Lippis Report Issue 96: What 2008 and 2012 Have In Store

A warm Happy Holiday wish to all Lippis Report subscribers, supporters and their families. We have a special Lippis Report for you. Zeus Kerravala and I review the important and game-changing trends of 2007 and predict what 2008 has in store for business and IT leaders. We then take a further look out to 2012 and paint a picture of what the industry will look like. We provide this analysis in both written and podcast formats.

Zeus KerravalaRelated Podcast:
Lippis and Kerravala Make Industry Predictions for 2008 and 2012

Listen to the Podcast

Jeff KaplanRelated Podcast:
Can Software as a Service Tie Together Cisco Communication Applications?

Listen to the Podcast

2007

2007 was the year that enterprise communication vendors restructured with Avaya going private, Cisco buying WebEx, Shoretel going public, Microsoft entering the market and joining forces with Nortel et al., Siemens Communications being spun off from Siemens AG, Mitel acquiring Inter-tet, etc. In addition 2007 was the year that the software industry focused their interest in Voice over IP (VoIP) and Unified Communications. In addition to Microsoft’s October OCS launch, IBM came out with its UC2 initiative while Citrix’s CEO Mark Templeton clued in its developers on how to do Click-to-Call in a Citrix environment. Microsoft, IBM and Citrix’s participation is a big step for the communications industry to move forward and transition to a software industry. 2007 was the year that enterprise communications was totally restructured. We’ll see more restructuring going forward but the big story in 2007 is a radical change in enterprise communication suppliers.

Many business and IT leaders scratched their heads trying to figure out NAC (Network Admission Control) to see how they could deploy it and put it into their network. A lot of them were confused by the complexity associated with rolling NAC out on a wide scale. 2007 was also a year where tighter integration between wired and wireless LANs, as well as mobile and fixed communication integration occurred as smartphone devices took off.

2007 was also the year that application fluent networks came of age. Riverbed took off with a very successful IPO while F5 had a great growth year and Cisco bolstered its offering by adding Application Intelligence in its Catalyst 6500 product line. When talking to CIO’s and IT managers, one of the areas of increased budget and spend will be network technology that directly impacts application performance.

Related White Paper: Communications Transformations: Implementation Considerations when Enhancing Enterprise Communications Solutions with SIP Trunks

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If 2007 was about enterprise communication firms restructuring, mobile communications and application fluent networks what does 2008 have in store?

2008

The Year of Unified Communications: 2008 will be the year of Unified Communications with Microsoft being a top three enterprise communications vendor. In fact, they will be a top two vendor with Cisco. Avaya will be a strong three, but nearly every business and IT leader will be evaluating OCS next year. This will have profound industry implications as many vendors who did not join the mainstream and kept to their own siloed proprietary communication solutions will fail. If ’07 was the year a few software companies got interested in UC then 2008 will be the year that the ISV (independent software vendors) community gets interested in VOIP, which will be driven largely by Microsoft and IBM. Some of the implications of this trend will be that high-end desktop phone sales will drop like a rock as UC and Smartphone sales skyrocket. The Apple iPhone will ship over 16 million units in 2008. We’ll see SIP trunking take off as a preferred way to connect Unified Communication islands and provide inter-enterprise UC links. In addition, managed service providers will increasingly offer hosted UC to the SMB market.

Related White Paper: Making WLANs Work Reliably and Cost-Effectively in a Multimedia World: A Guide for Small/Medium Business and Public Hot Zone Operators

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More Corporate Apps go Mobile: 2008 will also be the year that mobility will extend applications beyond email and calendar access. In short, we will start to see main corporate applications go mobile. Right now when you’re mobile with your Blackberry or IPhone you really only have access to corporate email and calendar. The big contribution that Blackberry made (and other smart phone vendors are following suit) is that they didn’t try and mobilize the application like exchange. Microsoft spent years trying to make Pocket Outlook work and it worked pretty poorly. What RIM did was take the application from Outlook and from exchange and give it to you in a format that’s usable. We’re starting to see a few small companies do the same for many corporate applications such as Dexterra Software that provide the same approach for CRM systems. The thinking here is that when users are mobile they don’t necessarily want the application, what they want is very specific information from their applications depending on what they are doing. 2008 will be the year that we start to see broader use of mobile corporate information.

