Last week my friend and colleague Jon Arnold posted Has VoIP Peaked? 8 Reasons Why I Think So. Jon isn't speculating that VoIP is dead. Far from it. But has it peaked? His short answer is yes, and he gives these 8 reasons. I've shortened them for brevity, and encourage you to read Jon's full post for his thoughts.
- Verizon/Vonage - whether this case holds up or not, Vonage is getting boxed in - or out - depending on your view, and they are no longer the threat they were early on.
- Order has been restored - related to Vonage, Humpty Dumpty has been put back together, and the U.S. telecom market is ruled by 2 mega carriers.
- Consolidation is largely done. Building on this theme, we're down to a handful of big carriers, and a handful of big vendors.
- Absence of successful IPOs. Imagine how the prospects for VoIP would have looked if Vonage's IPO was a hit with investors. VoIP has evolved to the stage where there should be lots of successful IPOs happening now.
- Jeff Pulver. Without a doubt, the most successful man in VoIP, right? And Jeff's going to share his vision of the future this morning at VON. I don't know what he's going to say, but I don't need to know. Anyone following Pulvermedia knows that Jeff's focus - and passion - has shifted to video.
- The demise of Voiceglo. They ceased operations a few days ago, and I take this as another sign of a market top.
- Wireless has thrived and not been hurt by VoIP. I've always said that while VoIP is a big, exciting market, wireless is an even bigger, more exciting market.
- Analyst firm coverage. I know of 3 well-known industry analyst firms with strong VoIP coverage that are in varying states of difficulty, and I suspect they are not alone.
While you're reading, be sure to also read Irwin Lazar's response in
Jon Arnold: Has VoIP Peaked? He adds some thoughts and clarity on the distinction between the consumer space and the enterprise space, two distinctly different markets.
I want to comment on Jon's points by the numbers because, as always, he points out some really vital issues.
#1 - The Verizon/Vonage issue is both a larger and smaller issue that I think Jon states. I've never been a Vonage fan, and my feelings are uot for everyone's reading. I think they're best served by accepting Moshe Maeir's offer, and every day they dealy, they are hurting both shareholders and customers. In the end nobody will be served well by this situation. But, Vonage's failure signals the failure of the largest and most visible commercial consumer VoIP service. To me, more importantly, it simply signals a failure of weak management. The failure is not in VoIP at all. The failure is in leadership and management. Coincidentally, this failure took place in a highly visible VoIP company.
That said, I think Skype is floundering and doing quite poorly with their recent advances. That means I see the top two consumer VoIP services as not doing well. There's a reason for that. I elaborate further on.
#2 - Order has been restored. I'd phrase it differently. The status quo has been protected. Jon sees two mega carriers. I see much the same. And recently Sprint was precluded from a federal contract, to the benefit of the old Bell System. As an employee of that Bell System, I'd say it's effectively being restored to power. It's been protected all along. Deep pockets, political powermongering and the good old boy network have kept the status quo reasonably intact throughout years of ostensible reform. Not much has reformed.
#3 - Jon says consolidation is largely done. I'm not sure I agree. Cisco buying Webex signaled to me that Cisco remains in acquisition mode rather than innovation mode. Their products continue to experience security problems. So do Microsofts. The two 800 pound gorillas in the space are both viewed with mixed reaction among enterprise customers. They claim success, but methinks the chest thumping has a hollow sound in many ways. In practical terms, a fair amount of what they speak and real world reaction to their solutions is that it's more of the same. I wouldn't disagree. I do not see either Cisco or Microsoft as innovators. They are followers who seize the bottom and claim leadership over ground broken by others.
#4 - I agree with Jon that the lack of successful IPOs signals something. There are exceptions like the great one Jon notes from Acme Packet. The problem I see is that, overall, the VoIP development community hasn't done a very good job of leveraging their own technologies. My fear, my gut feeling, is that for ten years we've been too focused on the technology and what it can do rather than customers and what they need.
#5 - Jeff Pulver. I'm not sure that I agree or disagree with Jon. Jeff has signaled his own shift in focus to video for some time. But beyond his personal commitment to VoIP, his leveraging his position with regulators, and his own marketability as one in the know, I don't really feel Jeff is anywhere near the root of the issue. Jeff is a spokesperson for the industry. He has served us well in that regard, and I think he continues to serve us well. He's a strong ally to the VoIP industry and an integral part. But VoIP isn't his only interest. And I think it's overdue that someone else step up to standing on par with Jeff's role in leading the industry. I don't see that happening. Far to often, Jeff's taken a strong stance, with support from someone like Tom Evslin, and we've all stood back, signed our names on a petition and said "me too" without seizing the reigns to control our own destiny. Shame on us.
#6 - Voiceglo. I can't comment as they never caught my interest.
#7 - Wireless. Yep. Amen. Wireless is exciting, hot and visible. There's excitement going on there that's viral in intensity. We don't capture that viral fever in VoIP. Not since the early days of Skype and circumventing the telcos who pissed us off have we really had a
wow factor that caught any sustainable buzz. In VoIP, we talk about SIP and peering and act like it's buzz. It's a false buzz. A gnat when we should be buzzing like hornets.
#8 - Analyst firm coverage. Agreed. The analysts love VoIP almost as much as the VC investors do. That's a strong signal.
I agree with Jon that VoIP has peaked, but for a different reason entirely.
VoIP = Plumbing
Nothing more than that. As an industry, we've talked about convergence. Talk is cheap. In ten years, we have done little or nothing to prove converence is real. VoIP is a building block. It's a foundation, perhaps even a cornerstone.
As David Beckemeyer recently noted (
Etel takeways, Better late than never), even our most emergent hot solutions don't really embrace SIP. And SIP is the hot solution we've been touting for ten years.
Ten years. Like David points out, we talk out of both sides of our mouth. And we don't eat our own dog food. Shame on us.
We look at SIP and sessions, peering and trunking, codecs and quality, but the truth is that our customers, the end users, don't give a rabbit's fart about that stuff. They care about solutions to business problems.
VoIP is an industry suffering a glut of buzzwords and nice phrases and a dearth of real solutions that solve customer problems. We deliver some services, but they're woefully short of what we said ten years ago we'd do with VoIP. VoIP has become simply a foundation cornerstone for something in the future.
Today we call that something unified communications. And spinning the story anew presents the same dangers. If fixed mobile convergence, software oriented architecture, software as a service and the like remain our own language for talking about the cool things we can do with technology, and we don't actually solve customer problems, we'll still be here saying the same things again ten years from now.
Just some rambling thoughts to wrap up the week.
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