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Asterisk + Skype + SMB = Freetalk Connect

Freetalk Connect

Jazinga and Freetalk have combined efforts and the result is a Skype enabled SMB phone system called Freetalk Connect.

The press release:

FREETALK Partners With Jazinga To Create FREETALK® Connect
Companies Collaborate On Skype-enabled Small Business Communication System
Featuring Set Up In Less Than 15 Minutes

MIAMI, January 20, 2010 — As the result of a new partnership announced today at ITEXPO East 2010, FREETALK and Jazinga have created the FREETALK® Connect, a full-featured unified communications system that is the first to feature Skype for SIP and Skype for Asterisk functionality.

FREETALK and Jazinga collaborated in designing the FREETALK Connect, featuring a do-it-yourself (DIY) technology approach that can be configured in less than 15 minutes, enabling users who are not tech savvy to use it without formal training. This new class of DIY communications system allows anyone with basic knowledge of computers to install and maintain the office phone system.  SIP, Skype and traditional PSTN phones can be plugged into the network, and the FREETALK Connect auto-detects and configures them. An onscreen wizard guides the user through setup. Adding users and administering the system after install is equally simple.

Further distinguishing the FREETALK Connect is its intelligent routing capabilities. Incoming Skype calls, as well as SIP, PSTN and IAX2 calls, can be routed to any local or remote Skype user, SIP, analog or mobile phone. Additionally, the FREETALK Connect enables users to set up “Find Me, Follow Me” features, and provides a unified mail box that consolidates messages from voice mail and email into one mailbox.

Some of the key features from the Jazinga platform found in the FREETALK Connect include:

Callback / Dial-around
Access to Skype Buddy lists
Auto Attendant / IVR
Call Parking
Remote Extensions
Music on Hold

The FREETALK Connect also has an easily configured and updated:

Managing routes to users, telephone services, and applications
Providing SIP/Skype telephone service management
Router management (networking, port forwarding, DNS, DHCP)

“Jazinga’s products consistently ensure call integrity by integrating quality of service and prioritizing voice traffic on the network into an affordable, simple product,” said In Store Solutions COO Craig Smith. “There was no question that FREETALK wanted to partner with Jazinga to develop the FREETALK Connect, because it continues our goal of working with the best providers to distribute outstanding products around the world.”
“FREETALK Connect is designed for small businesses with between 2 and 49 users, an undersold market that desperately needs UC functionality,” said Randy Busch, CEO of Jazinga Inc. “As a result of our partnership with In Store Solutions, the telecom technology playing field is much more level between larger enterprises and their smaller competitors.”

The the FREETALK Connect is marketed through Skype Shop, which is operated by In Store Solutions. The unit initially will be available to registered U.S. Skype users beginning in March.

For more information about FREETALK Connect PBX or to order a unit, visit


FREETALK is a product innovation catalyst – identifying market gaps and working with its global partners to design, manufacture and quickly bring to market products that disrupt traditional categories.  Leveraging untapped market opportunities, FREETALK products are designed to be environmentally friendly, sold online and delivered globally at aggressive price-points. Always at the forefront of innovation, FREETALK is known for creating synergistic products that add unique value to its partners’ branded points-of-sale.

About Jazinga

Jazinga Inc. develops communications products for small businesses and homes. The Jazinga system provides enterprise telephony and data functionality for this market, but at a fraction of the cost and without the setup complexity of an enterprise-class IP PBX. Jazinga Inc. is privately held and headquartered in Toronto, Canada. Additional information is available at

Sue Huss, for In Store Solutions
+1 619-379-4396

Jazinga came to market a while back with a Asterisk appliance that is not much different than other you would find in the Asterisk market today. Skype recently announced their Skype SIP Trunking capability which is helping Skype become more open standards compliant, paving the way for deals like this one.

Since I have not tested the system myself I can only speculate that it is not huge departure from other Asterisk systems, which are not trivial to set up. Let’s hope they did their homework and come to market (March) with something that is much less technical and more end-user friendly, like Response Point.. was.

One thing that I find interesting is that it will be sold via the Skype store to US registered Skype users. If you were wondering what the connection is between Freetalk and Skype; the creators of Freetalk are also the curators of the Skype store. Ya, you heard me right. The company that created Freetalk (In Store Solutions) operates the Skype store. Which makes one wonder if there is overlapping ownership between Skype and In Store Solutions.

Something else that I find interesting, and not just because I am one of the founders of  Xten/Counterpath, is how this announcement relates the recent announcement of the Asterisk/Digium softphone from Counterpath. Which may be why In Store Solutions decided not to leverage the Digium or Asterisk brand in this release, maybe they see the new Asterisk Bria softphone as a competitor in this instance?

I expect this will not be the last Asterisk-based phone system to incorporate Skype functionality this year, but it would seem as though they are the first, congrats to fellow Canadians at Jazinga.

Virtualization to Transform Enterprise Communications Infrastructure

Virtualization is the process of ‘decoupling’  users and applications from the hardware characteristics of the system that performs the computational tasks. Virtualization enhances the ability to manage and change the physical environment of the hardware and software without disrupting the performance of the enterprise. The benefits of virtualization have never been disputed. While the growing demand for Windows and Linux-based servers has led to the popularity of server virtualization, the need to eliminate incompatibilities among the several applications deployed by enterprises today has spawned a market for applications virtualization. Though server virtualization accounts for the bulk of the virtualization services market today, there are other critical ones such as virtualization of desktops, storage, networks and services.  

