Network and Telecom Strategies Blog

IBM Lotusphere 2010: A UC(C) Perspective

posted by: Mark Cortner

Last week, IBM Lotus held its annual Lotusphere conference in Orlando, FL. The conference attendance, dominated by faithful developers and partners, was solid although I suspect the numbers were slightly down from prior years – but given the economic environment, IBM should be pleased.

The time allocated to Lotus’s unified communications and collaboration (UCC) strategy during the keynote session was more limited than in recent years.  The UCC content emphasized gains in momentum, delivery of the most recent update to Sametime (8.5), and customer successes with IBM’s telephony integration middleware solution, Sametime Unified Telephony (SUT). The content touched on the importance of driving business value from UC through mobility and video-based applications, and the extension of UC to business applications and processes (i.e., CEBP) - but overall, the content dedicated to UCC was minimal.

In the past, IBM has more openly shared roadmap and release details for the upcoming year – one reason this may have been approached differently this year is that over the past several years, IBM had essentially fallen behind in the UC platform market and pre-announcements were necessary. I believe Lotus has closed much of the gap with its competitors now and as a result, is not under the same market pressure to disclose its future plans to maintain their customer base or have meaningful conversations with new prospects. I hope that IBM will take this opportunity to move more aggressively in the UC(C) than in the past, by exploiting two of the most significant announcements in the keynote: (1) cloud-based service alternatives (i.e., LotusLive) developed in conjunction and partnership with IBM Research (aka LotusLive Labs) and, (2) changing the use paradigm and driving innovation for communications and collaboration activities and events through Project Vulcan, an experience concept reminiscent of Google Wave.

BT + Cisco Deliver Cloud-Based Telephony

posted by: Mark Cortner

The viability of cloud-based UC took a significant step forward earlier this month with an announcement by BT and Cisco on the launch of a global cloud-based IPT service from BT’s Onevoice UCC portfolio. The hosted IPT solution will be the first global offering based on Cisco Hosted UC Services and is currently available in the UK. The offering will be available in the USA and EMEA in 2010 followed by Asia Pacific. BT is working with Cisco to build the virtualized infrastructure and leverage its cloud computing technologies to deliver a cloud-based UC service. The relationship between virtualization of telephony applications and cloud-based UC was highlighted in a previous blog post; BT and Cisco have taken virtualization to the next level to deliver a cloud-based UC solution including hosted IPT.

BT’s service offering will enable businesses to access services using a utility-based pricing model; the cloud-based services now include telephony, voice mail, unified messaging, and conferencing. The service is delivered over BT’s MPLS network service and can be blend the cloud-based telephony services with existing legacy TDM and IP voice infrastructures—enabling enterprises to migrate to cloud-based IPT services based on their business requirements and in consideration of existing investments. I look for BT to offer solid a SLA with these services, anticipate availability metrics between 99.9 to 99.99%, and to leverage the use of SIP-based connectivity introduced earlier this year. The ability to enable the cloud-based IPT solution to “integrate” with existing legacy TDM and IP voice infrastructure will be interesting to watch, and the terms “integrate” and “interoperate” often hold different meanings to service providers and customers. Furthermore, although large enterprise customers will appreciate the ability to support blended telephony solutions, they will also seek the ability to support hybrid unified messaging and collaborative application environments … the first step has been taken.

Cisco’s Acquisition of Tandberg

posted by: Mark Cortner

The first hurdle to Cisco’s proposed acquisition of Tandberg appears to have been cleared—earlier today Cisco announced that it now controls 90% of the shares in Tandberg. Cisco received acceptances representing 89.1% of the outstanding shares and purchased an additional 2% of the outstanding shares in November, resulting in control of 91.1% of the shares and voting rights in Tandberg. The process to clear this initial hurdle took slightly less than 60 days from when Cisco’s original acquisition bid was presented to Tandberg shareholders and will cost Cisco $3.4 billion, an increase from its initial offer of $3.0 billion. The remaining hurdles include the satisfaction or waiver of the remaining conditions to the offer through the Oslo Stock Exchange and approval from the U.S. Department of Justice.

The effect on the videoconferencing market and Cisco’s market share will parallel that following Cisco’s acquisition of WebEx in early 2007 for $3.2 billion. The acquisition of WebEx vaulted Cisco into the collaboration market and positioned Cisco as the market leader overnight. The successful acquisition of Tandberg will similarly position Cisco as a global market leader in videoconferencing, significantly augmenting its current market position developed over the past several years with its own high-end telepresence solutions and high-definition room-based videoconferencing systems.

