My Digital Transformation Series with RingCentral - Latest Post

I've recently been writing occasional guest posts for the RingCentral blog, and given how well they're doing in the UCaaS space, it's a good audience to be in front of. My most recent coverage has been about digital transformation, and more particularly, its impact on  collaboration. I've had a chance to speak to some RingCentral customers about their experiences, and that has informed my ongoing research about what's happening.

The second post in this series just ran yesterday - "The Benefits of Workflows for Collaboration", and it's already attracted wide readership. If you like it, you'll want to read the first post in this series, and then hang on for a bit, as the third post will be running later this month. 

ShoreTel/M5 was good news for voice, but perhaps even better for cloud-based video - why the time is right

I recently posted about ShoreTel’s acquisition of M5 Networks (which is still getting tons of readership!), which may signal the strongest validation yet for cloud-based VoIP as an alternative to premises-based telephony systems. The deal is good news for both companies, and even better news for the broader cloud communications space. ShoreTel’s move spells out a few realities that I think are becoming important drivers for everyone – vendors, service providers, businesses – especially SMBs, and the investment community.

First is the fact that ShoreTel had a simple make or buy decision on its hands. They have a healthy premises-based business, but have read the tea leaves, and recognized the need for a cloud-based offering sooner than later. ShoreTel is not known as innovator, so they did the smart thing and bought the best company on the market. Not only does that give them an instant entrée for cloud services, but they now have M5’s rich expertise in-house, which will now be their engine to keep the offering fresh. That’s a pretty good model for competitive differentiation, and is far more of a sure thing than trying to build it internally and hope the market buys it.

On top of that, the investment community now has a valuation benchmark based on what the market will bear for cloud-based communications at this early of its lifecycle. If ShoreTel can makes things work with M5 – and it’s theirs to lose, really – the pressure will be on for competitors to keep up, and with so few cloud VoIP players of substance out there, the deal values will jack up just to get into the game. That’s when things will get a bit crazy for everyone but ShoreTel, whose first-mover gambit may prove to be a bargain. Nice storyline, huh?

In case you’re wondering where I’m going with this, it’s not about VoIP. As promising as things sound for cloud-based VoIP, telephony, voice, etc., there’s an even better opportunity shaping up for video. Since attending the ITExpo in Miami, and a few other things since, I’m of the mind that ShoreTel/M5 is setting the stage for a similar run in video. Not quite yet, but when the stars line up, the story will unfold pretty much the same way.

We all know that video is complex, and people aren’t generally comfortable using it as an everyday mode like telephony. Fair enough, but desktop video – especially when SIP-based – has come a long way, and is ready for prime-time. Indirectly, we can thank smartphones and tablets for that, as their off-the-charts adoption has helped make video more mainstream. In a business setting, however, the stakes are higher, as interoperability creates even more challenges than ease of use.

To date, legacy video has been expensive, complex, reservation-based and proprietary. In an ideal IP-based environment, the exact opposite for each is true, and businesses are starting to get a taste of that with a few early stage cloud-based offerings. ShoreTel/M5 is really just another step along the way for validating the cloud as a viable platform for business communications and collaboration solutions. Every telecom and UC-focused vendor is trying to develop some form of a hosted or cloud-based offering; some incorporate video, but it is never the lead application.

This leaves room for cloud offerings built specifically around video, which is now mature enough to manage as a standalone offering. The great thing about cloud is how easily you can offer on-demand services, which video is very well suited for. Just like M5 is a leading example of cloud-based VoIP, there are offerings carving out the same niche in video. There are two pureplays on my radar here – Vidtel and BlueJeans – and either – or both – could have a similar exit to M5 if things go well. More importantly, this market is moving so quickly now, and should that happen, I can guarantee you it won’t take 10 years like it did with M5.

While it won’t take as long, video does have different technology issues and business drivers than voice. Unlike VoIP, video is really hard to give away and still make money. There are too many variables in terms of network compatibility/traversal, codec support, endpoint support, quality of experience, etc. That said, there certainly are lots of other vendors who are gaining traction with varying degrees of cloud-based video conferencing services for SMBs and enterprises – such as Nefsis, Vidyo and Glowpoint.