Virtualization is not a new trend by any means. For example, server virtualization finds its origins in server partitioning while desktop virtualization has been around as ‘thin client’ computing from the early 1990s. The big impetus behind thin-client computing or its more recent version, desktop virtualization, has come from the adoption of virtualization in data centers. The movement was led by VMware, which developed the hypervisor technology that involves the carving up of an industry-standard x86 server into multiple virtual machines. Each of these virtual machines shares the resources of the servers including processing power, memory and input/output while performing their tasks as a standalone machine. Since VMware’s initial foray into this market, the number of vendors has multiplied. 
Microsoft, Citrix and Sun Microsystems have developed capabilities in hypervisor technology and are making aggressive inroads into the market.

Who's Who in Virtualization

Who's Who in Virtualization

My colleague, Subha Rama, just completed a brief study on virtualization trends in the communications space and she concluded as follows: 
A looming question confronts communication vendors contemplating virtualization. Which would be the most attractive market segments to target? What should be the horizontal and vertical strategies? While there are no ready answers to this question, there are certain considerations that differentiate large enterprises from small and medium businesses while adopting application and desktop virtualization. Frost & Sullivan believes that medium-sized businesses would be the most attractive target segments for desktop and application virtualization services.
  • The prevailing server-to-virtual desktop concurrent user ratio makes this technology the most attractive for mid-tier companies. We believe that the technology has issues when it is scaled up to really large deployments (more than 5,000 users).
  • The application and deployment needs of medium enterprises are less diverse. There are fewer exceptions in terms of user profile when compared to large enterprises.
  • qThe higher volume and diversity of applications deployed by large enterprises today make it difficult to deploy them over a virtual desktop-application streaming model.

Target Market
Target Market

Subha identified the following factors as the key drivers for virtualization adoption: 
  • Innovation Drives Adoption: The market for server virtualization is fast approaching maturity. However, VDI and application streaming are still evolving. These technologies address a major pain point of enterprises – delivering communication solutions irrespective of location, device and time. Coupled with this, is the ability of organizations to scale application deployment without incurring large-scale investments. Frost & Sullivan expects that these factors will drive accelerated adoption in the next few years. By 2012, we expect at least 10% – 15% of large enterprises to have implemented application virtualization in one form or the other.
  • The UC Factor:Virtualization will gain new impetus from the growing need for organizations to deploy unified communications (UC) suites. Cost of implementation is the single biggest deterrent for large-scale UC adoption by enterprises. Enterprises that cannot afford the switch-over to IP-based communication networks that support ubiquitous enterprise collaboration can leverage virtualization and the public cloud infrastructure offered by a number of virtualization providers today. Though these services are attractive to mid-tier organizations, large organizations that find it difficult to keep pace with the rapid technology flux happening across the UC space may find virtualization a better option.
  • New Market Entrants Endorse Technology, Add to Market Confidence: Entry of large networking and communications vendors into the virtualization market has sent strong positive signals to end-users and instilled confidence in the technology. Communication vendors are partnering with virtualization technology providers to diversify solution delivery and offer advantages of virtualization to existing customers. This strategy also allows them to target new vertical and horizontal markets.
  • Lower IT Budgets in Times of Poor Economy Open Up New Opportunities: Gloomy economic conditions is exerting pressure on enterprise IT budgets. However, there are some sweet-spots that open up opportunities for vendors. One such opportunity is UC on mobile devices. While UC vendors innovate on the mobile application front, virtualization offers an attractive deployment option.

Are the Days of Single-mode VoWLAN and DECT Phones Numbered?

With the growing hype around FMC and the continued integration of mobile phones with corporate communication networks, one would think that onsite mobility solutions are becoming an extinct species. I, personally, don’t think so. Single-mode VoWLAN and DECT devices provide productivity-enhancing mobility to individuals that do not fit the profile of potential smartphone users, and, therefore, do not compete with mobile phones for the exact same opportunity.

In the carpeted office, we expect professionals to increasingly use mobile phones connected to corporate PBX systems leveraging advanced UC clients. Such individuals are most likely users of cell phones subsidized by the company as they are expected to be able to make or receive calls anywhere, any time, in order to better serve customers, partners or internal stakeholders. Those are typically sales or marketing people or top executives. Beyond the carpeted office, maybe doctors, real-estate brokers, lawyers, technical support, and a few other professions requiring immediate and around-the-clock contact represent possible target customers for FMC solutions providing corporate communication applications on mobile devices.

Onsite mobility solutions, on the other hand, will continue to provide valuable capabilities to verticals where individuals need to communicate efficiently while on the premises, but do not need to be available for business purposes after working hours. Healthcare, retail and manufacturing continue to account for the majority of VoWLAN implementations (41%, 13% and 7%, respectively, of 2008 new users) with hospitality, education and government offering some growing opportunities. The carpeted office accounted for about 19% of all VoWLAN single-mode new users in 2008. DECT has been more successful in the carpeted office with over 40% of new users in 2008 being in this market segment.