Related White Paper: Cisco TrustSec: Enabling Switch Security Services

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2008 will be a very active M&A year. There are hundreds of start ups that are well financed and working in good niche areas while the industry has a group of very wealthy companies, particularly Microsoft, IBM, and Cisco. They’ll continue to buy at their already aggressive trends. We’ll see Microsoft pick up twenty, IBM pick up twenty, and Cisco at least pick up ten but probably between ten and twenty companies.

Green IT Drives Data Center Virtualization: Green IT, which has been an initiative in Europe, will become an issue in the U.S. finally. The EPA just finished a study on data center power and cooling energy consumption which will drive change. Almost every major organization has a corporate social responsibility officer to assure that environmentally friendly processes are in place. However IT generally falls outside the realm of the corporate social responsibility officer but IT will start to be measured by this office in 2008. When that happens Green IT will be a corporate mandate and possible government mandated regulations around power and cooling will be initiated. This will change the way IT buys and builds data centers. One of the big evaluation criteria, by the end of next year, may be power and cooling efficiencies, which may change data center supplier market share. As power and cooling efficiency becomes data center table stakes, virtualization will go beyond power, space and cooling savings and efficiencies moving into networks where many-to-one management and one-to-many service distribution efficiencies are gained.

Application Fluent Network Appliances Integrate More Services: Application fluency appliance vendors will integrate more services in 2008. In 2007 IT departments bought F5 equipment for their data center, Riverbed, Cisco and Juniper for their branch, etc. Applications respond to different techniques based on where that technology resides. Some applications respond positively and some negatively to different application delivery technology. For that reason, in 2008 application fluency appliances will start to integrate WAN optimization, layer 4-7 and SSL-VPN technologies et al, to create what we think of as an application delivery market. The implication will be that the vendor community will be rationalized. Riverbed will seek to broaden their product line but Citrix, F5, Cisco, and Juniper have been collecting these components for a couple of years. One of those companies is going to come out with an end-to-end story.

Network Security Architecture Gets Rationalized: NAC, NAP, and Cisco’s recent TrustSec, will define the core of a compliant ready network.

Mid Enterprise WLAN Market Booms: There is a new enterprise wireless LAN market that is starting to take shape, which isn’t being addressed by Cisco, Aruba, Meru, Trapeze et al. Look at Ruckus Wireless to break out in 2008.

So 2008 is the year of UC, Microsoft will be a top three VOIP vendor and we’ll see more kinds of enterprise mobility expand outside of existing applications. We’ll see developers being heavily recruited by Cisco, Microsoft, and Avaya to build upon their UC platforms; NAC, NAP, and TrustSec are the architectures for compliant ready networks, Green IT hits the U.S. corporate market. SIP trunking takes off in 2008. The application delivery network market will restructure, mature and force industry consolidation.

Now Zeus and I look out to 2012 to see what the future of networks and communications has in store for business and IT leaders or vice versa.

2012

By 2012, Telepresence will be available in approximately 40% of organizations as video is a common form of corporate communications. By 2012 Telepresence will be used by inter company communications, not just intra company.

By 2012 the VOIP market will be enough of a software play that business and IT leaders will implement open source telephony reaching 10% market share.

By 2012 there are only four enterprise communication suppliers in the market with revenues greater than $5 billion and that includes Microsoft. So there are three others including Cisco, Avaya and IBM with Citrix being a dark horse.

By 2012 Microsoft will have between 25 – 30% UC market share.

By 2012 phone tag and voicemail usage is nearly gone from corporate communications, replaced by present-based IP communication.

By 2012 more than 50% of global 2000 concerns appoint a chief communications officer responsible for communication-enabled business processes (CEBP) where CEBP is systemic and common as it’s a contributor to corporate annual productivity.

By 2012 the Apple iPhone is the second largest player in the advanced OS Smart phone marketplace, but Apple is still half the size of Microsoft.

By 2012 there are only three enterprise LAN switch vendors that have revenue above $600 million, Cisco is one of the three. We predict the other two to be Foundry and ProCurve.

By 2012 you will start to see Fiber channel and infinaban market share fall as Ethernet technology continues to mature and becomes the preferred networking technology in the data center.

By 2012 wireless speeds will be fast enough to start negative growth in the LAN switching market.

Thank you for a great year everyone. Happy Holidays,
The Lippis Report Staff

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