With the lines blurring between personal and business services, you also need to think about consumer-focused plays like TokBox and ooVoo. I don’t see them taking much business away from the other vendors any time soon, but these days, we’re seeing a lot of consumer-based applications finding their way into the business space. Just a thought.

Anyhow, what I’m getting at are business models. Clearly, there are viable ways to offer cloud-based video services, and awareness is quickly building in the business market. As mentioned, video has more wrinkles than voice, and in terms of having success, I think the basic technology is secondary to the business models and paths to market.

As with voice, video must compete with the free offerings that serve the bottom end of the market. The likes of Skype and Google can and will serve that market, simply by virtue of being a click away for their hundreds of millions of users. Nobody can compete with that and make money, so let’s just take that as a given. These offerings are fine for ad hoc sessions, but most businesses want something that’s higher quality, more scalable and more reliable – and plenty of them are willing to pay for it.

At the top end, of course, we have premises-based systems, with immersive telepresence being the gold standard. It’s a fantastic experience, but so is driving a Porsche, and that’s not a realistic option for most businesses. Cisco may be doing big business with telepresence, but there’s a huge middle earth that can’t justify the cost, but also want something better than free. That’s the opportunity that the likes of BlueJeans and Vidtel are chasing, and I think 2012 is going to be an inflection point here.

Just like the early days of VoIP when AT&T and Vonage spent heavily to create awareness and interest, the buzz coming from both the top and bottom ends of the video market will be good for everybody. Smaller vendors will benefit from the boost in awareness, and as video becomes more demand-driven, the business models will become more stable.

Coming back to paths to market, the pureplays – Vidtel, BlueJeans, etc. – are actually one of three basic options. Of the other two, one is vendor-based and the other is operator-based. Briefly, along with Cisco, we have the usual suspects such as Polycom and Lifesize. They all provide a great user experience, but of course are expensive, and while all advocate being open, they work best with an end-to-end setup. On the operator side, it seems like everyone is getting into the act. Notable examples include 8x8 and Telesphere, and of course the customers of BroadSoft and Metaswitch can all go down this road now.

Higher up the food chain, there’s OVCC – the Open Visual Communications Consortium. This is a great way for the likes of AT&T, Verizon, BT, Orange, etc. to tap into this market, but there’s also a strong vendor element to OVCC, led by Polycom, Acme Packet and Dialogic. A cynic would say, pick your poison, as both of these broader-based options have varying degrees of vendor lock-in.

A true cloud-based service is vendor-agnostic, and works across all platforms and endpoint scenarios. That’s exactly where Vidtel and BlueJeans are zeroed in, and this should prove to be pretty fertile ground. No doubt, lots of businesses will go with the name brand vendors and carriers, especially if they’re just dipping their toes into the cloud. Fair enough, but there’s a growing segment who are ready to go further and want the full range of choice that a cloud pureplay can provide. In other words, being able to use video with different endpoint vendors, fixed or mobile devices, Web-based platforms like Skype, and connecting between IP and legacy networks, protocols and codecs (SIP, H.323, H.264, etc.).

It’s early days yet, but each company is pursuing different paths to market, and I think this should be closely followed as a barometer for what’s the best way to drive the adoption of cloud-based video. In short, Vidtel is relying on channels, whereas BlueJeans is mostly going direct and getting businesses to sign up with them on their own. This is the classic fork-in-the-road scenario from telecom, and there is definitely a place for both here – and that may turn out to be true for video.

Following these paths, Vidtel relies on partners to leverage their relationships and footprint with business customers. This group is a mix of video-centric VARs, video vendors (remember, Vidtel and BlueJeans are cloud platforms – they provide the network and virtual infrastructure – not the endpoints) and service providers who want to add video to their portfolio – ideally on a private label basis. BlueJeans, on the other hand, is building business one win at a time. By using various forms of advertising, they can quickly build up a customer base that’s theirs.