Frost & Sullivan recently published a study, authored by my colleague Alaa Saayed, that provides an in-depth analysis of this market space. Here follows a summary of the findings:

As in the case of many other technology markets, the world enterprise DECT and VoWLAN single-mode phone market has been considerably impacted by the economic crisis. With market growth rates already showing some signs of deceleration in 2008, economic conditions in 2009 seem to be presenting even greater challenges as business customers seek to cut costs by extending the life of their existing wireless devices, curtail investment in new technologies and select the product or vendor based on pricing rather than strategic value.

Moreover, DECT and VoWLAN single-mode technologies have started to feel the pressures of other types of carpeted-office mobile devices, such as advanced smartphones with built-in enterprise FMC solutions, that, in some cases, present a compelling value proposition to IT departments seeking to provide employees with a single device offering multiple capabilities. 

Despite this challenging landscape, the world enterprise DECT and VoWLAN single-mode market is expected to gradually return to its healthy growth rates in 2011 – as more vertical industries across the world recognize the various benefits and capabilities granted by these types of on-site mobility solutions. Moreover, the potential short-term slowdown in this market may be attenuated by the fact that enterprise FMC solutions are still viewed as very nascent technologies, and enterprises wishing to avoid any possible hurdles would, in most cases, prefer the reliability of DECT devices or the maturity of single-mode handsets. It should be noted, however, that any growth may be much slower than what it could have been in a healthier economy.

In terms of handset evolution, many of the major DECT phone manufacturers have launched new advanced DECT handsets into the market. Some examples include Aastra’s new series of next-generation SIP DECT handsets (the 610d entry-level handset, the 620d business version handset, and the 630d industrial handset), Ascom’s new generation d41 and d62 IP DECT handsets and NEC-Philips’s I755 phone and advanced M155 watch phone.

On the other hand, some of the technological advancements that new DECT solutions have introduced to the market include advanced messaging and alarming systems, centralized management capabilities, location detection capabilities and central directory and presence information. Today many DECT market participants affirm that the new capabilities offered by DECT technologies equal or even surpass those offered by VoWLAN single-mode devices. Cat-iq is said to further increase the value proposition of future enterprise DECT in terms of better voice quality, Web access to applications, and lower power consumption. 

In terms of VoWLAN single-mode market evolution, most of the basic VoWLAN challenges, such as reliability, voice quality and security, have been resolved through continuous improvements and advancements in handset capabilities, adoption of wireless standards, and partnerships among device vendors, IP telephony providers and WLAN infrastructure companies.

New handsets capabilities include enhanced interfaces, additional software functions, new form factors (smartphone looking devices), improved device durability, and integration with advanced messaging, push-to-talk, and location-based features and applications – among others. Evolving wireless standards that are either being implemented or considered for future implementation include 802.11n, 802.11r, 802.11e and WPA2 security certifications. Finally, the market has witnessed the partnership of two of the major VoWLAN single-mode participants: Motorola and Vocera – that is expected to further increase the adoption and implementation of VoWLAN single-mode devices in the healthcare and retail industry.

Growth Rate Comparison

Growth Rate Comparison

Some Ideas for Enhancing Communications in Healthcare Organizations

Following up on my previous post requesting feedback on implementing UC technologies in the healthcare space, I reviewed some case studies (thanks for the links, everyone) and spoke with some vendors and end users. We are still finalizing our study and plan to talk to more people and review further sources, but I thought I would share some interesting insight that I received from a company called Software Advice.

Having recently installed a new IP-PBX system in their own office, Software Advice got thinking about ways medical practices could combine electronic health records with IP-PBXs. By combinging the two technologies, they think there is a great opportunity for medical practices to reduce telephony costs, improve office efficiency and potentially improve patient care.
They found out that, surprisingly, there are few medical-specific IP-PBX applications. So to spark some interest in the Asterisk development community, they decided to compile a list of seven applications that could be developed, including:

Find me, follow me – The system would prioritize an after-hours call based on the urgency of the situation. Emergencies could be immediately forwarded to 911. Calls from patients that recently had an ambulatory procedure might be forwarded to the physician’s mobile phone. All others might receive voicemail or the answering service. Urgency could be assessed not only by patient responses (e.g. pressing 1 for an emergency), but also by the content of recent encounters (e.g. yesterday’s botox injection).

Dunning Voicemails – If a patient hasn’t paid their balance after a given time period, this module automatically calls and leaves a voice message: “Dear [INSERT FIRST NAME], we recently noticed your balance of [INSERT OVERDUE BALANCE] has yet to be paid. If you’d like to pay now over the phone, press one. If you think you have received this message in error, press two.”

To read more, visit: Seven Great Applications for IP-PBXs in the Medical Practice

Mitel Enhances its UC and Collaboration Portfolio

Today, September 23, 2009, Mitel announced significant enhancements to its Unified Communicator Advanced (its core UC application) and TeleCollaboration solutions (see press release here).  

Unified Communicator Advanced (UC Advanced) release 3.0 features capabilities such as dynamic status, integration flexibility, a launchpad for Web and applications access, knowledge management and context-driven communications, among other new or enhanced functionalities. 

The dynamic status capability allows users to dynamically manage their extension in terms of specifying a user’s status with regard to various messages, presence and call routing. It also enables users to treat certain communications preferentially based on user-selected criteria. Finally, it allows users to remotely manage their status. 

