I have written some earlier posts on Mitel’s and Siemens’ strategies for the hosted IP telephony/cloud UC market. But there are others that have tapped into this space previously reserved for the telcos (ILECs, CLECs), MSOs, ISPs and some ASPs. I get a lot of questions about BroadSoft, Cisco, Microsoft, IBM, etc. I have now completed my study on North American hosted IP telephony and UC services markets and have some new insights to share. Unfortunately, the individual vendor analysis is too lengthy to post here, but I will share excerpts that more broadly discuss the value proposition of these new business models.
A key new development in the hosted IP telephony and UC services market is the entry of PBX vendors with their own multi-tenant or virtualized (multi-instance) solutions designed specifically for carriers and partners or intended for service delivery out of their own data centers. Cisco’s Hosted Collaboration Solution (HCS) architecture, Mitel’s various hosted/cloud solutions and Siemens’ OpenScape cloud architecture are some examples of these new business models. These platforms are typically more feature-rich than the carrier softswitches and application servers traditionally utilized to deliver multi-tenant business telephony services, but they also offer some additional benefits. For example, Verizon’s UCaaS services based on Cisco’s HCS are positioned as most suitable for the highly demanding large enterprises who wish to integrate the hosted service with their existing Cisco premises-based infrastructure. Also, most of these new architectures are not truly multi-tenant, but are instead using shared hardware and dedicated software, thus addressing some security concerns associated with hosted services.
The new business models are likely to cause some re-alignment in the value chain, with potential advantages and disadvantages for all market participants. Their impact on end users, however, is going to be mostly beneficial as they will be able to choose from a larger number of alternative solutions. For the supply side, the key benefit is ability to focus on core competencies – vendors will be able to leverage their software expertise, data center providers will deliver the most cost-effective server hosting and management, and the diverse range of service providers will focus on customer acquisition and ongoing management, as well as the integration of typical carrier services such as SIP trunking.
- PBX vendors: PBX vendors are likely to benefit from gaining access to a customer base looking to outsource both infrastructure and infrastructure management from a third party. They will also be able to deliver greater value to their channel partners by enabling them to generate recurring revenues by either hosting the platforms themselves or reselling services hosted in a third-party data center. Potential pitfalls for PBX vendors include channel conflicts, if the vendors are also selling hosted/cloud services directly; customer mismanagement, if tiers of support and responsibilities are not clearly defined; and some loss of professional and managed services revenues. Also, customer churn is likely to be greater compared to that experienced in the premises-based business.
- Telcos: Service providers stand to benefit from the opportunity to deliver hosted/cloud services to more demanding customers using advanced telephony and UC platforms previously only available as premises-based solutions. Also, they can realize cost savings and reduce time to market, if the solution is hosted in a third-party data center, as the deployment and integration of multiple servers and software stacks is typically costly and time consuming. Virtualized solutions such as Mitel’s Virtual MCD and Cisco’s HCS also enable them to provide more secure hosted services to customers requiring their own dedicated software while leveraging the benefits of shared hardware and a hosted model. Potential challenges for service providers include the need to maintain multiple versions of vendors’ software stacks (as in the case of Verizon’s implementation of Cisco HCS), and more limited ability to customize the solution when hosted in a third-party data center. Furthermore, the new business model lowers barriers to entry thus potentially leading to increased competition.
- VARs, SIs and MSPs: For VARs, SIs, MSPs and smaller LECs this is an excellent opportunity to expand their portfolio and generate recurring revenues by introducing hosted/cloud-based services without the cost and hassle of acquiring, integrating and running the systems in their own data centers. The cost and complexity of next-generation architectures has prevented this group of market participants from exploring hosted services in earnest. Now they can more successfully compete against larger telcos and premises-based solution vendors by presenting several alternatives to their customers – from premises-based systems, managed in house, to provider-managed on-premises solutions and fully hosted services. With their strong expertise in CPE installation, integration and management and typically better customer service and support, smaller, regional interconnects will now be able to serve their customers even more effectively.
- Business customers: Business customers will benefit from increased availability and diversity of hosted/cloud solutions. As more service providers introduce hosted IP telephony or UC solutions, businesses will be able to choose a partner from a broad range of providers – from large telcos with a substantial brand-name reputation to trusted local system resellers with whom they have long-standing relationships. The increasing competition is likely to result in more competitive prices and better customer service. Also, service offerings now include a large spectrum of alternatives – from low-end basic telephony offerings to comprehensive UC bundles and packages of tightly integrated communications and business applications (e.g. CRM). Furthermore, along with the cost-effective multi-tenant services, providers are now able to address the needs of businesses with high security requirements by using virtualized solutions based on shared hardware but dedicated software.
