For starters, mobile Web advertising revenues in 2011 are expected to be dominated by Web and search. In fact, Strategy Analytics estimates that about 76 percent of all mobile advertising will be generated either by Web apps or search.

All of that dovetails with Google’s thinking about the advertising potential of the mobile Web. And the point is that if consumers find location-based Web apps attractive, and there is a robust advertising support model, carriers are bound to see big increases in broadband service plans, even if they don’t see similarly robust demand for walled-garden enhanced services.

Orange UK: Still Looking for Killer App

Mobile Web appears to be the most-frequently-used mobile app, according to new data from Orange U.K.(France Telecom).

Orange U.K. has 1.4 million broadband wireless customers, but the single most-used application is text messaging, which doesn't require broadband access. Orange U.K. customers send or receive about 71 text messages a day (more than 2,000 a month) but just about 4.3 Multimedia Message Service (MMS) messages a day (129 a month) for users who take advantage of MMS, and most do not.

About 58 percent of Orange U.K. customers can use MMS and six-month usage growth was 37 percent.

In the mobile search area, Orange saw about 250,000 repeat visitors each day, on a base of 1.4 million users. One might therefore estimate that about 18 percent of the base uses mobile search daily.

Orange users downloaded about 7,680 games a day across the user base, up about 3.4 percent over the last six months. Music downloads grew about 15 percent over the last six months to about 3,280 a day.

Orange mobile TV usage is said to be growing at double the management forecast, but one suspects the numbers still are fairly low, as the actual numerical results were not released. Mobile video clip downloads averaged 5,211 a day.

Downloads of logos, wallpapers and pictures averaged 3,233 a day. On the other hand, users are uploading about 23,333 photos a day to online photo albums.

So far, the story would seem to be consistent with what many would have expected: lots of niche applications but no single “killer app” beyond text messaging, which doesn’t require a 3G network. Orange U.K., like other mobile service providers, remains in a “throw it on the wall and see what sticks” mode, watching to see what apps are most compelling to users of 3G services.

So far, no other mobile carrier has discovered the elusive application that users intuitively understand and that is capable of driving 3G access. Right now, that’s the point: keep experimenting.

So far, one would have to conclude that mobile Web usage is the leading app, in terms of daily hits.

No EchoStar Purchase for at&t

at&t appears to have decided not to buy EchoStar to jumpstart its TV business, as it has boosted its dividend and launched a stock buyback program.

In total, at&t might spend roughly $17 billion in 2008 on dividends and buybacks, consuming most or all of the cash its businesses are likely to generate, leaving little to finance a purchase of EchoStar.

at&t also plans to expand U-Verse to cover 30 million households by 2010 in the 22 states where AT&T is the main local-phone company, up from an earlier target of 18 million households.

Broadband access strategy might have played a role in the thinking as well. By speeding its TV capabilities, at&t automatically creates a better network for high-speed access as well.