Further, Mitel’s UC Advanced solution now integrates with Microsoft Office, IBM Lotus Notes and UCA APIs. Calls can be launched from Internet Explorer, Word, Outlook, IBM Lotus Notes or the user’s calendar.  

The knowledge management capability provides call recipients with information about callers such as recent emails, contact entries and exchanged documents. 

The launchpad allows users to launch Mitel applications from a single access point. Individual contacts can be called with a single mouse click, including creating speed dials that navigate voicemail and conference service menus. 

Context-driven communications is another valuable addition. It enables screen pops providing the called party with information about the subject and call priority. It also displays a picture of the caller and allows the user to respond via IM.

Mitel Series X Context-driven Communications

Mitel Series X Context-driven Communications

 Source: Mitel

Some other UC Advanced enhancements include visual voicemail, secure instant  messaging, RSS feeds, easy audio and web conference initiation through the desktop, etc. 

The UC Advanced solution scales from small to very large enterprise and can support up to 5,000 users on a single server.  

Mitel’s TeleCollaboration solution release 1.5 features integrated video and collaboration capabilities, low bandwidth requirements and high tolerance, and greater simplicity compared to competitor solutions. It offers browser-based collaboration and the ability to participate from anywhere, as well as session and snapshot recording.  

Mitel TeleCollaboration

Mitel TeleCollaboration

Source: Mitel

With these technology enhancements Mitel is seeking to address some current business challenges such as the increasingly diverse, geographically dispersed and mobile enterprise workforce and the need to manage multiple communication media for greater productivity and efficiency. A plethora of advanced UC and collaboration solutions offered by communication vendors are looking to address the same business needs and challenges. Yet, Mitel has remained at the forefront of technology innovation. While most of the new capabilities are not entirely unique, they are very much in line with industry trends and match or exceed those offered by its competitors. My personal favorites are the knowledge management and context-driven communications capabilities. We frequently go through multiple emails and documents in order to prepare ourselves for a call with a colleague, customer or partner. The tighter integration of such resources into the communication process seems to have the potential to greatly enhance user convenience and productivity. I also believe that the integration of video conferencing with collaboration (file sharing, etc.) is a valuable feature that provides users with a more comprehensive collaborative experience. 

What also makes Mitel unique is its consistent focus on the SMB market and its relatively strong competitive position in this space. When combined with the rest of its communication portfolio, these solutions can provide SMBs with capabilities typically available to large businesses only. Given Mitel’s efforts to gain greater penetration into the larger business space, the scalability of these solutions along with the rich functionality provide Mitel with an opportunity to more successfully move upstream as well.

Next-Gen Telepresence: Offering Sky-High Benefits at a Down-to-Earth Price

Please join us for a free webinar discussing trends and issues in the nascent, yet rapidly growing Telepresence market:

Here is a brief event description:

With videoconferencing finally delivering on those many years’ worth of promises, business executives around the world are now asking themselves whether videoconferencing’s big brother, telepresence, is a better communications solution.  

Much-hyped, telepresence in some quarters has gotten an unfair reputation for being an expensive alternative that few companies actually need—and fewer can afford.  

In fact, telepresence has always been a highly flexible and practical business solution, capable of meeting the needs of companies of many shapes and sizes, while delivering a healthy return on investment and presenting a platform for new competitive advantage.  

Join Dominic Dodd of Frost & Sullivan and Marc Trachtenberg of Teliris, a leading telepresence vendor, for this fresh and highly relevant presentation. The two will discuss how visual collaboration is providing the “silver bullet” for many of the challenges faced by corporations today and why the new generation of telepresence solutions should demand your serious attention.  

Attend this September 24 Webinar and learn the following:

           Why services make the big difference between telepresence and videoconference

           How benefits of telepresence can go beyond cutting business travel costs

           Possible future developments in the market for visual collaboration

Hybrid VoIP and TDM Communications Environments to Drive Demand for Gateway Functionality

I just completed a study on World Enterprise Media Gateway Markets and I thought I would share some of my findings through this blog post. 

Enterprisemedia gateways have evolved over the past 10 years. From relatively simple devices with straightforward transcoding and protocol translation functionality they have now become critical network elements and are increasingly incorporating other functionality. While single-purpose, plug-and-play gateways will continue to appeal to certain customers, multi-purpose appliances are likely to become more common as gateway functionality is embedded into other network elements and gateways are enhanced with new features and capabilities.

Over the past four to five years, the gateway market experienced significant growth as businesses IP-enabled their Time Division Multiplexing (TDM) telephony infrastructure in order to realize cost savings on long-distance communications, a practice known as toll bypass, and as they increasingly adopted IP telephony platforms that needed to be interconnected with the public switched telephone network (PSTN). In 2008, toll bypass and IP telephony still accounted for over 80 percent of the total ports shipped, but their share is likely to decline going forward as SIP trunking and application integration drive new demand for gateway functionality.

Voice over Internet protocol (VoIP) access and Session Initiation Protocol (SIP) trunking services are rapidly gaining traction and are providing TDM and IP customers with significant cost savings by enabling them to converge access lines and reduce long-distance charges. They also provide some additional benefits such as network-based fixed-mobile convergence (FMC), voicemail and auto attendant and voice virtual private networks (VPNs) with abbreviated dialing across multiple sites. Since the majority of the installed telephony equipment is still TDM and interoperability with IP telephony platforms is limited, growing penetration of VoIP trunking services will be highly correlated with demand for gateway functionality. 

