SIP trunks versus ISDN

 

“In the SME market served by the channel there is no great surge towards SIP,”

says Mark Shane, Sales Direct at ICON the distributor of IP-PBX solutions for SME and enterprise businesses,

“In 2011 we saw unprecedented growth in installs of our  Wave IP-PBX but in almost all cases these were connected to traditional ISDN circuits.  Only around 3% of users had opted for a SIP trunk solution.”   

Mark attributes the low take up rate to the reluctance of the Channel to recommend and sell SIP.  

 “Our Wave solution works with ISDN or SIP so we are in a good position to see what is happening in the Channel.  The impression we get is that the Channel still does not have sufficient faith or understanding of SIP to recommend it to its customers.  SIP providers have a lot of work to do if they are to persuade the Channel to recommend SIP.” 

Mark added, 

“At the end of the day the reliability and performance of SIP may be better than ISDN but when your livelihood depends on you getting it right for your customer you are more likely to opt for the solution you are most comfortable with and have traditionally used

The channel and the 2012 market for IP-PBX telephone solutions

UC sales up

The market in 2012: ICON sales team are seeing increasing demand for PBX solutions in the small to medium solutions category compared with a year ago.  It is not clear if this trend is across the board or only the niches in which ICON is active. However, in the UC and integrated applications PBX sub-category demand in 2011 was up on that in 2010 and ICON saw unprecedented growth in its sales of the Wave IP-PBX solution and a healthy demand for the small business PBX TalkSwitch.

Growth expected in 2012

We believe that growth in this category is fuelled by the market moving more and more to value for money solutions as the recession begins to bite and because Channel Partners are being forced to look for an edge when in competitive bids in what is effectively a buyers market.  There is no sign that growth in this category will slow in 2012 and ICON is anticipating good growth for its Channel Partners throughout 2012. 

Microsoft Lync:  ICON account managers report that despite the hype around the launch of Lync not many customers in this category are taking it on-board.  The view is that Lync is a good UC solution but there are other IP-PBX solutions available such as Wave-IP that also offer UC capability.  

Wave IP changes the channel

Disruptive influences: In 2011, the launch of Microsoft Lync was the big news in the product space.  In 2012 ICON believes that changes to the manufacturer’s offered warranty will be the main disruptive influence in this market changing the way the channel sells and supports the advanced IP-PBX solutions. Vertical Communications, manufacturer of the Wave IP is expected to announce in the first half of 2012 changes to its reliability and warranty that will radically change the way the channel operates its support and warranty.  We expect this will open up opportunities in the customer space as well as making it easier for a reseller to take on a new solution.  

Channel changes: A significant change brought about by the recession is a rethinking by some channel resellers in the way solutions are sold in this market.  Solution selling has regularly been touted as the way forward and there is no doubt that at enterprise level this is the case but in the small to medium sized market channel resellers have been slow to take this on-board.  ICON is now seeing more and more of its Channel Partners using solution selling in the sub 50-extension category.  We attribute this to the impact of customers looking for more business-focused solutions and the need for Channel Partners to win every deal in a recession led market.  More and more resellers are finding that to survive they need to compete in the business applications space and not on price.  This means selling an advanced IP-PBX such as Wave IP and getting much closer to the customer’s business processes.

Contact & call centre solutions are winners

Market needs: Usability and the solutions ability to deliver business efficiencies are becoming key requirements in this market and the customer’s emphasis is increasingly on the role the PBX can play in streamlining the business’s communications with customers.  In 2011, integrated contact centre solutions were a big selling point with customers but the price had to be right.  

Paul Pyatt, ICON account manager for the Midlands and London, who has supported many of our Channel Partners selling the Wave IP-PBX with the integrated contact centre says,  “The market is very price conscious when buying contact centre capability and many solutions out there don’t hit the customer’s price point.” 

He added “Another feature that figures highly in this market is call recording.  The recession is making companies streamline their business processes and call recording is seen as a key tool for managing and training the sales teams” 

Price competition:   Price does not seem to be a major issue in this market.  Customers are not spending any less on a solution but they are demanding more bang for their buck. The recession has not changed the market’s total spend. Customers are prepared to spend the same on a solution today as they where a year ago, they just want more for their money. 