I recently had the opportunity to speak with Bill Vass, former CIO of Sun Microsystems, about some technology trends such as virtualization, cloud and mobility.
With more than 30 years of technical and IT management experience, Bill Vass is an industry leader in the field of information technology. Prior to its acquisition by Oracle in January 2010, Sun Microsystems Inc. was a global fortune 100 company with a 26-year history of providing networking computing infrastructure solutions. For 15 years, Sun had a highly flexible work policy that allowed 19,000 employees to work away from the office at least one day per week. Bill Vass and his team selected and implemented the technology to support this highly effective virtual organization.
Elka Popova (EP): Hi Bill. You have a tremendous amount of experience in deploying advanced technologies to support Sun Microsystems’ transition to a more flexible work environment. I would like to hear your perspective on future technology trends.
In view of some key demographic shifts – growth of the virtual organization, consumerization of the enterprise, mobility, etc., what technology trends do you think will shape the market in 2011?
Bill Vass (BV): I think SaaS is going to continue to grow. I think there will be a lot of challenges in integrating SaaS, though. Consumerization will continue to grow as consumer devices penetrate the workplace. I think that will drive organizations to virtual desktops. So the idea would be – we don’t buy you clothing to come to work; we don’t buy you a car to come to work; why do we buy you a PC? I think that is the way it is going to move; and you just choose anything you want; we don’t care; when you are ready to work, we will give you a virtual desktop. That way we will keep our corporate data safe in the corporate cloud; and you can work on any device you want – you can work on your iPhone, or your Android phone, or your iPad, or your Mac, or your Dell Ubuntu box, or your HP Windows box, we don’t care.
Virtual desktop and understanding that environment is going to grow significantly. What you see happening with SaaS is very interesting. I was at a CIO conference with Fortune 100 CIOs. I asked them “How many of you are using SaaS today?” And 60% of them raised their hand. And then I asked them “How many of you, CIOs, selected those SaaS apps?” And no one raised their hand. And the reason is – just like with consumerization, where people are using their own devices, business leaders and users are selecting their own applications.
Picture this scenario. The business leader goes to the CIO and says ”I need this CRM system.” And the CIO says “Well, there are probably 1,100 interfaces on our CRM system. We will have to run it in a SAS70 data center; we will have to go through Sarbanes-Oxley; we will have to buy these additional products and install them and integrate them, and so on. Give me $13 million and 18 months and I will have it for you.” And the guy rolls his eyes and goes back to his office.
But then the salesforce.com sales person comes in and says “I can give you CRM right now, just give me your credit card. It’s only $25 an employee!” And the business leader gives them a credit card, and next thing you know, he’s got 5,000 people on salesforce.com. And then the same thing happens in HR; so then the HR system is on Workday. And then it happens in all these other places.
But then you have to manually type all this stuff people typed in salesforce.com into the Workday program, and into the ERP system, and the Order Management system. And the next thing you know, the business ends up hiring this huge staff to do this – for instance, type a new sales person’s information into all the systems, because these things are not integrated. And then the business leaders go back to the CIO and say “Hey can you automate this for me, just like it used to be?” And the CIO scratches his head and says “Oh, God, there are still 1,100 interfaces; you didn’t make these go away; you didn’t make the Sarbanes-Oxley requirement go away; you didn’t make the integration testing go away.”
I think there is going to be this time of chaos – SaaS chaos and revelation; immense growth of SaaS and immense growth of consumerization, and then a rationalization to virtual desktops, and a managed SaaS environment with integrations for SaaS.
You will also see lots and lots of companies putting up what I call private clouds, which is nothing more than continuing to do desktop virtualization and server virtualization, but with more automated provisioning.
I think you will see people waking up about closed wireless systems, and wondering why they are running these closed wireless systems, while they already have environments where people are working on unsecured wireless systems. And they will get the idea of having a wireless provider run it for them instead of them trying to run it themselves.
