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									A Call to IP Phone and
VoIP Device Vendors…
Achieving Success in
the SMB VoIP Market
Fred Zimmerman
Director of CPE VoIP products,
Texas Instruments
SMBs: the market proclaims a hot segment
                           “….the opportunity is ripe for VoIP
                           vendors. The SMB space represents a significant portion of the opportunity,
                           and vendors that have the right combination of quality ease of use, and cost, are well
                           positioned, at least for the next several years….”
                           - Rich Tehrani, president and editor in chief, August ‘08

  “…this year, momentum will swing towards SMBs as they continue to evolve into
  more distinct markets with unique needs. Despite the challenges faced by SMB
       we believe that SMBs will begin
  vendors,

  to adopt VoIP in increasing numbers….
                             - Alan Weckel, Dell’Oro Group, July ‘08


                                                “Since its introduction in the late 1990s, Internet-telephone
                                                service has been rapidly adopted by big businesses.
 But small and midsize counterparts have lagged behind.

 Now, that is changing as more small and midsized
 businesses come around to the technology.”
                            - Bobby White, technology reporter, August ‘07
SMB market projections
           SMB Segments, 2007
                                                              $1.3 trillion
  Total IT
 Spending
   2007                                                                           Total Growth
                     Upper mid                                                     2007-2011
                      500-999
                       empl.       SB <100
                        24%         empl.
                                     39%
                       Lower mid
                        100-499
$1.3 trillion            empl.
                          37%

                                                            2007 Spending
                       $440 billion

                                       Source: IDC, The Emerging Global SMB Market Opportunity: Tapping
                                       Next -Generation "SMB 2.0" Firms, Doc # DR2008_GSRB, March 2008


            • Approximately over 35 million SMBs WW
            • In the US, approximately 500,000 new SMBs per year
VoIP state of the union
Let’s get a reality check…how far have we REALLY come?
                                   Residential
      Predictions then…
         By 2002 all will be in place to make VoIP the defacto standard for Cable
          telephony
         More than 20M WW cable telephony subs in 2004
      Reality now…17M voice cable US subs
       Source: Texas Instruments



                                    Enterprise
      Predictions then…
         WW IP phones in 2004: 7.6M              WW IP phones in 2006: 18.7M
      Reality….
         WW IP Desk Phones in 2004: 5.1M         WW IP Desk Phones in 2006: 11.3M
          Source: Dell’Oro 2008                   Source: Dell’Oro 2008




      VoIP markets are evolving, but not as fast as expected.
                  SMBs can be the next VoIP opportunity!
 IP Phone…a diverse market with diverse challenges
          45
          40
          35
          30                                             Residential
          25                                             SMB
       Ku 20
                                                         Enterprise
          15
          10
           5
           0
               2008   2009   2010   2011   2012   2013
                                                                       Source: Texas Instruments

• Wired enterprise IP Phones
   – Deployments to date primarily with proprietary PBX
   – Majority of users utilize simple feature set
   – Market is turning the corner, more IP phones shipped than analog
• Wired residential IP “phones”
   – Vast majority of residential VoIP are POTS phones connected to gateway
   – Consumer feature set (call waiting, caller id)
SMB landscape
SMBs differ from large
enterprises:
• Diverse environment across SMB
  space
• Limited technical know-how is typical
  among users
• Higher turnover = ongoing phone
  training
• “Need it now” requirements
  vs. phased approach
• Employees may be part time or
  working in shifts
• Access to PC is varied and
  capabilities are limited
What does this SMB market mean to IP
Phone vendors?
• Residential VoIP features (call forward, call waiting)
  don’t necessarily translate to SMB
• SMB solutions require customization
• Less concerned with “VoIP” vs. specific traditional
  features, functionality
• Bottom line: While “cool” apps sell IP phones,
  functionality and quality on par or better than
  traditional analog phones is critical
Case study: the VoIP SMB opportunity
                                          ADP IP Networked Services
• Hosted VoIP services
   – Launched May, 2007
   – Fastest selling product in ADP
     history
   – Initial niche has been small
     businesses less than 300 phones
   – Gaining interest from large,
     national dealerships
   – Recurring revenue
• Customer benefits
   –   Simplifies technology management
   –   Delivers predictable cost
   –   Simplifies vendor management
   –   Increases reliability
   –   Lowers application costs
ADP IP Network Services

                                             “On-Net Calling”
                  ABC Auto                      Broadband Access
                  Body Shop

                                                         Media Server
                                          Application
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                                                                 F




                                            Server
                                                                 i

                                                     S       u   r
                                                                 e
                                                                 V
                                                     u

                                                 S   n
                                                             n   2



                                                                                                 PSTN
                                                                 4
                                                     F           0
                                                     i

                                                 u   r




                                                                        SBC
                                                     e
                                                     V

                                                 n   2
                                                     4




                                                                                         IP
                                                     0




                 Broadband
                  Access                                                               Network   PSTN



                                                                                                 PSTN



                                SoftSwitch
ABC Automotive QoS Enabled
                Broadband                ADP Hosted Voice
                 Access                                   “Off-Net Calling”
                                          Hosting Center
                                                                             Into Public
                                                                         Telephone Network