Internet protocol (IP)-based applications such as contact center, conferencing and unified messaging (UM) have created some new opportunities for gateway vendors over the past couple of years as these applications needed to be integrated both with premise-based telephony infrastructure and carrier TDM networks. Application integration is likely to account for a growing percentage – from 10 percent to about 15 percent – of total ports shipped over the next five to six years.  

The gateway market experienced growth deceleration in 2008 due to a number of factors including the beginning of the recession and the maturation of the traditional gateway markets – IP telephony and toll bypass – and the slow take-off of nascent markets such as SIP trunking and UC. In 2009, the market is likely to experience a decline mostly due to the tough economic conditions. Pent-up demand is expected to drive growth in 2010 and onwards.

In 2011 and beyond, the market is likely to continue to grow driven by mass adoption of IP telephony, branch office integration, and solid growth rates in the SIP trunking and UC markets. Due to market maturity and rapidly improving SIP interoperability among vendors and service providers, annual growth rates are not likely to ever reach the heights of previous years and are likely to peak in 2011 and 2012 and start decelerating towards the end of the forecast period.

Enterprise media gateway vendors will face a number of challenges over the forecast period as follows:

•The need to ensure interoperability with multiple CPE vendors and VoIP service providers

•Cisco’s dominant market share and router-based approach, practically limiting all other vendor’s ability to grow

•The need to differentiate in order to remain competitive

Market growth will be driven by the following factors:

•Growing IP telephony penetration will continue to drive demand for enterprise gateways required to connect IP CPE to the PSTN.

•Toll bypass opportunities continue to thrive in some markets where PSTN costs are still high.

•Increasing availability of VoIP access and SIP trunking services will drive demand for gateways required to connect to both TDM and IP telephony CPE.  

Market growth will be restrained by the following factors:

•Some concerns over the reliability of IP telephony platforms and the quality of IP voice will slow down IP telephony adoption.

•VoIP access and SIP trunking services have gained little traction so far and are likely to be slow to penetrate the market due to interoperability challenges as well as limited service provider focus and marketing efforts.

•Slow adoption of UC and other IP-based communication applications is slowing down demand for gateways associated with such implementations.

Competitive power is quite unevenly distributed in the enterprise media gateway market with Cisco holding over 60 percent share of ports shipped and close to 70 percent share of revenues in 2008. Cisco has benefited tremendously from its leading position in data networking in tapping into the enterprise IP telephony market. Cisco is likely to lose some share over the next five to six years as independent vendors aggressively pursue new market opportunities.

With IP telephony implementations accounting for over 60 percent of total ports shipped, the rest of the IP telephony vendors (besides Cisco) using their own gateway appliances or cards in IP telephony deployments accounted for over 25 percent of gateway ports shipped in 2008. Each telephony vendor’s share of the enterprise media gateway market is largely determined by its share of IP telephony lines shipped in the same year.

A number of standalone gateway vendors are competing for a share of the enterprise media gateway market. Those include Aculab, ADTRAN, AudioCodes, Dialogic, Edgewater Networks, Grandstream, Multi-Tech, NET, VegaStream, Veraz and others. Each vendor is trying to position itself somewhat differently from the others differentiating either through features and functionality or business model and partnerships.

Given the high concentration of market power and the mature stage of the market, it is not likely that many new entrants will seek to tap into this opportunity throughout the forecast period. It is possible, however, that some vendors in adjacent markets such as Aculab (entered in 2008) and Veraz (entered in 2009) may seek to leverage existing technology expertise or channel partnerships to diversify their portfolio and revenue streams. Going forward, it is likely that existing market participants will look to re-position themselves for continued success in an evolving marketplace.

Update on Aastra's Strategic Roadmap

Last week, I had the opportunity to meet with Tony Shen, Aastra’s co-CEO, President and COO. Since I won’t be able to make it to Aastra’s analyst event in Stockholm this fall, this meeting was intended to provide me with an update on Aastra’s performance and a perspective on Aastra’s strategy for the communications marketplace. 

This was my first meeting with Tony Shen and I was really impressed by his practical, down-to-Earth approach to business matters. His answers and comments were straight to the point and appeared unembellished and sincere. 

Some of the issues I raised included Aastra’s continued portfolio consolidation and adjustment since the multiple acquisitions including the most recent one of Ericsson’s enterprise business, Aastra’s vision for its position in the unified communications technology paradigm, and its strategy for an increasingly consolidating marketplace. Here follow some of the takeaways from the discussion with Aastra’s co-CEO (please note this is myinterpretation of the messages conveyed by Tony Shen): 

