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Dave Stein
Mr. Stein, a principal with Stein Consulting Group, has more than 30 years of consulting, information systems and telecommunications experience,...
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Dave Stein | November 01, 2017 |

 
   

Communications: Everything is Amazing and Nobody Is Happy

Communications: Everything is Amazing and Nobody Is Happy The communications market is ripe for disruption, leaving the traditional players longing for the good old days.

The communications market is ripe for disruption, leaving the traditional players longing for the good old days.

portable I borrowed the title of this post from a Louis C.K. stand-up routine a few years ago. In that routine, Louis talked about growing up having to dial a rotary phone -- and what a pain it was if the person you were calling had lots of zeros and nines in their phone numbers (for younger readers, ask your parents to explain). He also talked about the amazing things we take for granted in today's everyday life such as human flight -- sitting in a chair hurtling through the sky.

Today, we have an abundance of communications technologies that are being applied to solve our everyday problems. This includes using products such as Amazon's voice assistant Alexa to accomplish everyday mundane tasks, or Vonage's Nexmo CPaaS combined with geo-fencing to solve the remote ordered soggy French fry problem (CEO Alan Masarek does a great job describing this application). I expect we already take things like this for granted without thinking about the technology used behind the scenes.

As history shows, traditional markets are ripe for disruption, leaving the traditional players longing for the good old days. I'd like to apply Louis C.K.'s perspective on unhappiness to today's communications technology ecosystem:

  • End User Organizations -- Not happy because there are seemingly fewer solution choices, business partners of many years have gone by the wayside, and new choices via the cloud represent unknown significant risk and require new relationships.

  • Manufacturers -- Not happy because they aren't making money. The traditional premises-based vendors seem to be fewer by the month, which is driven by economics of eroding margins and declining market share. The newer cloud-based vendors are rumored to have investment bankers searching for a buyout, as they also do not appear to be making sufficient profit. Just last week while at the BroadSoft Connections conference, CEO Michael Tessler announced that Cisco was acquiring his firm (see "BroadSoft Fits Cisco Like a Puzzle Piece"). It will also be interesting to see how companies such as Slack fare long term. It currently is at a $200M annual revenue run rate, growing fast, with a valuation of roughly $5 billion, though not expected to be profitable through at least 2018.

  • VARs and Integrators -- Not happy because their revenue model has been broken by the cloud. The traditional model had a front-loaded revenue stream (each sale of hardware, software, and professional services) with a recurring stream for maintenance and support. The cloud model has moved most of the revenue to a recurring model based on a cut of the licenses, although front-loaded elements are still required such as professional services. In addition, significant competition from the Master Agent (MA) channel, which offers many of the same services and has strong ties to Service Providers (SPs), threatens the traditional VAR.

  • Consultants -- Not happy because many of the traditional vendors have de-emphasized their consultant programs. Recent examples include ShoreTel closing its program before the Mitel acquisition closed, and Cisco laying off its long-time consultant liaison manager. Cloud vendors, MAs, and SPs are beginning to reach out to consultants, but it's early. CPaaS vendors don't have established programs that I'm aware of and enterprise vendors such as Salesforce have entirely different channels in which communications technology consultants do not participate. Communications consultants are being forced to learn new things at a faster pace than ever before.

The disruptors in this space are creating amazing new applications that include elements of AI, IoT, and natural language processing, which improve countless things in our daily lives. This has changed the entire communications technology ecosystem and will continue to make many unhappy if they are unable to adapt.

"SCTC Perspectives" is written by members of the Society of Communications Technology Consultants, an international organization of independent information and communications technology professionals serving clients in all business sectors and government worldwide.





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