I think you will see pico cells being installed and replacing the desk phone altogether. Maybe you will see some more complicated phones at the receptionist’s desk, but for everybody else, who already has a cell phone, you will see pico cells which will improve reception and, now that you are not paying for wireless minutes while in their corporate buildings, you can also do it more economically than you did before. It becomes a very compelling option to give everyone a cell phone. And then you have the added advantage of letting everyone use their device, as long as you have a Web service environment, virtual desktop, and you can deliver an edge mail service.
You will start to see networks being turned inside out. But you will also see tons of companies doing it the old-fashioned way. There are companies still using mainframes, right? It’s not going to change overnight. You will have banks and governments who are very slow to change. And for good reasons around security and all those other things. But the real dichotomy you will run into is the competition between virtual enterprises and physical enterprises. It’s going to be staggering over the next few years.
In the end, the virtual enterprises will be so fast and flexible, and they will be able to run competitive rings around the “old fashioned” companies. Not only will the virtual enterprises be more fast and flexible, they will have a much lower overhead of operation than the traditional way of providing IT services in big companies. They will be able to expand and contract faster, get into new markets faster, and get the best talent from all over the world, without geographic limits.
EP: Bill, how strongly do you believe in cloud architectures? Do you think businesses will increasingly leverage external clouds? Which applications do you believe are best suited for the cloud?
BV: A lot of companies will be deploying private clouds, mostly virtualization with automated provisioning. However, it’s important to note that these concepts are not new, IBM invented virtualization back in the late 60s and what we call cloud computing in the early 70s. What we are seeing is just another cycle of centralization from decentralization but now on top of more open platforms.
The thing that will slow the movement to public and even private clouds will be the normal politics between different parts within large companies, but newer / smaller companies will not have these issues.
If I started a company today, I wouldn’t install any servers, I wouldn’t install any phone systems, I wouldn’t install any wireless systems. I would go to 802.11 service provider and have them run wireless APs in my office. I will have pico cells installed on the wireless network and give everyone cell phones. I would go to Workday for my HR, and salesforce.com for CRM, and I’d build an IT environment that costs maybe about $2K a year per employee. The old-fashioned way, it cost about $17K a year per employee (business systems, plus network and hardware, and data-centers). So you will have a company with an overhead of $2K a year per employee competing with a company that has an overhead of $17K a year per employee. You have a company that can double its size in a day because of its virtual environment; it doesn’t have offices. And then you have a company that has this real-estate portfolio that’s slow to change. You are going to start to see these battles.
And the other thing that you are going to start to see is anxiety among the IT organizations about their jobs, and their place among all this. In a virtual company, the CIO is the same person who does real estate and who does purchasing. That’s a scary thing for CIOs; that’s a scary thing for the whole environment. That is also going to slow change and the adoption in the big companies.
The virtual companies will put everything in the cloud. They don’t have a legacy. Companies with a legacy will try to gradually move everything in the cloud, except their ERP systems. Mail, calendar, that will go faster – nobody is going to run those on the premises, that’s the dumbest thing in the world. Your web sites – why would you run that; just go to Amazon and have them run them for you.
I think desktop virtualization is going to go to the cloud; but most companies are going to run this internally, at first. I think you are going to see custom apps stay inside the premises, but commercial apps move to a more SaaS environments. I think the easiest stuff to move is the stuff that you don’t have to deal with Sarbanes-Oxley about. There are companies that legitimately have custom requirements, and companies that legitimately have security requirements that will prevent them from moving to SaaS. Those would be banks and governments, and other similar organizations. But even they should be delineating what they can take advantage of in the cloud. But they should also be careful about what they put in the cloud and make sure they don’t get locked in with a SaaS provider, and have an exit clause in contracts, and make sure they understand the SLAs properly.
EP: How about voice, Bill, corporate telephony? When will it get moved to SaaS on a large scale?
You know, the way I see things going, people would just put pico cells in their offices and use mobile phones. I think VoIP, beyond using it for Skype or something like that, might start to become one of those things where you ask yourself “Why did we even bother to develop something like that? We all have cell phones any way.” Why would you go and put in a bunch of Cisco VoIP phones in your company if you all have cell phones? What if you could reduce the cost and improve the quality by just putting in a bunch of pico cells?
EP: I think one big question on many customer and vendor minds is whether all-in-one solutions will eventually become more dominant. Currently, most businesses deploy best-of-breed architectures and this approach has both its advantages and disadvantages. Some vendors are making concerted efforts to become the one-stop shop for their customers’ communications needs. Where do you see the potential for this approach, especially in view of the SaaS and mobility trends you just talked about?
