Megatrends 2012

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It is good to reflect on the past year and I’ve been enjoying many of the pieces published in this annual ritual. It truly is impressive how much happens in a year. However, I also feel that the annual analysis misses some of the bigger picture. Fundamental changes in this industry are normal, but sometimes important things are not visible on an annual scale.

Rather than offer an annual review, I’m going to jump back to a December 2009 post called Megatrends in Voice. These trends, mobility, the cloud, and de-materialization, continue and are evolving. I think these shifts (shift happens) are still relevant and transformational, but I’d like to offer a few updates.

Mobility: Mobility remains huge and somehow managed to become even bigger in 2011. It was big enough when it was just smartphones – but tablets are much bigger than smartphones :). Mobility is just part of the equation – it’s also about simplicity. I think we saw a false start with the advent of netbooks. If you recall, netbooks were surging in popularity in 2009, so much so that they were notably harming the sale of notebook computers (see Notebook Sales Flatten, While Netbooks Surge).

This created a problem for Microsoft as everyone was taking advantage of a lite version of XP at the expense of full version sales. Microsoft put a stop to it with Windows 7 licensing and pushed netbooks into 10.1” or smaller display and that curbed demand. I think this was a huge blunder. In hindsight, it was clear writing on the wall that there was a mass market for simple, inexpensive, low maintenance devices.

The netbook was possible because of the cloud. The web itself, web email, social services, photo services, instant messaging, and other “programs” were transforming traditional software into services. After Windows 7 came out, people were forced back to expensive, high maintenance devices for surfing. Meanwhile, Apple was pushing the limits of notebooks with its AirBook.

The iPad or tablet was inevitable. Apple was able to leverage its experience from iPods, iPhones, and AirBooks into an elegant netbook without a keyboard. Ironically, Microsoft intended to cripple the netbook with a small screen, but it turns out the screen size was fine – it was the keyboard that was the problem. The pièce de résistance was the Appstore. It wasn’t just software that became a service, but the browsing, delivery and installation experience as well.

Now we have an ecosystem filled with vendors suffering from Apple-envy. The tablet can replace desktops, phones, and smartphones – but will it, or will it just complement them? Will non Apple tablets ever get any momentum? Is the iPad so critical that the Government will mandate everyone to buy one (No iPad Left Behind)? I don’t have the answers, but it’s clear we are in the early stages (yet five years into it) of the mobility era of communications. But like the keyboard vs. the monitor – I wonder if we really yet understand the problem we are solving.

The Cloud: I see a disparity between the cloud camp (8×8, Broadsoft and its providers, Comcast, Fonality, Cbeyond, etc.) which are all reporting impressive growth, and the UC Camp (AvayaCisco,MitelNECAastraSENShoreTel, Lync, etc.) which is struggling more as their cost and sales models are adapting. These two groups are clearly on a collision course yet no one speaks of it. Conferences like ITExpo have the first camp, and Enterprise Connect has the latter. Some of the UC players are trying to sell to providers, but only Mitel and SEN have been directly trying to to practice an inter-camp faith.Microsoft is about to make waves as it has started to position Lync as a hosted service.

Making matters worse, there is also the consumer camp that is clearly penetrating the office. Skype, Google, MSN, Yahoo, FaceTime are directly offering voice, video, and IM to consumers – (read bypassing IT). We try to ask these vendors their enterprise strategy, but just get confused looks as a response – they offer communications services to those that wish to communicate – simple really. This begs the question: who is the customer? IT or the user? The user experience is far more important than it was, and even those that sell to IT will find “selling” now involves more buy-in from its users – such as internal pilots and user powered selection committees.

The emerging story is the collision of these camps. Consumerizaton of IT has been an interesting aside, but it is just beginning to get interesting. I also expect the cloud camp to get a little more in the face of the UC vendors this year.

De-Materialization: This trend is seriously changing the channel. A big chunk of the channel’s value has historically been distribution. De-materialization means things are turning electronic instead of physical. It started in the 90s when the Internet was new and together they continue to grow.

It is pretty clear on the consumer level how our lives have improved with de-materialization. I can obtain my movies, music, airline tickets without leaving my computer. The fact that the movie rental places are gone, music stores are gone, and travel agents are gone is curious. Time marches on, like typewriters and aluminum foil tv dinners, who misses them?

But the trend is a big deal and it has huge UC ramifications. Change can be painful, and the goal is to be ahead of the curve to profit instead of pay for the lessons. De-materialization of the office (home based workers) has hurt the car business (sales, tires, car repair), office furniture business, clothing industries, and more – all of which used to buy telecom stuff. It has created new industries like these collaborative workspaces popping up all over. Our office social interactions are changing, our norms and mores, and even the notion of work hours are all in flux. UC and social networks are raising to de-materialize both the conference room and the water cooler.

The role of the UC channel is rapidly changing from distribution to services. With virtual goods, is the reseller model even right or should it be the agent model? What is the value the channel should bring and who should pay for it? Should dealers still be restricted to territories when they perform most of their work remotely? Lots of variables in play here. The fact is the vendors need a channel as direct sales are far too expensive. The consumerization concept is great, but this stuff is still way too complex.

But even worse is vendors that have killed their channel frequently still don’t want to talk to their customers. Consider United Airlines – the recording says don’t call – ‘better deals are online.’ If that doesn’t discourage you, then they say they will ‘charge you a fee to talk to an agent.’ If that doesn’t discourage you, they will put you in queue for 30 minutes. Try finding a phone number for Google, Amazon, or Facebook to share with them an idea to improve their service. The problem is United still thinks it’s a channel company despite the fact their channel is gone.

This is a time of short product lifecycles, amazing innovation, and great confusion. The channel is more important than ever. The vendors need to figure out what they expect from their channel and the dealers better figure out their value-add. If it involves physical inventory, repeat.

 

Cross posted at UCStrategies

Dave Michels