  • Portfolio consolidation: Tony Shen believes that, even as they stand today, the merged portfolios are more complementary than redundant. While, overall, the perception that Ericsson’s enterprise portfolio acquisition helped enhance Aastra’s large-business portfolio is fairly accurate, the major advantage from the acquisition was Aastra’s ability to rapidly (though inorganically) expand in several new markets including the Nordics and the U.S.A.Also, the different products in Aastra’s portfolio have different strengths and positioning in the different countries. For example, Aastra seems to have a strong #2 position in France(according to Shen), including the large business market, whereas Ericsson has been more successful among French SMBs. Ericsson is, however, strong among U.S. very large businesses including university campuses (note: Aastra is in this space with the Intecom acquisition as well). The former Ericsson large systems are also dominant in Sweden, Australia, New Zealand and Spain. Nevertheless, Aastra intends to further consolidate its portfolio to ensure maximum efficiency and will most likely share its vision and the details of a 3-year portfolio evolution plan at the analyst event later this year.
  • Localization: In Tony Shen’s opinion, a key element of Aastra’s strategy and a major differentiator is its focus on localization, rather than globalization. He firmly believes that in Europe(where Aastra has the strongest presence), each country has different requirements with regard to communications infrastructure and one size does not fit all. He also pointed out some peculiarities of European business practices vis-à-vis American practices such as the general preference to avoid leaving messages in favor of communicating directly or through receptionists and secretaries. Going forward, Tony Shen believes the company will continue to develop local strategies and individual approaches for the more than 20 countries in which it operates.
  • Unified Communications positioning: It seems that Aastra does not aspire to become a one-stop-shop vendor for the various UC applications. It is developing partnerships with others (e.g. Microsoft) in order to be able to provide certain components of the UC stack (telephony platforms, endpoints, etc.) where it has a competitive advantage.
  • Growth strategy: Aastra’s focus seems to be on rejuvenating its existing installed base. Tony Shen sees a large opportunity in upgrading and modernizing the multiple legacy (Ericsson, DAMOVO, etc.) systems deployed around the world. It also intends to focus on maintaining and growing its market share in the countries where it has presence today. Aastra is looking at some emerging markets such as Brazil, Asia Pacific and Russia for new growth opportunities.
  • Financial prudence: A key element of Tony Shen’s leadership approach seems to be his focus on financial prudence. He stressed the fact that Aastra has weathered the economic recession better than most other market participants due to its more conservative business practices. Aastra’s recent financial results seem to indicate that its leadership has a strategy in place that makes it more resilient in a tough economy. It reported record revenue for the year ended in December 2008, and Q2 2009 marked its 45th consecutive profitable quarter.  
  • Innovative business models through partnerships:  Tony Shen pointed out that Aastra’s performance in Spain, one of the most hardly hit economies, actually improved over the past year due to the success of  Telefonica’s “rental” go-to-market model, which helped drive sales in an unfavorable economic climate.  

According to our most recent World Enterprise Telephony Platform Market study, Aastra held close to 9% market share in EMEA and ranked 6th in terms of revenues generated in the region in 2008. It ranked 7th in terms of global enterprise telephony revenues with close to 5% market share in the same year. 

Given Aastra’s recent financial performance and Tony Shen’s focus on financial prudence, I have no doubt the company is likely to remain a viable competitor in the near term. However, with the massive technology evolution, market consolidation and considerable vendor repositioning in the enterprise communications marketplace, I have some concerns about its growth strategy for the long term. If Avaya’s acquisition of Nortel’s Enterprise Solutions business is successfully completed by the end of this year, market concentration will increase with the top four vendors (Avaya+Nortel, Cisco, Siemens, ALU) holding over 60% market share of world enterprise telephony revenues.  

While customers are still likely to appreciate having more choices and to continue to purchase products from multiple vendors, growing market concentration is likely to effectively create a barrier to growth and entry to smaller players unless they have some very distinct competitive advantages. Those advantages may revolve around technology or specific geographic markets or both. Aastra’s country-by-country approach may, therefore, give it a certain advantage in the countries where it has presence. However, I do believe that it will be necessary for it to also seek to expand in new ones in order to be successful in the long term.  

During my conversation with Tony Shen, I got the sense that Aastra does not have a strong plan in place for organic growth in North America(other than in terminals). While I agree with Tony Shen that this is a mature, fairly concentrated market with several very powerful participants and, therefore, a difficult place for Aastra to grow organically, I believe it needs to find a competitive spot in this market that offers some growth opportunities even if that involves yet another acquisition. In fact, the SMB vendor market in the U.S.may be due for some further consolidation with the large vendors (Avaya, Cisco, etc.) making a concerted push in this market segment, Mitel facing some credit issues, NEC and Toshiba having limited presence, open-source telephony vendors gaining traction, ShoreTel growing, yet being very small to be able to successfully compete against the established vendors, etc. If the SMB market remains so fragmented, it will be increasingly more vulnerable as the technology paradigm shifts and the market consolidates at the top.  

Aastra may need to grow its indirect sales in order to expand its reach both geographically and across customer segments. Its localization strategy seems to warrant a more indirect approach to help gain efficiencies and economies of scale. Further, channel partnerships are becoming critical as the complexity of communications infrastructures increases, on one hand, and vendors compete for market share in a maturing marketplace, on the other. 

Aastra will also need to send a more compelling message to the market about its vision for UC. The trend in the SMB market seems to be around the introduction of single-box solutions comprising all or most of the UC applications and offering an economical option for budget-constrained customers. IBM’s Lotus Foundations Reach with an integrated ShoreTel PBX functionality represents a recent example of how vendors are approaching the SMB space. While I believe that customers will continue to deploy best-of-breed technologies (versus all-in-one solutions) on many occasions, Aastra may need to develop some go-to-market partnerships for more effective marketing and implementation of complex, integrated UC environments. 

