The Emerging Cloud Order

My trip to BroadSoft’s Connections conference  got me thinking more about the cloud and hosted UCaaS. The space is growing, energetic, and optimistic. Infonetics recently reported the number of seats for hosted business voice-over IP and unified communication services is on track to “more than double” between 2012 and 2016. I put the emphasis on the “more” part of that statement.

[Related: my post on BroadSoft Connections at NoJitter]

A new ecosystem is emerging – vendors at every level from core infrastructure to add-on application providers. As with all disruptive things, stage one was to be as good as (premises) and stage two is to do new exciting things impossible with premises based solutions. UCaaS is currently crossing over into stage 2. For example, the cloud offers more powerful capabilities to smaller businesses because of cloud scale-nomics (vs. the closet). Case in Point, The CTI Group‘s speech analytics engine performs real time call center monitoring/listening for keywords in live conversations. This type of technology just isn’t practical for many call centers in a premises-based world.

So who are the new players in this emerging landscape? For this post, I am going to look at three tiers: Soft-switch makers, Service Providers, and Endpoint makers. I will skip over the server and cloud infrastructure dudes as that’s not particularly relevant to telecom, and (for now) avoid the new crop of application vendors.

Soft-switch Makers: Many claim to be in this space, but the big ones are BroadSoft, MetaSwitch, and GenBand. There’s also a group of vendors that are adapting other products to meet the unique needs of service providers which include:  Cisco, Microsoft, ALU and Mitel. All of these firms are selling their solutions to service providers (and some directly to end users). I should also give a shout-out to Digium, as  its Asterisk is heavily used (and customized) by many service providers.

Then comes the Service Providers (SPs) which come in all sizes. The vast majority are using technology from one of the above vendors. Don’t think that providers using technology from say BroadSoft are offering identical services. Each SP determines services, pricing, and bundles. Some combine with their network services, some position for OTT. They fill gaps such as video conferencing in unique ways. There are large numbers of Internet Telephone Service Providers (ITSPs) – too many to list here. They include the big carriers like AT&T and Verizon, cable firms like Comcast and Cox,  RBOCs and CLECs like Hawaiian Telecom and cBeyond, PTTs around the world, and numerous independent over the top players. Many SPs are going with more than one strategy – for example AT&T hosts solutions from both BroadSoft and Cisco HCS.

There are also several providers that built their own technology platform- effectively a hybrid between a Soft-Switch maker and provider (yet they don’t sell their software). The major ones are: 8×8, Alianza, Fonality, Phonebooth, RingCentral, ShoreTel M5/Sky, Star2Star Communications, Thinking Phone Networks, and Vocalocity.

Recently, the major premises-equipment vendors have also jumped into the cloud. They have the technology, but are frequently caught between the interest of their channels and their own interest in selling products. Avaya, Mitel, NEC (soon), and Siemens Enterprise all offer hosted services.  The next shoe to drop will be cloud/premises hybrid strategies – currently available from Fonality and Mitel, but not particularly well productized. There’s also some interesting consortiums emerging such as Internet2 focused on the higher education market (Level3 and Aastra).

The SP space is wild and immature. The solutions are hard to compare, channels are immature, SLAs are inconsistent, with overall very poor and inconsistent transparency regarding operations, practices, SLAs, and financials. Yet: growing quickly.

Regarding endpoints, most are using standard SIP phones. This is increasingly a crowded commodity-like market as most SIP phones will work with any provider (as well as with the open source communities). The following endpoint makers seem to be the stars: Polycom, Aastra, Snom, and Cisco. Panasonic is gaining traction with its IP Dect phone.  Mitel’s solutions support SIP, but tend to use MiNET, Mitel’s proprietary endpoint protocol. Avaya, NEC, and Siemens use standard SIP with extensions that favor their own hardware. ShoreTel currently uses Cisco endpoints with its Sky service, but intends to release new ShoreTel branded compatible hardware in 2013. There are several other emerging brands (mostly from Asia) that are lowering the price of SIP endpoints. Earlier this year, Digium released phones with optional licensed features that could work their way into some Asterisk-based service providers .

Polycom and Aastra got suckered into building separate proprietary phones for Microsoft’s Lync. Snom took a big gamble and reverse engineered a solution for their existing SIP phones allowing them to leverage existing models (and distribution) with phones ready for standards-based SIP or Lync. Eventually Microsoft embraced this and now “Qualifies” Snom Phones. I expect Polycom and maybe Aastra to do the same thing now that Snom has paved a path. Both firms offer high quality SIP phones (the world doesn’t need another proprietary IP phone).

In 2013, video and desktop sharing capabilities will be key for UCaaS which last year had to scramble to support presence, and mobile clients. In an upcoming post, I will talk about some of the big changes I expect in 2013 as the market continues to grow and mature.

This emerging space has a lot of excitement and drama. For some basic reasons of why hosted is gaining traction, check out my white paper “The Big Shift in Communications” written for business owner/operators available from Simple Signal.