I anticipate Cisco will quickly add integrated capabilities between its Unified Communications Manager and WebEx applications with the Tandberg videoconferencing product lines to facilitate pull-through and refresh system opportunities. With this acquisition, Cisco has improved its overall market position in the unified communications and collaboration markets (these are rapidly blending together) and has created another strong product basis to successfully cross-position with other elements of its portfolio. In terms of the chess-match between Cisco and Microsoft for leadership in the UC market ... advantage Cisco.

UC 1.0 – The Contrarian View

posted by: Mark Cortner

The enterprise response to today’s UC offerings (“UC 1.0”) has generally been tepid, no doubt in part to the difficult global economy. I recognize that there is a lot of energy in the market, sourced primarily by the vendor community, though I have not witnessed a corresponding drive to invest by our enterprise clients. The reality is that although many enterprises are interested in UC and are developing technology and platform strategies, the vast majority of investment to date has been constrained to legacy refresh initiatives with an eye to ensuring that current investments do not conflict with evolving to UC.

The UC has not developed a clear or compelling message with respect to business value to date. The benefits of service cost reduction and improving the efficiency of individual and group communications and collaboration are appealing but not convincing. CEBP is very promising but still too immature to drive UC adoption. IMHO, the UC market will continue to advance at a relatively slow pace until several disruptive forces can combine and enable “UC 2.0”.

The disruptive force will not be defined solely by the presence-based integration of the communication and collaboration applications (UC 1.0); significant impacts driven by the consumerization, democratization, and externalization of enterprise IT will combine and source the magnitude of disruptive forces required for UC to succeed. The formula for each business will undoubtedly be different although similarities will exist within vertical industries. The leading candidates to drive this disruption? The most likely prospects will be driven by wireless and mobility, the viability of cloud-based UC to complement and extend enterprise-based infrastructure and applications, and ultimately  ... CEBP.

UC and Virtualization

posted by: Mark Cortner

The recent announcement from Avaya related to its new virtualized UC offering is an interesting development for the UC industry. The single-server UC solution is based on Avaya’s Aura architecture which was introduced earlier this year. In early 2008, Mitel announced a single-server solution that signified the first application of virtualization technology to enterprise real-time communications applications.

Avaya’s initial virtualization solution, Aura System Platform, is currently targeted to the midsize market with a maximum scalability of 2400 users. The solution includes the core components within Avaya’s Aura architecture—Communications Manager, Voice Messaging, SIP Enablement Services, Application Enablement Services, Utility Services, and Media Services deployed on a single server.

I fully expect more announcements soon from the UC industry that take advantage of virtualization for not only asynchronous applications but also real-time communications and collaboration applications. I also expect the scalability of virtualized UC solutions to rapidly increase; anticipate that single-server offerings will evolve to effectively address enterprise requirements within the next year … and one step closer to cloud-based UC.

Personal Telepresence

posted by: Mark Cortner

The same week Cisco announced an agreement to acquire Tandberg, another interesting and potentially disruptive development occurred in the visual collaboration market—LifeSize announced a new high-definition videoconferencing product that may redefine and expand the market for telepresence solutions. The product, LifeSize® Passport™, is approximately the size of a netbook and delivers a personal “telepresence” experience at a price point below $2,500 USD.

Lifesize’s Passport supports 720p HD video at 30 frames per second and HD audio and requires only 1 Mbps of bandwidth. The current release of Passport supports point-to-point HD video, although one would suspect that a multi-point version is in its future. In addition, and other evidence point related to the growing acceptance of Skype in the enterprise, Passport supports Skype as an audio source enabling the product to directly connect with any Skype user worldwide. The product also connects with other LifeSize and standards-compliant enterprise videoconferencing systems.

LifeSize has broken some new ground with Passport—including form factor, integration with Skype, and price point. I suspect that other industry players will follow quickly and further dilute the telepresence category (by positioning high-definition video and telepresence as one and the same). With that said, new videoconferencing products such as Passport will undoubtedly continue to add value by enabling the proliferation of and expanding the use of videoconferencing by enterprises. The support for Skype audio is a great step forward though this would be enhanced further with the ability to interoperate with Skype video too …

 

Cisco to Acquire Tandberg

posted by: Mark Cortner

Cisco announced today a definitive agreement to launch a cash offer to acquire Tandberg for $3B. The proposal was recommended unanimously by Tandberg’s board of directors and represents a 25% premium to the 3-month volume-weighted average closing price for Tandberg’s stock.

The acquisition, expected to close during the first half of calendar year 2010, will significantly expand Cisco’s portfolio of visual collaboration products and immediately establish Cisco as a market share leader in enterprise videoconferencing solutions. Cisco will gain a leading position in room-based videoconferencing systems, obtain potentially the best high-definition, high performance multipoint control unit technology (i.e. Codian) in the market today, and acquire new products in the accelerating desktop videoconferencing and media phone product categories.