That’s what I referred to earlier as the chaos of SaaS that’s coming. What I described about the business users going and selecting SaaS on their own, outside of the organization, is going to continue and they will do it on the principle of best of breed. And then this giant chaos is going to occur, maybe 4 or 5 years from now, when we try to figure out how to integrate all the SaaS apps together into a best-of-breed environment.
The trouble with the all-in-one systems – old companies that have all-in-one systems are going to resist moving to SaaS. New companies, that don’t have anything, are going to move to SaaS right away.
I don’t think that any single SaaS provider is qualified to provide everything to a company. Certainly it’s simpler to get everything from the same company; but everyone who has had the experience knows how unpleasant it is when you are negotiating your next year’s support costs and there is no competition.
EP: When do you believe IT and telecom will fully merge – technologically, organizationally and in all other related aspects?
BV: One of the areas where I worked with Mitel a lot was this combination of the desktop and the phone. The challenge is that those two groups – the people who manage the desktop and the people who manage the phone – don’t talk to each other. And they are both threatened by each other. It is a people problem, not a technology problem. I think it is still going to be a long time before they merge, because they are two different camps internally and two different sets of vendors. I think what will cause them to merge is the younger generation coming in. They are already using Skype on their desktop, they are used to SIP-compliant VoIP on a desktop, and used to working on a cell phone. And those are the things that will drive the change; I don’t think organizations on their own are going to change.
EP: Bill, thank you very much for your insights. I think many CIOs as well as vendors and SaaS providers will appreciate your perspective on technology evolution.
Vanessa Alvarez and I just completed the update of our North American Hosted IP Telephony and UC Services Markets study. Here is a summary of our findings:
In 2009, the economic crisis continued to plague enterprises, particularly in the small and medium business segment, which is the target market for hosted IP telephony. Many service providers suffered customer retention issues as SMBs downsized and some even went under and couldn’t pay their bills. Customer acquisition was even more difficult as many enterprises held back on making communications decisions or made other IT technology investments a priority.
Yet, 2009 was a relatively successful year for hosted IP telephony. The installed base grew by close to 30 percent with new adds compensating for losses due to workforce reduction in customer organizations.
Although the concept of unified communications continued to make inroads into enterprises, it did not gain as much traction as originally anticipated. As a result, although many hosted service providers took 2008 to retrench and include more UC offerings into their portfolio, the market segment targeted by hosted services was not ready for unified communications, and UC adoption rates and revenue impact were minimal.
Frost & Sullivan estimates about 1.4 million installed hosted IP telephony lines as of the end of 2009 and expects the installed base to reach between 7.5 and 8 million lines in 2015. Revenues, estimated based on an average bundle of features and capabilities, reached about $700 million in 2009 and are expected to reach $3.8 billion in 2015.
Many factors will contribute to growth going forward. The macroeconomic situation forces enterprises to reconsider maintaining their own infrastructure as opposed to using hosted services. Enterprises today want to focus on driving their business, not managing their IT environments.
Parallel to this, hosted IP telephony, and hosted services in general, have evolved in terms of features and functionality. Underlying technologies are also evolving, allowing service providers to upgrade and enhance their own networks and data centers, making the delivery of IP telephony easier and more cost-effective.
The market remained fragmented with over 50 providers, each offering varying bundles of communications applications typically including local and long-distance voice, voicemail or unified messaging, auto attendant, conferencing, contact center and CRM applications, frequently also packaged with an access line and an Internet service. Frost & Sullivan predicts that consolidation in this market will accelerate, as large IT service providers look to bundle communications services into their overall IT hosted services offerings. As cloud computing begins to evolve in service providers’ data centers, it will become easier to deliver compelling cloud-based communications services. Also, within the next two to three years, some PBX vendors will look to develop their own solutions, in the form of virtual appliances hosted in their own data centers or the public cloud, and deliver services more directly to end users, bypassing the traditional telcos.
Enterprises today must consider what delivers greater value to their business. Many are finding that managing their own IP telephony systems, or any IT for that matter, just doesn’t make economic sense. It is best to focus their IT and communications management resources on delivering superior products/services to their customers as quickly and efficiently as possible.