                              Pizzeria
    Real world example: ADP IP Network Services
                                          Current
                                         customer                     •   Sales history
                                                                      •   Interests
                                           •   Sales history
                                                                      •   Repair record
                                                                      •
                                           •   Interests
                                           •
                                           •
                                               Repair record
                                               Call history
                                                                          Call history
                                           •   Reminder calls


      Phone     Caller                                                •   Reminder calls
                          Data
      call in    ID       dip
                                                                      • Reverse phone
                                           •
                                           •
                                           •
                                               Reverse phone lookup
                                               Log lead
                                               Record interests
                                                                        lookup
                                                                      • Log lead
                                           •   Set reminder calls



                         Database          New                        • Record interests
                                         customer                     • Set reminder calls


                         Customer requirements
•   Easy to implement, cost effective solutions
•   Data services/phone integration
•   Advanced features (soft keys) to enhance response time/efficiency
•   Optimized use of costly bandwidth to the premise
•   Ability to support media generated audio
•   Transparent migration from analog to VoIP (call park, queuing)
“   In the automobile industry, customer
    service is everything. It can help make
    or break a deal in a matter of minutes.
    The dealerships we work with simply
    need reliable phone service and
    features that work as well or better


                                     ”
    than current traditional phones.
– Marty Sorenson, GM, ADP IPNS
The VoIP opportunity
What benefits does VoIP
have to offer SMBs?
• Advanced applications enable    Find me           Call
  SMBs to “sound” like an          follow         routing
  enterprise                         me

• Improved professionalism/
  image
• Increased sense of stability
• Enhanced productivity           Interactive   Integrated
• Better customer service            voice      web-based
                                 recognition      selling
• Cost savings
• Ability to expand geographic
  footprint
SMB translation….
It seems obvious, but benefits of VoIP must be translated
into a unique value proposition for each SMB
                                                 Customer
• Collaboration across industry will                          Service
                                      IP phone
  facilitate growth                    vendor                 provider
    – Technology providers
    – Equipment makers
    – Third parties
    – System integrators
• Quality of service and
  support is a MUST
• SMB specific features and functions
• Technology advancements
                                      Applications           Media
                                        server              gateway
Can you prove your quality?
 • The nature of IP
     – Despite proven technology, IP is non-deterministic
     – Network dynamics can affect call quality
 • Call quality management is table stakes
     – IP end point instrumentation is a must
     – Cannot charge the end customer for operator required tools




“   There is a real shortage of tooling/instrumentation beyond
MOS scores that allows us to quickly identify problems along



                                                               ”
the media path and to subsequently troubleshoot them.
                 – Marty Sorenson, GM, ADP IPNS
Creating an ideal communication
experience
        Focus on user satisfaction and everyone wins

                            User

                          Provider
• Real time QoS
  monitoring
                            OEM
• End point diagnostics
and troubleshooting           TI

• Alerts and metrics
      Business architecture with IP Phone and
           quality management elements
IPP                                Router                      IPP
                                                Headquarters
                    IP


                                                     Gateway




                  Gateway       Network Probe




                         PSTN
Branch
Office   IP PBX                       Gateway      NMS at IT
The HD voice promise
                                               Deployments
• Benefits
   – Path to higher quality HD voice             Residential
     experience for SMBs
   – Ability to transmit voice at
     sample rates up to 48 KHz
   – Better accuracy, clarity
                                           Small / Medium Business
   – Less repetition in command
     structures
   – No longer constrained to local
     loop
   – Two times the audio capability,
     half the bandwidth
   – CD quality sound
   – New applications
       • Real time language translation,
         etc.
Wideband voice value proposition
  • Wideband or High-definition (HD) voice is a differentiating feature over the
    current PSTN that enhances user experience with a richer and fuller HD
    audio based on TI VoIP technology




  • Lab subjective results show significant improvements are realized from
    wideband voice
  • Even low bit-rate wideband coders exceed subjective perception of
    uncompressed narrowband voice
Graphics and user interface driving broad
range of electronics




 These technologies are moving from the mobile and consumer devices into
                            desktop IP phone
Advanced user interfaces
• Advanced user features
    –   Ability to program soft screens
    –   Easy to use, multi-extension features
    –   Customize music-on-hold, advertising
    –   Color screens with high contrast
    –   User activity management
    –   Recognition (speech, face, handwriting)
• Drive business user benefits
    –   Provide user feedback
    –   Corporate directory capability
    –   Internal news, training
    –   Extend personal area network
    –   Enhanced user productivity
    –   Potential revenue generation
Power
 Naturally, power consumption is a “hot” issue
  for Enterprise and SMB Business Managers



   Enterprise case study:
      Enterprise with 10k phones powered at class 2 POE
      6.5w/phone at 24x7 usage  $56k/yr to power phones alone!
   However…
      Phones are typically idle 16 out of 24 hours a day




         Idle mode IP phone features can save SMBs
           in energy waste and related utility costs
Keys to SMB success
• Call to action is now to tap market potential for VoIP
  growth
• SMBs are unique – requiring solutions customized
  toward their varying needs
• Quality, enhanced functionality are critical for VoIP
  adoption over traditional business phones
• Collaboration is key
• Technology advancements are furthering efforts
  toward a world where every connection is voice
  enabled.

								
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