What Next for Salesforce.com, other SaaS Providers?

Salesforce.com has been the poster child for how voice and communications capabilities can be integrated with enterprise applications.

But Salesforce.com now is a decade old. Pretty obviously, the focus on applications that can benefit from voice has to shift elsewhere.

And analysts at Forrester Research say enterprise interest in SaaS might be slowing. That could suggest that organizations are having a harder time figuring out where SaaS really delivers measurable benefits.

Web conferencing might be the only application for which there is broad-based recognition of the value of voice and communications tightly integrated with an existing business app (presentations and meetings).

Cisco Enters Blade Server Business, Ecosystem

Cisco has introduced a new data center architecture that moves it directly into the blade server and computing architecture business. That inevitably means Cisco now competes in some new areas with the likes of Hewlett-Packard and IBM.

Cisco says it has designed an entirely new class of computing system incorporating the new Cisco UCS B-Series blades based on the Intel Nehalem processor families. The Cisco Unified Computing System also essentially consolidates what today are three separate networks: local area networks (LANs), storage area networks (SANs) and high performance computing networks, into a single fabric.

By supporting "virtualization," allowing multiple apps to run on a single server, Cisco's move also suggests some further changes. Though up to this point most important business applications have been run on dedicated hardware, in the future apps might typically run on standard hardware.

For those of you with some decades of experience in the communications business, that might suggest an evolution of most parts of the business towards "software" rather than dedicated machines. Where once a Class 5 switch was a discrete machine, in the future the equivalent applications might run much as other enterprise apps do: on standard hardware platforms, using Ethernet as the transmission layer.

That might lead to rather widespread repositioning. Many companies commonly thought of as "hardware" providers might come to be better known as enterprise or carrier "software" firms, with less direct bundling of the hardware on which the applications execute. At that point, an enterprise class data center becomes a carrier switching center. You can then envision new ways for contestants to build the foundation for a communications business.

That doesn't mean the existing financial, legal and regulatory issues go away. Those key elements of the business context must be addressed. But core communications features might shift to a more software-focused mode, without the requirement for dedicated hardware. This probably is a longish sort of transition. But the direction increasingly is clear.

To the extent that the Cisco architecture incorporates a number of discrete networking protocols such as Storage Area Networking and LANs, the ecosystem further might create some new entry points for wide area network providers into the enterprise computing and LAN business as well.

That trend likewise will take some time to develop. In principle, though, it should in the future be easier to integrate "data center" and "central office" apps in a more unified way. Big stuff.

Think You Qualify for Broadband Stimulus Funds?

Lots of companies and organizations believe they might be eligible to apply for funds to support broadband access services. Some of them are right. But the rules might be far-more restrictive in practice than most believe. 

NTIA funds clearly favor non-profit and governmental agencies. RUS funds clearly favor firms that have received rural electrification funds in the past. So most actual firms that supply broadband access services will not be able to apply directly.  Perhaps they can do so if they are participants in bids submitted by government or non-project agencies. 

But it appears lots of firms will spend significant time, and some money, to learn that they don't actually have much of a chance to submit bids that meet the program guidelines very well. 

Section 6001 of the American Recovery and Reinvestment Act of 2009 requires the National Telecommunications and Information Administration (NTIA) to establish the Broadband Technology Opportunities Program, responsible for disbursing some $7 billion or so for broadband projects of various sorts. The Act further establishes authority for the Rural Utilities Service (RUS) to make grants and loans for the deployment and construction of broadband systems. 

NTIA will be disbursing about $4.7 billion while RUS will award some $2.5 billion. Applicants have been told they may apply for awards under both programs, but will receive awards from only one, should their proposals be accepted. But there is a dramatic difference between the two sets of programs. 

Despite the exhortations to craft applications that apply under either set of program rules--rules that remain maddeningly vague--the NTIA and RUS programs are quite different in intent. 

RUS is supposed to award grants, make loans and offer loan guarantees for broadband infrastructure in any area of the United States where at least 75 percent of the area to be served by a project is a rural area without sufficient access to high speed "broadband service to facilitate rural economic development." The emphasis for RUS funds clearly leans toward infrastructure deployment.

The NTIA program, in contrast, clearly is aimed at "new programs," not infrastructure, with a clear "non-profit" organization focus. In fact it remains unclear whether "for profit" entities will be allowed to submit applications, except for  "economically or socially disadvantaged small businesses as defined in section 8(a) of the Small Business Act."

NTIA has to give some preference to projects supported by local authorities, especially state agencies. But it also has to give preference to public safety applications; health care providers, clinics, and facilities; schools and libraries; colleges, universities, or other higher education and research institutions; job training and job-creating facilities and community support organizations. 

NTIA also is bound by statute to give preference to projects that increase broadband access to low-income, unemployed, aged, and other disadvantaged or "vulnerable" populations.

But NTIA also is directed to favor projects that provide educational or employment opportunities using broadband access/deployment/infrastructure; that stimulate demand for broadband and economic growth; and that are submitted by nonprofit organizations (for-profit firms can partner with such entities).

Projects must show that they would not be undertaken but for the grant. But such projects also should show how they increase affordability of, or subscribership to, broadband to the greatest populations.

