Siemens Enterprise Communications has launched a new cloud communications solution. Leveraging SIP, open standards and its highly scalable softswitch-based OpenScape suite, it is looking to provide partners and customers with more flexible deployment options. The cloud solution includes virtualized, multi-tenant versions of Siemens’ OpenScape Voice, OpenScape UC and OpenScape Web Collaboration software, hosted in four geo-redundant data centers. The service features top-notch availability, survivability, governance and data privacy features, including:
- Highest availability, TIA-942 class data center, voice redundancy, secure endpoints
- Edge survivability option, local trunking, IPSec VPN, local firewalls, SBC and media server
- Multi-tier role-based access management, automated management and provisioning, application-level data center protection
- End-to-end encryption in the cloud, local country data storage, multitenant capability, data protection audits
Cloud-based voice and UC services will be available only through partners, who will handle customer needs assessment, CPE installation, billing, 1st and 2nd level tech support and ongoing equipment maintenance. The service will be first launched in the U.S., Germany and the Netherlands. Initial partners include Black Box in the U.S., mr.net and Telefonbau Schneider in Germany, and Televersal, ICT Trends Group and onecentral in the Netherlands.
The cloud solution is considered optimal for organizations with about 350 to 1,000 users, with a need for highly packaged, tightly integrated solutions. Users can choose from a variety of features and capabilities grouped in Base Packs and Booster Packs. The estimated end-user list pricing ranges between $5 and $30 per seat per month, based on required functionality.
What I like about this announcement:
Siemens has finally launched a cloud solution – something it started exploring about two years ago by demonstrating a proof of concept with Amazon’s EC infrastructure. With the incredible (I think, almost unreasonable) amount of hype surrounding cloud technologies and the cloud business model, it was about time for Siemens to finally bring this effort to fruition. I have to agree that there is a group of customers out there that would indeed appreciate the opportunity to outsource its communications infrastructure to avoid CAPEX, focus on core competencies or gain access to superior technologies and expertise. This customer segment would remain out of reach for Siemens, unless it finds an appropriate role for itself in the hosted/cloud-based communications marketplace.
It should be noted that Siemens has had a multi-tenant voice platform for years and some service providers such as Postrack and Engage have been using it to deliver services to end users just like others use BroadSoft’s or Metaswitch’s platforms. Other vendors such as Alcatel-Lucent, Cisco and Mitel have also deployed multi-tenant communication managers with service provider partners.
The new approach has significant advantages, however. It gives Siemens continued control over the platform and its capabilities. But more importantly, it empowers partners that cannot or do not wish to manage their own data centers to deliver services using Siemens’ feature-rich and highly scalable platform. Siemens allows partners to use its brand, co-market or white label their cloud services. This is an opportunity for them to gain differentiation as well as new recurring revenue streams. This model provides a fast and economical entry point for small MSPs and VARs to become hosted service providers. It is noteworthy that Siemens announces the new solution along with six partners already lined up.
Issues that Siemens will need to address:
Siemens is not alone in this market. Other telephony vendors are experimenting with new delivery models as well. For example, Mitel offers the Mitel Anywhere service, which it sells directly to business customers. Now it is exploring opportunities with data center providers such as Host.net and Hosting.com, which can host the platform on behalf of small MSPs and VARs. Siemens and other vendors will need to find ways to differentiate or be fast to market with the right partnerships while the market is still nascent and untapped.
More importantly, this new delivery model is still unproven and it is not clear how all market participants in the value chain will reposition themselves for competition in the evolving marketplace. Will the MSPs and VARs be successful in penetrating the CPE customer base? Will the vendors be able to successfully manage their channels to ensure customer satisfaction and optimal benefits from the cloud services? How will carriers be involved to ensure proper bandwidth and QoS management – critical elements for real-time communications services delivered over the WAN? Who will manage the carrier relationship? How will the hosted IP PBX and UC solutions be aligned with SIP trunking and IP VPN services to provide superior benefits to multi-site organizations?