There is a good chance my concerns will be addressed at the analyst event later this year. I look forward to updates from Aastra.


Avaya Wins the Auction for Nortel’s Enterprise Solutions Business

Today, September 14, 2009, Nortel Networks Corporation (Nortel) announced that “it, its principal operating subsidiary Nortel Networks Limited, and certain of its other subsidiaries, including Nortel Networks Inc. and Nortel Networks UK Limited, have concluded a successful auction of substantially all of the assets of Nortel’s global Enterprise Solutions business as well as the shares of Nortel Government Solutions Incorporated and DiamondWare, Ltd. Avaya Inc. (Avaya) has emerged as the winning bidder agreeing to pay US$900 million in cash to Nortel, with an additional pool of US$15 million reserved for an employee retention program.  

The sale is subject to court approvals in the U.S., Canada, France and Israel as well as regulatory approvals, other customary closing conditions and certain post-closing purchase price adjustments.” 

Both the press release and the comments provided by Joel Hackney, President of Nortel Enterprise Solutions, on the analyst call this morning described the event as “a very exciting day in the history of Nortel”, “a historic moment” and “a big day for us [Nortel]”.  These claims seem to be based on the anticipation that the deal will provide existing and potential [Nortel] customers with investment protection.  The deal is expected to close by the end of the year. The finalization of the bidding process, which started last Friday, took, in fact, three days and was described as “a very productive process” demonstrated by the almost doubled price compared to the original stalking-horse bid placed by Avaya earlier this year. The names of the other two bidders were not disclosed, but the Nortel spokespeople noted that Avaya’s advantage as the stalking-horse bidder was primarily in the ability to gain a head start on integration planning.  

Much has been said about the potential advantages and disadvantages of this transaction. As I go over my previous post on this subject matter (please see further below on, I feel that most of my earlier thoughts on the then potential merger are still valid.  

The one important aspect that has changed, however, is the price. As mentioned, it has almost doubled since the original stalking-horse bid for US$475 million. I believe that the other two bidders must have played a key role in pushing up the sales price. However, Nortel’s spokespeople reiterated something they had stated earlier when the stalking-horse bid was announced – namely, that the interests of customers, channel partners and employees represented primary concerns in the negotiations. Therefore, other aspects of the transaction (in addition to the acquisition price) must have given Avaya a superior position in the negotiations vis-à-vis the other bidders. For example, Avaya’s commitment to preserve at least 75% of Nortel Enterprise Solutions’ workforce at the time the deal closes certainly demonstrates good citizenship on both Avaya and Nortel’s parts. 

Nortel is most likely to continue gradually restructuring its business until the deal closes and to also invest in conveying a consistent and compelling message to all stakeholders about the benefits of the merger in order to ensure the most successful final outcome. Joel Hackney mentioned that the next 60 days will be critical for them to prepare the market for the upcoming transition. While Avaya and Nortel will continue operating as separate entities, each will work towards this goal to the best of their abilities. 

For everyone’s sake, I hope that the higher transaction price indicates an even greater commitment on Avaya’s part to make the merger as successful as possible. I hope it takes this opportunity to invest in focused transformation and portfolio evolution and creates a strong entity that can compete more effectively against Cisco and Microsoft (as well as the rest of the communication vendors, of course). There have been speculations that Avaya is likely to just leverage Nortel’s installed base to convert it to Avaya solutions with a minimal investment in preserving and further developing Nortel’s technologies or partnerships. That would indicate complacency that Avaya cannot afford in this period of rapid technology evolution and drastic paradigm shift. I believe Avaya’s leadership has identified the need for change (judging by other initiatives taking place at the company) and is not likely to squander its good fortune granted by the acquisition. 

As the merger provides Avaya with an uncontested leadership position both in terms of installed base and shipment and revenue market share, Avaya should use the “break” from the breath-taking competition with Cisco over the past few years to aggressively transform its product line, overall approach and marketing message. With the new threat posed by Microsoft, incremental changes are no longer sufficient to ensure a telephony vendor’s longevity. Some tough decisions may need to be made, but they need to be made rapidly, yet prudently, and with a vision for Avaya’s role in the communications marketplace not two or five but ten years from now. 

As I stated earlier and as I can see my fellow analysts have commented, the merger definitely represents a positive development for Avaya. This was probably one of few and, most likely, the best opportunity for it to rapidly gain market share. Without more visibility on who the other bidders were and what they had to offer, it is difficult to judge if this was the best alternative for Nortel, but the increased transaction value and the highly positive comments by Nortel’s spokespeople, give us reasons to believe that Nortel secured the best deal possible given the circumstances. 

From a channel perspective, partners may have some mixed feelings. In my opinion, channel partners should not fear that they would be abandoned empty-handed. Avaya has officially committed to a more channel-centric approach and, who else can best install and support Nortel solutions, but its partners? For some time to come, Nortel’s existing customers and those that continue to trust and invest in its technologies will represent a cash cow for Avaya and it will need trained individuals to help milk that cow. Eventually, nothing can prevent partners from also adding Cisco, Microsoft or any other vendor to their portfolio and thus diversifying their portfolio and reducing risk. As vendors struggle for market share, they are more likely than not to seek to attract and nurture new partners. 