Projects that offer high broadband speeds also will be favored, as well as projects that enhance healthcare, or serve education or children. The one area where commercial interests are allowed to bid, by statute, are "economically or socially disadvantaged small businesses as defined in section 8(a) of the Small Business Act."

Projects that feature the greatest "open access" to users might also be favored. 

That's an awful messy set of priorities, with an awful lot of constituencies to satisfy, with no immediate indication how a commercial service provider might apply, except as a partner of a non-proift. 

The RUS program rules give priority for awarding funds in ways "that will deliver end users a choice of more than one service

provider." So far, there is no language that clarifies what that means, but it might mean higher priority for projects that have a substantial "wholesale access" component. 

The RUS program also favors projects submitted by "borrowers or former borrowers under title II of the Rural Electrification Act of 1936 and for project applications that include such borrowers or former borrowers." In practice, that means the inside track is held by firms now receiving, or who have received in the past, funds. 

Much remains to be decided, so perhaps the finalized rules will open the doors a bit for most companies that actually sell broadband access to customers. Right now, that isn't the case.

Despite Video, Text Still Rules, So does Voice

There are some interesting parallels between "voice" and "text," and the relationships can illustrated by the difference between "telephony" and "IP communications," or "text" and "video."

Voice usage continues to increase, even as more text, blogging, video and conferencing occurs as well. But voice is not necessarily "telephony." Voice is used in many different ways, even as buying of traditional consumer voice lines continues to decline in favor of mobile or VoIP alternatives.

Likewise, lost of news, commentary and entertainment now is moving away from legacy print and towards online formats. But text seems to have grown in importance as legacy "print" channels have struggled. Again, what we see is a pattern similar to that of "voice" usage. More usage, but using new formats, media and channels.

But user behavior is quite complex. As Steve Rubel points out in this post, text remains key for Web-based and mobile communications, even as Web video has emerged as the next wave of Web media.

One can look at video growth, telephony "decline", and make the wrong forecast: that people mostly will communicate using video. Likewise, one can look at the demise of newspapers or magzines and assume people are not reading. They're reading, but it is tweets, blog posts, news feeds and Web pages. Text simply is used in different ways.

As Rubel notes, though, an argument can be made that text still "rules."

Thinking the Unthinkable: Telcos Have Done Better than Publishers

Over the course of some years I have on occasion used the airline analogy to look at structural issues faced by telecom service providers. Both are capital-intensive industries with huge economies of scale, multiple customer segments, important regulatory backdrop, and similar market entry and incumbent response patterns.

At other times I have used the analogy of how Internet Protocol is changing the telecom business to describe what is happening in the print media business, arguing that the underlying business impact is similar in both industries.

Neither the print nor the airline industries have performed as well as the telecom industry in coping with dramatic change.

Clay Shirkey's article is a provocative but largely accurate assessment of why print publishers--newspapers in this case--have failed to adapt as rapidly as telecom providers have.

More than 77 percent of wireless subscribers in the U.S. subscribe to or purchase text-message capability, says Nielsen Mobile. And uers now send and receive more text messages than they do voice calls.

In the United States, about 200 million of the 259 million wireless subscriber lines subscribe to or purchase text-message capability. Of these, 138 million--53 percent of all mobile subscribers--use text-messaging on a regular basis.

Nielsen recently reported that in the second quarter of 2008, mobile subscribers sent or received an average of 357 text-messages per month, compared with 204 phone calls. And while the average number of text-messages sent or received has increased 351 percent (from 79 text-messages sent or received last year), phone traffic have not become less popular.

In fact, phone useage has been constant, suggesting that text messaging adds to, rather than replaces, voice communications.

U.S. and U.K. Users Represent Half of Mobile Web Browsing

About 29 percent of global mobile Web browsing traffic now happens in the United States, with about 20.3 percent happening in the United Kingdom. Between them, the United States and United Kingdom now represent about half of global mobile Web browsing, says bango.

That might come as a surprise to many. What might be a bigger surprise is the number of people who now land on Web sites using a mobile. That could be an issue: sites not optimized for mobile access might not execute some expected functions at all, others poorly.

But most businesses do not have mobile-optimized websites.“Many people simply have no idea that they have visitors from mobile devices accessing their PC-optimized website, says Anil Malhotra, Bango SVP."These mobile visitors are simply invisible to them.”

The statistics also show that while some countries such as India and Indonesia have a good appetite for browsing on their mobiles, it doesn’t always convert into purchases. In fact, only five countries in the Top-10 browsing chart are also in the Top-10 payments chart. Those countries are the United States, United Kingdom, Portugal, South Africa and Spain.

“When it comes to payments though, the US is accelerating faster than any other country and now accounts for 57 percent of payments worldwide,” says Malhotra.

No matter how high the browsing rate, it is only converted into a high purchase rate where people have a good disposable income and can pay for content on their phone bills, bango says. In regions such as India, South Africa, Indonesia and Egypt the driver for mobile browsing is a lack of fixed-line broadband and PCs for accessing the Internet which means that the mobile device is the only way people can get onto the Internet.