Australia’s Voice-over-Internet Protocol (VoIP) market is certainly on the rise. People have stopped talking and started acting. SMBs are now leaping into what was once an enterprise-only fray.
Yet views differ on the benefits.
Geoff Johnson, a research director at Gartner, says what is happening in Australia broadly follows the situation in Western Europe. The market research firm surveyed European users in November 2004 and came up with a mixed bag of results.
SMBs are certainly starting to adopt VoIP, it found, but the total number of adoptees is quite low. Survey analysts Susan Richardson and Katja Ruud said many firms still believe VoIP offers “no real benefits”.
Service providers, they said, must concentrate on making SMBs aware of potential cost savings from the technology.
That will boost a rapid migration of voice traffic from basic PSTN and ISDN services to VoIP and mobile telephony.
VoIP usage increased from 7 percent in 2001 to 12 percent in 2004.
“However, most of that usage was via customer premises equipment (CPE), such as IP PBX,” Richardson and Ruud said.
“[But] 34 percent would consider using VoIP by the end of 2005. The impact of broadband has positive spinoffs into the VoIP segment. More than 30 percent of the respondents would consider using voice over broadband.”
Johnson could not give figures on the size of Australia’s VoIP market. However, the "best or most likely" way for resellers is to think of VoIP as an underpinning network infrastructure, he says.
VoIP is really a part of the much bigger picture that is IP telephony. Johnson says resellers are most likely to win deals as equipment suppliers -- such as analogue terminal adapters -- system integrators that upgrade PABX to IP telephony or network providers that sell cheaper voice calls.
“The real secret is to understand that voice, once carried as an IP stream, will be available to be readily embedded in more than half of an enterprise’s IT applications within the next two years,” Johnson says. Johnson warns that the VoIP market might look large and grey but is changing fast. Some players might get caught out, especially if they fail to keep their eyes open.
“[Those at risk are] the guys who mistakenly think they own the market, because it is changing so radically,” he says.
Estimates on the size of the market differ. However, Gartner’s main rival IDC released a study in 2004 that forecasts Australia’s VoIP services market to hit $288 million by 2007, meanwhile enjoying a compounded annual growth rate of 62 percent. That means the market may double every year until 2007.
“VoIP services should be measured by enterprises from the value resulting from its integration with enterprise applications rather than the traditional view of cost per minute to end users,” says Landry Fevre, a telecommunications analyst at IDC.
That sounds like there might be a lot of opportunities, not just for VoIP resellers but for those building applications and services around VoIP.
Hey, baby, I’m your telephone man
You just show me where you want it and I’ll put it where I can
I can put it in the bedroom, I can put it in the hall
I can put it in the bathroom, I can hang it on the wall
You can have it with a buzz, you can have it with a ring
And if you really want it you can have a ding-a-ling
Because-a hey baby, I’m your telephone Man
– Meri Wilson, “Telephone Man”
Diverse VoIP products and services are already appearing, many targeting SMBs. Where VoIP was until recently largely an enterprise game, resellers and vendors now argue that trickle-down is happening in earnest.
Some small vendor-sponsored studies -- such as one released by AT&T this year -- suggest 40 to 50 percent of corporations might go VoIP by the end of 2006.
One relatively new service provider, engin, on the other hand, is consciously targeting the tiny end of town. Matt Farmer, national sales manager at engin, says the take-up is good so far for its products and services targeting SOHOs, SMBs and consumers. Farmer says engin customers want to move from traditional PSTN into VoIP mainly because it is cheaper. “It is saving people money and lets people use their existing broadband network infrastructure and hardware.”
One chief executive using engin had cut monthly phone bills from $400 per month to $10 per month. SMB customers were saving around 40 percent, Farmer says.
Engin offers a softphone application that lets people put a softphone on their laptops or PCs -- a boon for international travellers seeking lower cost ways to stay in touch with the office.
Resellers like Leading Edge and Queensland’s Allstar Computers are selling engin’s flagship Voice Box offering, which comes in two varieties.
Voice Box is plugged into a broadband connection to give “fully-featured” telephony, including familiar capabilities like call forwarding, voicemail and call waiting, Farmer says.
Engin’s anywhere connect service, meanwhile, targets mobile convergence. “You can bring your number and telephone with engin Voice Box connected and route it anywhere around the world into engin,” Farmer says.
“If you make a lot of mobile calls, that’s really expensive, but now you can route your calls through your home number.”
It is also broadband-over-powerline-compatible and can be unlocked from engin, users say.
Electrical and whitegoods retailer Appliance Spares Warehouse has 14 staff and two stores. Its phone bills on traditional voice technology were costing it as much as $1500 a month in some cases.
