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Open Source Solutions Penetrating IP-PBX Market: ITEXPO Speaker

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December 14, 2009

Open Source Solutions Penetrating IP-PBX Market: ITEXPO Speaker

By Michael Dinan, TMCnet Editor


Though communications technology and telecom have taken leaps and bounds forward in recent years – bolstered by the rise of Internet-based phone calling, or Voice over IP – the audio quality of conversations, ironically, has probably taken a step back, according to an official with a subsidiary of a Fairport, N.Y.-based company that provides data, voice and Internet solutions to business-class customers.

 
Jeffrey Szczepanski (News - Alert), co-founder of Allworx, a subsidiary of PAETEC Holding Corp. that provides data, voice and Internet solutions to business-class customers, told TMCnet in an interview that the solution space has generally sacrificed quality to yield lower costs and more ubiquity in the form compressed audio for cell phones and VoIP.
 
“In fact, even under nominal circumstances using the same G.711 encoding that the PSTN uses, VoIP communications audio quality can actually measure slightly worse (in terms of MOS scores, for example) than the typical straight PSTN call because of the added latencies of the packetized data networks that the audio moves through,” Szczepanski, vice president of R&D at Allworx (News - Alert), told TMC CEO Rich Tehrani in an interview, printed in full below.
 
Clearly, Szczepanski said, shifting users beyond the 3.4 kHz sound barrier is the path for VoIP to really break free from the shackles of the legacy phone network.
 
“However, what is not quite clear yet is what people are willing to pay for those capabilities, especially when most other people are not yet enabled to receive such calls,” he said. “It is a bit of a Catch-22. The HD capability almost has to be free for people to adopt it I believe - and admittedly, that may not be too far off.”
 
During their back-and-forth, Szczepanski also told Tehrani that he doesn’t see one smartphone provider dominating the market any time soon – though he does foresee a big year for Google and the undeniable rise of its open Android platform. Szczepanski also had some interesting thoughts on what the future might hold for the IP-PBX (News - Alert) market.
 
Their full exchange follows.
 
Rich Tehrani: Smartphones continue to rise, find their ways into offices and homes alike. Who will dominate that market and why?
 
Jeffrey Szczepanski (pictured left): Clearly, the three main players at this point are Apple iPhone, RIM BlackBerry, and Google (News - Alert) Android with everyone else in a declining share position.
 
In the overall smartphone market, I don’t think there will be a single dominant player in all market segments with RIM staying strong in the enterprise space and Apple in the consumer space. The wildcard is the Google Android platform and how they will fair against Apple’s iPhone for the consumer market and against RIM on the enterprise side; however I think RIM should be able to hold the top position in that space. From a strict technical perspective, currently Google has the best application platform and has a better overall developer friendly application deployment model, but Apple is not inherently disadvantaged; it’s just a question of how much they are willing to open things up to neutralizes some of Android’s strengths.
 
Going forward, it is very important for Apple to be a student of their own history here. I see direct parallels between Apple’s original Macintosh closed platform solution going up against the comparatively open Microsoft Windows. In the smartphone battle, Google is taking on the role of Microsoft. History showed that Microsoft’s strategy dominated over Apple’s even with Apple’s early technical lead. This makes me wonder, “Mr. Jobs, did you learn your lesson, or is history going to repeat itself?”
 
RT: We hear more and more about high-definition voice features in IP communications products and services. What is going to drive wideband audio and HD VoIP into the mainstream market? How long will it take?
 
JS: It is interesting how the technologies and markets have evolved in the telecommunications space – if anything, typical communications voice quality has actually gotten worse in the last decade! That is, the solution space has generally sacrificed quality to yield lower costs and more ubiquity in the form compressed audio for cell phones and VoIP. In fact, even under nominal circumstances using the same G.711 encoding that the PSTN uses, VoIP communications audio quality can actually measure slightly worse (in terms of MOS scores, for example) than the typical straight PSTN call because of the added latencies of the packetized data networks that the audio moves through.
 
Clearly, shifting users beyond the 3.4 kHz sound barrier is the path for VoIP to really break free from the shackles of the legacy phone network. However, what is not quite clear yet is what people are willing to pay for those capabilities, especially when most other people are not yet enabled to receive such calls. It is a bit of a Catch-22. The HD capability almost has to be free for people to adopt it I believe - and admittedly, that may not be too far off.
 
So, how long will it take? Good question. Ultimately there may need to be some kind of killer application to arrive on the scene that pulls a critical mass of people into the new paradigm. The voice quality aspect of it alone - just because it’s technically enabled - doesn't seem to be quite getting people there all by itself.
 
RT: What’s the most innovative product that’s going to hit the market in 2010, from a company other than your own?
 
JS: What Google is doing with its Google Wave real-time communications and collaboration solution is perhaps one of the most innovative undertakings I have seen in several years. And, to be clear, the most important part of Google Wave is not the current implementation that Google has made public for experimentation, but the fact that they decided to also open up and standardize the federation protocol (which itself is based on the already existing XMPP messaging protocol). I am not yet convinced that Google’s own implementation will win in the marketplace, but the open Wave Federation Protocol may in fact become the replacement for SMTP type e-mail longer term and be the pathway for solving spoofing, authentication and security problems related to traditional e-mail, i.e., finally saying goodbye to spammers, phishing tactics and email borne viruses, etc.
 