It has certainly been anticipated that the recession would force telecommunication markets (not unlike other industry sectors) into further consolidation. The enterprise telephony space, for example, has long been struggling with slowing revenue growth, limited differentiation opportunities and rising competition from non-traditional vendors such as open-source telephony providers, Microsoft, Skype, mobile carriers (somewhat indirectly, through increasing usage of mobile phones for business purposes), you name it.
Although we have no sufficient evidence on what is going to happen with Nortel, we can speculate based on recent news about M&A negotiations taking place and some general marketplace analysis.
At this stage, it just does not seem likely that Nortel is going to make it through bankruptcy protection intact. Rumors that Avaya and Siemens (probably among several others) are in acquisition talks with Nortel for its enterprise business unit should not be surprising. In tough economic times, as demand shrinks, there is no space for too many similar vendors. Also, acquisition costs are at an all-time low, so if anyone is striving for market share growth, this is the time to leapfrog ahead of the competition with an acquisition rather than waiting for slower organic growth.
Nortel’s enterprise business is attractive for several reasons. Nortel has some great telephony, messaging and UC technologies, leading contact center solutions, a large installed base and a loyal channel. Yet, the value of this business to its different competitors will not be the same.
With Siemens Enterprise now financially more stable with the Siemens AG and Gores Group joint venture, it is focused on growth and market expansion. A potential acquisition of Nortel’s enterprise unit could provide it with an immediate access to a North American channel and customer base. Further, from a UC point of view, there are opportunities for eventual synergies. For example, both vendors have partnerships with Microsoft for the delivery of unified communications solutions to business customers. A potential merger will position the new entity very competitively in the enterprise communications marketplace.
Some industry pundits claim Siemens and Nortel have similar technologies; yet, in my opinion, there will be major redundancies as well (e.g. MCS vs OpenScape, large-business telephony platforms, etc.). One of the most significant advantages is Siemens’ open standards approach which allows it to integrate with multi-vendor IM/UC and telephony environments. Finally, both vendors have been on track to become “services” companies for some time now, which could help the new entity more easily align resources under a common vision and consolidate business operations.
Avaya could also benefit from a potential acquisition of Nortel’s enterprise unit as it will emerge as the undisputed North American telephony leader, with a compelling global market share and a significant advantage in the SMB space. The two companies are believed to have a similar customer base described as fairly “risk-averse”, i.e. inclined to work with incumbent vendors with a proven track record of delivering reliable enterprise telephony solutions. Also, Avaya has committed to expanding its channel partnerships and further shifting sales towards a more indirect model, and access to Nortel’s partner base can help accelerate this trend. Finally, Avaya can thus get a hold of some of Nortel’s more advanced UC technologies such as MCS and other solutions already interoperable with Microsoft’s UC portfolio, which will position it even more competitively in the evolving UC space. Needless to say, there will be various portfolio integration challenges and redundancies as well.
Although Alcatel-Lucent is not mentioned to be in any active acquisition talks with Nortel, no doubt, it could also benefit from the opportunity to grow its North American presence leveraging Nortel’s customer base and channels. It could also use Nortel’s technologies to enhance its UC portfolio, which at present, is somewhat less complete than those of its telephony competitors.
Cisco, on the other hand, as stated in other commentaries in the press, may really consider a potential acquisition less beneficial given its proprietary technology approach and anticipated greater difficulty in integrating Nortel’s technologies into its portfolio. It should be noted, however, that Nortel’s contact center solutions could greatly enhance Cisco’s enterprise portfolio as it is somewhat behind its competitors in that market segment.
There are others that could perceive benefits in acquiring Nortel’s enterprise business: Aastra, Microsoft, NEC, etc. Yet, with no evidence of actual activity taking place, I would hate to go into pure speculation at this point.
I will postpone the discussion of other potential advantages and disadvantages of the above scenarios until an acquisition actually takes place. We should not exclude the possibility of a non-telephony vendor acquiring Nortel’s enterprise business. Let’s not forget, however, that there is no vendor or financial institution that is not experiencing some difficulties today. Therefore, a potential acquisition will have to be very carefully considered and tightly aligned with the vision and strategy of the acquiring entity.