Ultimately, I think the market will decide which model works best. I think it really comes down to trust, and that’s where I think channels have the upper hand. If they have good relationships in place, adding video isn’t a big leap, especially if it’s under their own brand. As far as I know, BlueJeans does not support private labeling, as they prefer to own the customer – which creates natural conflicts if/when channels are involved. Vidtel avoids this issue, and being a smaller player, is happy to go with the flow and take their wins any way they can. On that note, it’s worth mentioning that Vidtel’s pricing is lower than BlueJeans, which itself can be another driver for adoption. Not only that, but this provides more room for channels to add an attractive margin and still be competitive on price.

Another consideration in favor of the channel is their ability – and desire – to integrate video with UC platforms. This can be a great way to strengthen the customer relationship and give them as much of a collaboration solution as they like. Furthermore, Vidtel supports both H.323 and SIP, giving channels more flexibility to work with clients who have a mix of legacy and IP in their network.

This is much harder to do when taking the best-of-breed approach by going direct with BlueJeans, at which point you’re on your own to bolt this on to whatever UC or collaboration platform you’re using. On the other hand, if what you want is an affordable, easy to use cloud-based video service, it’s hard to go wrong with either offering, and no doubt, BlueJeans will serve this niche especially well.

For either vendor, the appeal is pretty simple. Businesses can adopt video with their existing infrastructure, and not have to worry about making all the pieces work, regardless of which endpoint vendors they have, or which carriers they use. Relative to what businesses will spend going with the likes of Cisco or Polycom, both BlueJeans and Vidtel offer great value, and more flexibility to work out of the box with pretty much any current environment. So, for now, let’s watch as the big players seed the market with their push into the cloud, and hopefully along the way, the value proposition of these pureplays will bubble up and gain their fair share of this wide open opportunity.

Disclosure – I am an Advisor to Vidtel, but feel this post has been both fair and objective. I have been careful not to show bias here, and have deliberately stayed away from any in-depth analysis of the companies discussed herein. My main intent is to highlight the broad opportunity for cloud-based video and the pros/cons of the two main routes to market. Your comments are duly welcomed.

Hosted PBX - my New White Paper with Metaswitch

I was recently engaged by Metaswitch Networks for some thought leadership in the hosted services market. Whether you call it cloud or hosted or managed, this is a strong trend, especially among SMBs. They had me research and analyze the factors driving this space, as well as evaluate how their Hosted PBX offering addresses the needs of the market.

They recently published the white paper, and it's now available for download on their website. The paper is titled "Hosted PBX and Beyond", and
you can register here to get a copy. If you like what you read, I'm sure they'd be happy to hear from you! If you have any difficulty getting the paper, just drop me a line and I can get you a soft copy.

M5 - Another Acquisition - Callfinity

M5 Networks just announced the acquistion of Callfinity this morning, and it looks like another small step forward in the much-expected consolidation of the hosted communications space.

This is actually a contact center play, and is very much in line with the trends I've recently started following via my column for Exony. I definitely think M5 has the right idea here, as hosted/managed contact center capabilities are starting to make a lot of sense as these technologies mature, as well as prove themselves on a large scale.

Callfinity is a different type of pickup for M5 than their previous deal, when they acquired Geckotech late last year. That was a similar business, and it simply allowed M5 to expand its customer base along with gaining a physical footprint in a new urban market - Chicago.

I've been following M5 for many years, and having turned 10 last year, they sure have come a long way. That's not to say that every hosted player needs to be around 10 years before they can start doing this, but M5 has earned their keep, and I have no doubt that their thinking around Callfinity is pretty sound, and is part of a well-planned growth path that will help re-define this space as it comes of age. - My First Brief Published

Blogging has been sporadic the past week or so, but for good reason. I've noted recently that I'm working on some new things, and these are starting to take root now. Some of you are seeing me pop up now and then on Twitter, and it's great that so many of you are welcoming me - or asking what took so long? I'm still trying to normalize myself to this, and I can see already how it's cutting into blogging time, and that's going to take a while to balance out. is another new front that I'm enjoying quite a lot. They have a pretty extensive and engaged community, and it hasn't taken long for me to find topics to comment on. It's a great portal - among other things - and if you follow me, you should hang out more on I'm now a Focus Expert, which means I'll be regularly writing Focus Briefs. These are short analyses of various IT/IP comms topics, and I just published my first brief, which talks about things to consider when looking at hosted services. As with everything on their portal, comments are welcome, and I hope to see you there soon.