RT: We entered 2009 in a recession and now we’re seeing signs of the economy picking up. How did the slow economy affect demand for your products and services and what are you anticipating in 2010?
 
JS: Within the Allworx equipment business specifically, the biggest impact of the economic downturn was a change in the channel’s propensity to carry inventory, presumably driven by demand uncertainty and perhaps by tighter credit markets. While the channel burned off their inventories, we saw an impact to near term revenues, but with the exception of late 2008, end-user pull of sales was actually not really impacted negatively and in the end, may prove to be largely beneficial to Allworx given our value based price points. In other words, the downturn put us in an easier to manage channel pipeline situation and also is causing more and more customers to consider Allworx over our higher priced competitors.
 
RT: What are some of the areas of market growth in the next few years?
 
JS: Not unlike the PC and Server software market, Open Source solutions are definitely affecting the IP-PBX telephony market space. And, more to the point, Open Source software licensing models definitely challenge certain fundamental business model assumptions as compared to the traditional IP-PBX systems. These dynamics are really important to understand.
 
Over the last few years, Open Source solutions in the various flavors combined have made significant inroads into the IP-PBX space. In fact, John Malone of Eastern Management Group estimated that at the end of 2008, Open Source IP-PBX’s represented 18 percent of the total market space putting it into the number one market position. John is predicting this growth will continue to be experienced for at least a few more years.
 
However, two important phenomenon are important to understand here. First, the market share numbers are based on the number of installed lines, not based on revenue. This is an important distinction because the Open Source IP-PBX software solutions can be freely downloaded at no cost. Second, as a percentage of installed handsets or lines, nearly all Open Source deployments bypass the channel and are self installed into enterprise locations via a professional IT staff. These two facts together tell me that the Open Source selection process is strictly about the cost savings to a certain segment of the market – the early adopters. Not unlike Linux on the desktop, will growth flatten and the Open Source IP-PBX ever get in a situation where it can “Cross the Chasm” and be able go mainstream?
 
Our job, not unlike Microsoft’s counters to Linux, Apace, MySQL, etc. is to figure out what moves we should be taking to counteract the Open Source threat in our market space.
 
RT: I understand you are speaking during ITEXPO East 2010 in Miami, to be held Jan. 20 to 22. Talk to us about your session or sessions. Who should attend and why?
 
JS: I am participating in two sessions. My first session is titled “Deploying Enterprise-class VoIP with SMB Resources” and is aimed at the notion that small business want to look big and have enterprise class communications without the cost and complexity of a full IT staff. Interestingly enough, this very specific notion is the exact value proposition and the rally cry for Allworx product development. In fact, when I founded Allworx (then named InSciTek Microsystems) originally as a digital systems consulting company, my background was coming from having worked at a Fortune 500 company and being used to the internal IT staff maintaining all that kind of stuff.
 
As a small business owner myself, it was too time consuming and difficult to deploy the systems I was used to having in place and then realized than many small businesses must experience the same kinds of issues. From there, the Allworx product line was born and for the next 10 years we worked to fully realize and refine that original vision. So, for my talk, I plan to share some of the insights into what things are there and what opportunities lay ahead to really reach mass deployment of VoIP in the SMB space.

For my second session, I participate in the “Meet the HD Handset Vendors” and with the eight other vendors on the panel, I plan to talk to Allworx’s thoughts on HD voice capabilities, what we see coming on the roadmap, what stands in the way of adoption and whether or not users really care about this technology driven capability or not.
 
RT: Please give me one outrageous prediction pertaining to our markets for 2010.
 
JS: After many years of trying and several re-launches with various strategies, finally, in 2010, Microsoft’s “Windows Phone” Smartphone on the HTC platform moves into the number two market position behind Google with Apple in the number three position! You did say outrageous right!? – Joking aside, my “outrageous prediction” is that Apple will not renew their exclusive contract with AT&T for the iPhone out beyond 2011 and that an Apple made phone will be available on the Verizon networks by around 2012. As lucrative as the deal is for Apple, to do otherwise would seem to stunt Apple’s market growth out into the middle of the next decade, if not sooner.
 
To find out more about Jeffrey Szczepanski, Allworx and PAETEC, visit the company at ITEXPO East 2010. To be held Jan. 20 to 22 in Miami, ITEXPO (News - Alert) is the world’s premier IP communications event. Szczepanski is speaking during “Deploying Enterprise-class VoIP with SMB Resources” and “Meet the HD Handset Vendors.”Don’t wait. Register now.

Michael Dinan is a group managing editor for TMCnet, overseeing TMCnet's Web editorial team and covering news in the IP communications, CRM and VoIP industries. He also oversees production of e-Newsletters in the areas of 4G wireless technology and smart products. To read more of Michael's articles, please visit his columnist page.

Edited by Michael Dinan


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