Adopting VoIP -- in its case by deploying an engin offering -- cut its monthly bill by an average of $300 or $400 a month. Some months it hovers around the $100 mark, according to managing director Philip Dunn.
Roy Wakim, an Asia-Pacific converged solutions director at communications vendor Avaya, says things are certainly going well.
A year or so ago, Avaya seemed a voice crying in the wilderness about IP advances like Session Initiation Protocol (SIP) and the need for security. But SIP and security are now on almost everyone’s lips.
“Customers are looking at taking on technologies like SIP,” he says. “Most organisations now in Australia are taking IP telephony into their vision and deploying applications on top of it.”
Avaya is also opening up its platform to the development community -- a move the vendor expects will accelerate application opportunities. “We’ve got about 10 companies in Australia and a couple in New Zealand developing applications for Avaya,” Wakim says.
Customers have started seeking additional security features, based on open standards, in particular. Examples that have already been released include encryptions for sequences of numbers, such as credit card numbers or PINs, he says.
Service providers could also target SMBs with whom they have existing relationships or a history and think up ways to combine technology with carriage. System integrators will keep doing well in the mid-market or larger enterprise, especially adding applications on top, he says.
“And there’s also work with consumer products, like AOL or Yahoo, or Skype. I think the market is growing substantially and everyone has a place,” Wakim says.
My heart began a-thumpin’ and my mind began to fly
And I knew I wasn’t dealin’ with no ordinary guy
So while he was a-talking I was thinkin’ up my plan
Then my fingers did the walkin’ on the telephone man
– Meri Wilson, “Telephone Man”
Craig Neil, managing director at integrator NSC, says NSC has seen good growth, the bulk of which has been VoIP-related. Key to NSC success has been the development of a number of large, sound reference sites over a period of years.
NSC is doing about 95 percent IP to 5 percent TDM and a big driver of that is the ability to centralise and adapt communications flexibly across sites and applications. “Vendors have lifted their game as well. Our relationship with Avaya [for instance] is getting stronger and stronger,” Neil says.
Mick Regan, convergence director at Nortel, agrees, adding that many customers are now migrating to pure IP solutions. A year ago, most migrants bought the hybrid approach, he notes.
Further, ways to use VoIP with some very different devices -- such as RIM’s BlackBerry -- are appearing, Regan says.
But he warns that some statistics suggest the IP market has, if not quite stalled, started to slow. So extra effort from the channel is needed to kickstart further refreshes. “Customers are really looking for value,” Regan says. “What are the productivity gains and benefits?”
Gary Howes, channel manager at Genesys, says training the channel to educate users about potential benefits is proving critical. The contact centre specialist has set up Genesys University and Genesys Sales Academy to do just that, for both existing business partners and new resellers.
“No-one [in the channel] needs convincing now, but users do," Howes says. "But they all talk about IP as a serious option.”
Howes says return-on-investment, coupled with the right applications, are primary issues. Applications that smooth out telephony use peaks and troughs can do both, he points out.
“And there’s something new I have seen in Europe that will probably soon come here. Video-on-hold. Rather than having music while you’re on hold, you can have images and advertisements for your clients,” Howes says.
Charles Assaf, managing director at Nexon Asia-Pacific, reiterates that the move is not really about VoIP but IP telephony. Not voice so much as the diverse possibilities that going IP open up for users. “Unified communications, messaging, CRM and other systems. Just things that start to make networks a lot more efficient,” he says.
“Anything that lets them reduce the cost of the data network.”
Resellers with a strong data background may have the upper hand. IP telephony, after all, is closer to the data world than it is to voice. Many voice resellers, Assaf suggests, end up getting the expertise externally.
“Things like Quality of Service -- how would the [voice specialists] handle it?” Assaf says. “But the biggest challenge is security.”
Gwen John, managing director at value-added distributor Zircon, says the biggest challenge for data resellers is how to embrace VoIP or IP applications and deal with people who understand their issues from the data side. “A managed services distributor like Zircon, with its heritage in the data channel, can help them to overcome this and provide direction, training and support,” she says.
John believes big opportunities in VoIP exist for companies that offer pre-sales and implementation help in voice-and-data sales. If resellers do not feel they have the skills to deploy a particular offering but do have the relationship with the customer, partnership is the answer.
“There are also a couple of different opportunities open to them, which I’m currently trying to cement. They can install a new IP telephony system or they can choose a VoIP gateway solution to sit over their existing system,” John says. “There are options but they just need a distributor to help them through the entire process.”
Many more specialist companies like Zircon, therefore, are likely to appear in the near future, John says.
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