The counterpoint to what? Good question. I wanted to talk about some personal experiences with communications technologies. Since the sentiments in this article may appear to contradict ideas I have shared previously – taking more of an analyst, rather than a consumer point of view – I thought I would present them as a “counterpoint”.
Frequently, nascent technologies promise to improve the way we live and work. But at the early stages, both businesses and individuals tend to experience more challenges than benefits.
I work out of a home office, like many other professionals today. Organizations are becoming increasingly virtual and IT managers are struggling to deliver reliable, secure and cost-effective communications to their growing remote workforce. In fact, many technological advancements – such as enterprise mobility, unified communications and SaaS/cloud-based communications, to name a few – are touted as particularly appropriate for mobile and geographically dispersed users. But remote workers frequently face issues that negatively impact their ability to leverage the full potential of these advanced technologies.
Here follow some quick references to popular marketing pitches and my counterpoints as an end user:
UC and software-based communications provide a cost-effective and convenient communications solution for remote workers.
COUNTERPOINT: At home, I have a regular POTS line, as well as a Cisco IP Communicator client on my laptop. I am glad I have the Cisco client because it allows me to call home when travelling or call an international number from home – free of charge to me. However, the few times I have tried to use it to attend an audio conference or make a critical business call, the quality turned out to be so poor that I had to switch to the POTS line or my cell phone.
There are several “weak links” in this scenario and the soft client is just one. It may be the quality of my Internet connection. I have a DSL line (I believe 4 Mbps downstream and 1 Mbps upstream) and I frequently have quality problems (breaking voice or slow website upload) when using various web applications or soft clients. It may be my wireless router – which is integrated with the DSL modem. It may be my laptop RAM or processing power. It could also be an issue with my VPN, the size of my Lotus Notes mail box, or any other application I access on my laptop. It may be some cookies or software bugs on my home network.
So it could be anything! But my point is, I am not ready to dump my TDM line OR my desktop phone for a PC-based soft client any time soon. Though my experience is that of a home worker, I think business environments are not immune to such challenges. If you really believe PC-based clients are ready to replace desktop phones, maybe you need to make sure the money you save from eliminating desktop phones is properly invested in assessing and upgrading LAN and WAN connections, PC processing power, RAM and hard drivers, etc. In my opinion, soft clients make a great adjunct to desktop phones, but not a viable replacement alternative … yet.
SaaS and cloud-based communications enable convenient self service for SMBs and remote workers.
COUNTERPOINT: I strongly believe in the value of hosted/cloud-based communications for businesses with limited in-house resources. But I have an issue with the claims around self service. I suppose, self service makes sense at the very initial stages of service selection and provisioning. Certainly, IP telephony – hosted or premises-based – also enables self-service moves, adds and changes (MACs), which provides substantial cost savings. IP telephony also enables IT managers as well as end users to manipulate settings through software/Web-based interfaces – providing flexibility and cost efficiencies.
However, self service only goes so far. In fact, hosted IP telephony and other ASP services never gained much traction exactly because service providers were not able to provide sufficient network implementation and management support required for mission-critical, real-time communications.
Inevitably, hosted services involve some customer premises equipment (CPE). To begin with, LAN and WAN reliability and security are top concerns with both hosted and premises-based IP communications. Therefore, router and switch selection, proper configuration and management are critical. Further, telephony endpoints and the respective wiring still require someone to literally crawl under people’s desks. Small business and remote workers should not be left entirely on their own when implementing or managing hosted IP communications.
Most of the time, a remote worker, similar to a residential user, uses… well, “cloud” or hosted communications. The Internet service, the POTS line – it is all managed by a service provider. And remote workers frequently face some common challenges. For example, my intermittent Internet connection has been an issue for a while. Having to spend hours on the phone with a customer service rep and stick pins into the router to restart and reconfigure it could be immensely frustrating. My phone company, on the other hand, has so far left me without a phone service only once (for about 24 hours). But even that one time, the warning that if they come to my house and it turns out to be a problem with my internal wiring or phones, they’ll charge me whatever it is they charge, etc., etc. … well, it leaves a bitter after-taste.
So, my point is, small business, remote workers, even medium and large businesses – they all want to feel taken care of. They’ll expect someone to come in and install or fix things for them as part of the monthly service charges and will not be too thrilled about self service.
I hope my thoughts make sense. Let me know what you think.