Customers demand more for their investment

Product requirements: Customers are demanding more applications to be included at the same cost and because it is a buyers market, they can afford to be picky.  Channel resellers with PBX solutions with highly integrated applications such as the Wave IP have an edge in this buyers market.  In competitive scenarios, ICON is seeing channel resellers of basic telephony solutions loosing sales because they need to add applications such as call recording, auto attendant and management software to their bid price.  

Working with Channel Partners to create value

Value added distribution means being the resource that the reseller can call on at any time, it means being loyal to the reseller and its business aims and it means buying into the resellers objectives and supporting them all the way.

Mark Shane, Sales and Marketing Director of ICON says than ICON does all this for its partners every day of the week.  These are not hollow words says Mark, for example, we recently worked with Affinity Communication Systems to develop and win a major retail bid.

The retail client contacted Affinity with a requirement to upgrade its telecoms infrastructure and provide a voice mobility solution. The existing mobility solution was a legacy OEM analogue implementation of a Polycom KIRK solution that had served well but needed modernising to ensure interoperability with the proposed Splicecom Maximiser on a VoIP network.  One of the criteria that Affinity had to work with was a fixed budget set by the retailer.  Often a first reaction of many resellers is to reduce the margin on the project to meet their client’s budget target.  ICON was able to put together a system architecture and handset combination that delivered the clients requirements, met its budget aims, and maintained Affinity’s margin.  During the sales process ICON sent both sales and technical people to site to ensure the opportunity was well executed and understood by the partner and their customer.

This is how good value added distribution works to everyone’s benefit.  When practiced fully and with conviction value added distribution results in a win-win scenario for the client, the reseller partner, in this case Affinity, and ICON.

Affinity won the business because with ICON’s support it was able to address the three key requirements of any deal -

• the right commercial solution,
• the right technical solution, and
• the right equipment.  

With ICON adding value, Affinity put forward a business case for migration to VoIP showing how the client would benefit, proposed a minimum cost system architecture that provided the performance the client required, and presented a range of professional Polycom KIRK handsets to choose from. 

A look back at the 2011 telephone market for 50 users or more

Wave is Vertical Communications solution for the 50+ extension market.  There have been a slew of upgrades and new features since 2010 and this, along with a reseller price drop at the start of 2011 has shot Wave out of the starting blocks. 

Now over three quarters through the year Wave is continuing to exceed all expectations with more and more solutions being deployed.   ICON has seen double figure growth compared with last year.  In a market which is experiencing little growth overall this is quite impressive.  Once customers have experienced Wave in action they come back for more.  One government service is expected to spin out Wave in its centres across the UK.  

The feedback from the Channel is that when going head to head with the alternative solutions Wave wins on value for money and functionality.  Wins include installs in retail, hospitality, government, and manufacturing.  Mark Shane Sales and Marketing Director at ICON commented, “In the government sector especially we have seen a lot of wins for Wave as a result it pushing out the incumbent vendors solution” 

A strength of Wave IP is its free out of the box UC apps.  Now, Vertical is introducing an apps store for Wave.   Up and running in the US this will be an invaluable source of additional apps.  It will enable Channel Partners to add even more functionality to Wave IP bids.

The move by vendors to shift product strategy to that of selling a platform on which comms apps can be run is a developing trend in many markets.  Vertical already has an apps store for USA resellers of the IP-PBX Wave and Polycom is expected to move to a KIRK handset platform that runs “apps” 

A review of business in 2011 and 2012

Growth Our small business and UC related solutions are holding up well in a market which is flat and expected to remain so for some while.  TalkSwitch the small business IP-PBX is doing particularly well and we expect this to continue to be a reliable profit earner for our Channel Partners.  Wave our UC IP-PBX solution is also showing firm sales and we expect that this will continue. Sales are partly driven by the price reduction made at the start of the year but it is the core usp’s of Wave which are attracting the end users whilst Channel Partners are finding that the capability to offer a price competitive but unique solution gives them an edge.

Channel Partner opportunities Our Polycom on-site mobility solutions are the real winners for our Channel Partners.  Growth in demand for on-site voice mobility has been strong and is expected to continue out to 2015.  In the medium term, as a result of the Microsoft – Polycom partnership and the release of Lync, the forecast suggests that demand for our Polycom SpectraLink and KIRK voice mobility solutions will continue to outstrip the market and possibly reach double figures. 