From a customer point of view, the most positive development is the end of the uncertainty – in its present magnitude, at least, as some uncertainty will linger on for some time to come until Avaya sends a clear message about its portfolio evolution plans and demonstrates some commitment to this plan through consistent execution. With the rapid pace of technology advancements, customers looking for cutting-edge communication solutions should be prepared for shorter technology refresh cycles, anyway. Declining technology prices are making such more frequent infrastructure replacements more affordable. On the other hand, as architectures become more open, most vendors are developing products and strategies for more seamlessly and cost-effectively migrating their competitors’ customers to their own solutions, thus expanding the array of options for end users and offering them much greater flexibility. 

In conclusion, I would reiterate that, in my opinion, this is a positive development for the industry. Our eyes are on Avaya to share a vision for the future of the merged entity when the deal closes toward the end of the year.

Siemens Strikes a Partnership with Netlink

On September 2, 2009, Siemens Enterprise Communications Group (SEN Group) announced a partnership with Netlink, one of the fastest growing U.S.-based providers of IT solutions. As part of the arrangement, Netlink will acquire SEN Group’s product and service portfolio in 27 countries around the world.  The agreement is valued at €204 million ($308 million) and includes Netlink’s acquisition of SEN Group’s local assets in the following countries:  Estonia, Latvia, Lithuania, Finland, Sweden, Ukraine, Greece, Switzerland, Turkey, Ireland, Hungary, Bosnia, Bulgaria, Croatia, Slovakia, Slovenia, Serbia, Romania, Singapore, Malaysia, Thailand, Ecuador, Peru, Portugal, Venezuela, Chile and Canada.  

According to the press release “customers will enjoy full continuity of service while benefiting from the broader portfolio of capabilities that the relationship delivers”. The understanding is that SEN products will still be offered under the SEN brand, but Netlink will acquire any local SEN legal entities as well as all inventory, staff and other assets, and will take over the delivery of services for SEN’s products under its own (Netlink) brand. 

According to Ross Sedgewick, Director of Global Marketing for Siemens Enterprise Communications, the partnership is part of SEN’s global strategy of improving SEN’s market reach via channel partnerships and driving revenue growth while ensuring customers are served effectively.  

Most likely, SEN’s penetration in some of these markets has been less than satisfactory. Netlink’s market positioning and global structure are expected to enable it to more successfully market and support SEN’s products in these countries. Netlink’s existing product and service skills will be complemented by those of local SEN staff, thus ensuring a certain degree of business continuity. By partnering with a single entity, rather than multiple resellers, SEN expects to more cost-efficiently transfer the assets and also ensure that the selected partner will be more engaged and can fully develop the operations without worrying about competition. 

Ever since the Gores Group acquired 51% stake in SEN, the new entity has been committed to growth. Many analysts, including myself, believe that for Siemens to be able to get on a faster growth path, it needs to make some changes to its services strategy and grow its indirect channels. From that point of view, this partnership seems like a move in the right direction. As is seen from the list of countries included in this partnership, these are mostly emerging markets, many of them small countries. For a global vendor such markets typically present a challenge. Building local presence takes time and investment; yet, the return is limited and it’s difficult to gain economies of scale.  

For a vendor such as SEN seeking to grow in a down economy and in a consolidating market, it seems prudent to find a partner that can take over parts of the business that are not run as efficiently as desired. In the event that Netlink is indeed successful in growing the business in these 27 countries, SEN can expect to realize some benefits as follows: 

  • Grow its brand awareness and installed base in a number of currently under-penetrated countries
  • Grow product revenues
  • Retain some control over product and service delivery through a master partnership with a single, more engaged entity
  • Focus on primary target markets such as Germany (mature, yet key for SEN), USA (maybe its top growth objective), Brazil, China and some countries in Central Europe and APAC

The biggest disadvantage to SEN is the foregone opportunity to develop these operations on its own and generate greater revenues and margins, while retaining full control over its brand. Obviously, the worst outcome would involve Netlink failing completely in all these markets, which is somewhat unlikely since Netlink will have a vested interest to generate return on its investment. Further, Netlink is a fast-growing company with a structure and processes in place that make it a suitable master partner for a communications vendor such as SEN.

What should customers expect? There may be some bumps during the transition, but SEN products and related services will continue to be offered in these countries and, most likely, they will be marketed with renewed vigor and maybe even more consistency than before. There is always a chance that, in some countries, Netlink may be less successful than in others and maybe even less effective than SEN used to be. But I believe that Netlink is more likely to commit efforts and resources to develop the business. 

What could make Netlink more successful? Thorough knowledge of SEN’s product portfolio and a deep understanding of its overall market positioning in view of evolving market trends will be critical for its success. Marketing SEN’s solutions will have to take into account the communication vendor’ shifting focus towards delivering applications and services for comprehensive, end-to-end unified communications (UC) environments. Proper training of all local resources will be key in ensuring that they are prepared to address customer concerns both throughout the transition and going forward. Given its product portfolio (IT, business applications, etc.) and specific expertise, could Netlink be well positioned to develop CEBP solutions for business customers leveraging SEN communications technology? That could make a compelling value proposition if the technologies are in place and a strong marketing message is sent to the market.

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