The Lippis Report

During a podcast with Zeus Kerravala of the Yankee Group, we came to the conclusion that the unified communications market is in a funk and the only way out is for suppliers to adhere to industry standards that allow interoperability. To demonstrate this achievement, UC providers would be well advised to participate in industry wide interoperability testing. In this Lippis Report, we discuss the issues that are holding back UC and video conferencing adoption.

It’s important to understand that standards and interoperability mean different things. A supplier can be open, but not standards based. A supplier can be standards based, and not open. And then a supplier can be standards based and build a range of extensions to the standard, which then makes their implementation nonstandard. And this is where the UC industry is right now. Nearly every supplier will tout how open they are; that is how standards based they are, but what it all comes down to is we really don’t have a common standard UC that allows IT business leaders to deploy UC solutions and work in a mixed vendor and service provider environment. This is the single most important issue to IT business leaders that is creating pause in their UC deployments and extending sales cycles.

It’s disappointing. Our industry has been developing UC since 1996. It seems as if UC suppliers are not ready to implement standards based UC solutions, as they haven’t figured out how to maneuver as the basis of competition changes toward interoperable UC. The question is if a UC supplier makes their offering open and interoperable will they lose important functionality and compete on features above standard UC services?

The UC market is built primarily off of a telecom heritage in which none of the PBX phone system vendors had interest in interoperable solutions, and as a result, the PBX market was frozen with 30% share each going to Lucent/Avaya, Nortel and Siemens for decades. Voice over IP or VoIP thawed that market by radically changing it with a new approach to voice and based upon the openness of IP.

It’s because of this PBX heritage that many of the suppliers view being open and truly standards based as a threat. Thinking this way masks the bigger picture. UC suppliers are missing the larger picture, which is this. If UC endpoints truly worked as plug-n-play, and IT business leaders knew that whatever UC systems they deployed would interact and work with different UC suppliers, then UC usage would go through the roof. The market would expand and service providers could offer standard UC services too.

The big picture of plug and play universal UC would change market share. Perhaps large suppliers would have a lower percentage of share, but of a much bigger addressable market and associated dollar value. In short, the pie would get much bigger. In addition, the big picture would create a much larger UC ecosystem, with more winners than the current industry structure, and that is healthy.

Point in case. Most IT business leaders have relationships and large investment with both Cisco and Microsoft. Many Lippis Report subscribers voice concern that they can’t get their Cisco and Microsoft UC solutions to work properly together. If two of the largest vendors in the UC space don’t work together, than what hope do most IT leaders have of actually getting their UC investments to work in a mixed vendor environment?

This is systemic, because without adherence to basic UC standards overall market size, growth rates, adoption rates and adjacent markets will be limited. A closely aligned UC adjacent market is video communications. While there are companies promoting various different standards, there’s no interoperability within the three-tier enterprise video communications structure. The three-tiers are 1) desktop video, 2) a pedestrian video conferencing system and 3) Telepresence rooms. There are little to no standards that would allow different vendors to be providing each of the three-tiers and offer users the same simple set-up that allows video communications to work between the three tiers. Today’s solution is to buy a single vendor, but no video conferencing supplier offers all three-tiers. Cisco may soon offer all three tiers thanks to their Tandberg acquisition, but Microsoft still owns the desktop and they are not opening up their RTA/RTE protocol any time soon.

Another closely aligned UC adjacent market are smartphones, such as the iPhone, Android, blackberry, the Palm Pre etc. There are only limited UC extensions being offered to mobile endpoints but they lack standards, presence, directory and fixed mobile convergence

In short, the biggest drawback is that it’s too hard to get systems, sometimes-even systems from the same vendor to talk to each other. Getting different systems from different vendors to talk to each other is nearly non-existent today. The directory problem is a huge industry problem, because it’s very different to know who has video communications and who doesn’t. Think of it in terms of telephony. I know you’ve got a phone and a phone number that I can call you on. I know you’ve got an email address. However, I don’t know if you have video, and if I do, I don’t know how to connect to you. So, if that barrier doesn’t fall, video will remain a niche application with relatively low utilization even though high definition video and Telepresence utilization has increased substantially during the downturn.

We are calling the telecos to task on this. The telecos hold a lot of the keys to success because video conferencing systems are connect over teleco networks, which is the perfect place to apply interoperability standards. And while a number of telecos now support inter-company Telepresence on their own backbone, they need to step that up and provide inter-company video cross-backbone, and be willing to work with all video conferencing providers.

Again, here’s the case where the telecos probably look at this interoperable video service as threatening, in that they don’t want to open their network up and allow other provides to provide service with our network. Yet if they did, usage would go up and everybody would benefit. So the network operators really need to step up here.

The big picture plug and play model of UC will change business models. As the industry becomes open and standards based, truly standards based, an innovative ecosystem will flourish. Money flows will shift as the big picture UC market becomes much more ISV (independent software vendor) driven. In this model, from a vendor perspective, what’s important is less about the tools you have or the applications you provide, and more about your willingness to support the ecosystem that surrounds you and the development tools you provide them. In essence, the developer community winds up leading your organization.

This is a big shift. In the world of applications, the platform is the important asset and how a company supports its ecosystem will become a key basis of competition and a barrier of entry, as there are only a limited number of ISVs. The open UC market will move the value proposition to one of a platform delivering innovative UC applications. In this model, revenue generation shifts where money comes from and how vendors get it. Avaya understands it very well, with its Dev Connect community, Cisco with its CDN and Siemens with its UC Server 2010 UC platform, but all suppliers need to put much more energy into open standards and going to market through a developer ecosystem.

To accelerate the industry to the big picture UC market expansion, the industry needs to embrace a public semi-annual interoperability testing and demonstration event. It was this public testing that drove TCP/IP into the success of the Internet with the industry trade show and conference called Interop. We need a UC Interop to move this technology to mainstream.