The most significant overlap between Cisco’s current visual collaboration product portfolio and the products acquired with Tandberg will be the high-end telepresence systems. Cisco and Tandberg have both been very successful in the telepresence market and it will be interesting to observe and analyze Cisco’s approach to supporting, integrating, and consolidating these product offerings given that current enterprise customers of both vendors have made significant investments in these platforms.
 

UC and Catalyst 2009: Closing Thoughts

posted by: Mark Cortner

I had the opportunity to interact with a broad spectrum of enterprises this week at Burton Group’s Catalyst Conference North America held this past week in San Diego, CA. The majority of my conversations with attendees focused on the topic of UC. I found that many of the discussions were in step with the types of conversations that I frequently with clients related to this subject: what are other enterprises planning and currently implementing to support UC and how should a business navigate the evolving competitive landscape fo UC solutions?

I was also interested to hear how a number of enterprises were giving strong consideration to pursuing approaches to UC that challenge the status quo – specifically the use of software or unified clients to replace the use of wired IP handsets and the interest in cloud-based UC services that can be used to augment (or replace) the premises-based systems and platforms positioned by the major vendors. I don’t predict a rapid shift to ether of these approaches but I believe it’s important to recognize that enterprises are wary that UC is “old wine in new bottles” and as a result may be more open to adopting a less traditional view toward endpoint strategies and service delivery models while transforming their communications and collaboration environments.

 

Avaya + Nortel, Not Quite Yet

posted by: Mark Cortner

Last week, Nortel announced that it had entered into a “stalking horse” agreement with Avaya for Nortel’s enterprise solutions business unit for $475M. The stalking horse agreement essentially sets a minimum bid for the auction of the business unit and will be filed with the bankruptcy courts. The auction process allows other qualified bidders to submit higher or otherwise better offers over a 45 day period and then the bankruptcy courts in the United States and Canada will have final approval of the winning bid once the bidding process is complete.

So, at this point, Avaya has not “purchased” Nortel’s enterprise business unit but has rather committed to purchase the business for $475M pending competitive bids. What is the likelihood that Avaya will ultimately “win” Nortel’s enterprise business unit? The same process just recently played out with auction of Nortel’s CDMA and LTE wireless infrastructure businesses. Nokia Siemens Networks entered into a stalking horse agreement with Nortel for these assets in mid-June and today it was announced that Ericsson submitted the winning bid for these assets. The initial stalking horse agreement was for $650M and Ericsson’s winning bid was for $1.13B. The auction process increased the purchase price by roughly 75%.

I’m not sure Nortel’s enterprise business unit will achieve as high a valuation as the wireless infrastructure business. The stalking horse bid for the CDMA and LTE assets was approximately valued at 33% of 2008 revenues and the winning bid was just short of 60% of 2008 revenues. In contrast, Avaya’s stalking horse bid for Nortel’s enterprise business unit is currently valued at roughly 20% of 2008 revenues. Who are other likely potential bidders in the auction? Alcatel-Lucent and Siemens Enterprise Communications could be candidates. Both could benefit from Nortel’s installed base in North America, although I suspect that Nortel’s customers would be uneasy with either. Nortel expects the auction process to be very active; perhaps there are many others that will aggressively bid but I’m not convinced …

New Developments in Telepresence

posted by: Mark Cortner

The telepresence market appears to be maintaining its market momentum and acceptance given numerous vendor and carrier announcements over the last several weeks. The most visible infrastructure vendor in these announcements has been Cisco, a strong proponent of visual collaboration technologies. Cisco has been a driving force in the telepresence market and the combined positioning of telepresence to its enterprise and service provider customers is generated several interesting announcements.

Cisco recently announced that it had successfully demonstrated the industry’s first telepresence session across multiple carrier networks. The demonstration occurred coincident with Cisco Live 2009 and consisted of inter-carrier telepresence connections between seven sites on the AT&T, BT, and Tata Communications networks.  The demonstration verified the technical ability for a business using Cisco’s telepresence solution to utilize telepresence services to collaborate with any other business or location that is also utilizing Cisco’s telepresence solution.

The ability to initiate and reliably conduct a telepresence session across multiple carrier networks will resonate with large global enterprises, as they frequently utilize multiple carriers to provide network connectivity to their worldwide facilities. Furthermore, the ability to conduct an inter-carrier telepresence sessions enables business-to-business or inter-enterprise telepresence usage—effectively expanding the number of addressable telepresence suites for an enterprise and driving more utility out of investments in visual collaboration infrastructure and services. The demonstration by Cisco, AT&T, BT, and Tata Communications is a great first step; ultimately the telepresence infrastructure vendors and carriers need to demonstrate telepresence over multiple networks with connections different third-party telepresence systems – that’s interoperability.