Today, a group of hosted communications companies formed an alliance, which they named the Cloud Communications Alliance (refer to the press release here). The following summarizes the objectives of the Alliance and lists the founding members:
About Cloud Communications Alliance
The Cloud Communications Alliance brings together leading Cloud Communications providers Alteva, Broadcore, Callis Communications, Consolidated Technologies Inc., IPFone, SimpleSignal, Stage 2 Networks and Telesphere to promote development of the Cloud Communications category. The Alliance is aggressively pursuing new technical standards, capabilities and applications. The Alliance harnesses the power of each member’s individual networks and systems to create a seamless, nationwide HD voice network that delivers outstanding voice quality, apps, features and cost savings. For more information about the Cloud Communications Alliance, visit www.cloudcommunicationsalliance.com.
Why these eight companies? These service providers have several things in common: they all use BroadSoft’s BroadWorks platform for the delivery of hosted communications; they have all been recognized as being among the fastest growing BroadSoft customers; they are all relatively small (30 to 50 employees) with mostly local or regional focus and limited geographic reach; and they all face similar challenges.
When did it all start? About a couple of years ago, this group of eight decided to collaborate and pool their resources together in order to become more successful and accelerate growth. Since then, these companies have been having regular meetings, at which they would exchange knowledge and best practices and discuss opportunities to leverage each other’s strengths for mutual benefits.
Why does it make sense for hosted IP communications providers to join efforts? Interestingly enough, I recently heard about what seems to be a common practice among cable companies. They would get together and openly discuss challenges and best practices and try to help each other grow in their respective areas. The cable industry is more mature than hosted IP telephony, but similarities include somewhat clearly defined territories of influence and a fairly large market potential that offers opportunities for everybody. Oh, and a common enemy – the incumbent telcos!
As I have discussed in previous posts, the hosted IP telephony market is very fragmented, and small service providers (some LECs, some next-gens founded specifically for the delivery of VoIP services) have been among the most innovative and committed to advanced hosted communications, but have had limited resources to promote and support their services on a large scale. While hosted IP communications eliminate a significant portion of the CPE and the need to dispatch technicians to the customer’s site, frequently, service providers have to ensure that the LAN is properly configured and literally crawl under people’s desks to adjust the wiring. This kind of tasks require local support staff and small market participants can greatly benefit from an alliance that helps them more effective serve larger, multi-site businesses.
Further, market awareness for hosted communications is still fairly limited. Service providers with small marketing budgets typically count on online resources, word of mouth and personal contacts to promote their services. By pooling marketing resources together, Alliance members can more effectively use market intelligence, more confidently market the capabilities of a more powerful entity, and provide customers with a “disaster recovery” option – the ability to easily port the service to another service provider if the original one goes out of business.
I asked the Alliance members about some of the additional challenges they have been facing, and they mentioned the following:
- Backoffice operations: accounting and provisioning could be slow and complex; integration with other software platforms is challenging;
- Customer acquisition is costly and difficult to scale;
- Individual providers have limited ability to come up with new ideas for apps and new sources of revenue;
- They are all looking to make their services more cloud-like.
Since the new formation is being marketed as a “Cloud” Communications Alliance, I inquired about how members saw the difference between cloud and hosted. We did not get into all the details on the call and I have promised to tackle this issue separately, so I will just highlight a few key points:
- Some member organizations have already deployed some of their capabilities (such as voice messaging, for example) on Amazon’s and other public clouds for cost efficiencies and plan to move more infrastructure elements into the cloud (maybe storage first, call control much later).
- The members plan to enable integrations with a growing number of cloud applications (such as www.salesforce.com, for instance) to help facilitate specific business processes for their customers.
- As businesses increasingly adopt mobile communications, Alliance members plan to be able to manage the fixed-mobile integration from the Cloud.
- Finally, the Cloud offers a great sandbox and a fertile ground for more rapid and more prolific application development. As Alliance members and other parties increasingly develop Cloud applications, the ability to integrate those and properly package and position them to end users will be key for their success.
I believe the formation of the Cloud Communications Alliance is a positive development. It is part of a consolidation trend in the communications market that is likely to accelerate over the next couple of years and will impact fragmented markets more so than the more concentrated ones (such as the PBX market, for example). Consolidation at this stage is healthy; I have, in fact, been recommending co-opetition as a viable approach in hosted IP telephony for some time now.