Medium term growth in the on-site mobility market will be fuelled by the shift to UC but in the short term we are seeing productivity concerns driving sales.  With recruitment on hold in many companies our Polycom SpectraLink and KIRK voice mobility solutions are seen as one way to increase the productivity especially in the service and care sectors.

Key trends & market growth The increasing participation and commitment of Microsoft to telecoms and its strategic partnership with Polycom has to be one of the most influential trends the market at the moment.  Microsoft’s participation is likely to cause a paradigm shift in the licencing and pricing model as the data resellers business model become more influential in the channel and Microsoft imports its way or doing business into the industry. 

Another key influencing trend over the next few years will be the shift to hosted or cloud based solutions.  Figures suggest that the hosted solutions market will grow in double figures out to 2015.  This will not necessarily be a threat to CPE solutions but it will mean the channel will need to learn to sell against cloud based solutions especially those Channel Partners whose business focuses on the SMB market.

Big hitters shape the market The moves of the big influencers such as Polycom and Microsoft will have a major effect on the structure of the market and the shares of established players.  Long respected for its range of on-site mobility solutions for industrial type environments the planned move by Polycom to expand its handset portfolio into the high volume carpeted office environment with the introduction of new handsets will seriously disrupt market shares in this segment especially with its tie up with the other global  trend maker Microsoft. 

The "apps" business One of the major trends almost sneaking in unnoticed is the adoption of the “apps” business model so successfully developed by Apple.  Vendors such as Vertical and Polycom are already shifting their product strategy to that of selling a platform on which communications apps can be run.   Vertical Communications are creating an “App Store” for its Wave solution and Polycom will be releasing a portfolio of basic generic apps for the KIRK handset solutions. 

More business for Channel Partners The rest of 2011 and 2012 will be an interesting time for ICON and its Channel Partners.  The Microsoft -Polycom partnership is expected to expand opportunities for our Polycom on-site mobility solutions faster than the market is growing and the move by Polycom KIRK to a handset platform which runs “apps” is expected to generate new opportunities in vertical markets.

Recruiting partners In the short term ICON’s focus is on recruiting data resellers and helping its traditional channel partners to take on-board the more solutions focused and software based solutions. 

Until recently the traditional telecoms solutions were not compatible with the data reseller channel.  Now with the introduction of the UC solution Wave and the move by Polycom to build more software based apps into its solutions data resellers are becoming the channel of choice for these solutions. 

Thumbs up for Microsoft Lync and Polycom KIRK

Microsoft Lync’s strength has to be its ability to integrate with the existing platforms.  Make it  easy to integrate with existing telephony platforms and you remove one more objection to buying.  Microsoft is working with the likes of Polycom to make this happen.  There are Polycom KIRK DECT on-site mobility solutions which are already interoperable with Lync. These are the first Microsoft certified DECT solutions for Lync.

ICON, the UK’s distributor of the Polycom Lync compatible on-site mobility solutions is already planning for an uptake in sales as a result of Lync.  Microsoft’s low hanging fruit are organisations which have made large investments in OCS or are in a vertical segment such as education (where Microsoft provide attractive license offers) – ICON sees many of these organisations and a surprising number are already active around Lync as a UC telephony solution and are talking with us on how they can enjoy the benefits of onsite mobility as an expansion.

The future of the cloud

ICON does not believe, as some pundits claim, that cloud solutions are displacement technologies which will kill the CPE solutions.

Cloud solutions will co-exist with CPE solutions in the market.  In a perfect channel where resellers and vendor match the solution to the needs of the user we expect to see cloud and CPE solutions co-existing and providing the user with same telephony benefits no matter whether they choose a CPE or cloud solution.  There is no telephony reason for either one to dominate and the decision to deploy a CPE or cloud based solution will be based on differentiators not related to telephony.  The financial structure of the business, the strategic importance of the telephone system, and the fiscal status of company will be the deciding factors.

ICON distributes Wave IP a CPE solution which delivers functionality which equals that of the best enterprise CPE or cloud solution and MESSAGEmanager a Unified messaging solution which can be deployed as a CPE or cloud based solution but has not seen any wholesale move to cloud based solutions.

Mark Shane commented

“There is a lot of information around at the moment about the technology of cloud based telephony.  But I have still to see any sound presentation of the financial and fiscal benefits of these solutions for the end user and that is where the real difference lies.  For many of our clients the strategic and lifetime cost of deploying a Wave IP solution far outweigh the advantage of a cloud solution”