Mike, I think that you're right about the history of VOIP but it looks to me like this niche is about to take off and its a good time to start nibbling at stocks that will benefit.
nbr.co.nz
Home » Technology » Cisco's VoIP gamble: A long shot looks set to win the business telephony sweepstakes
Cisco's VoIP gamble: A long shot looks set to win the business telephony sweepstakes
Francis Till
At last month's Australasia introduction of the new EDS Agile Enterprise Platform, an outsourcing architecture that uses specific contributions from a wide-ranging "federation" of partners to deliver unheard of bang for the buck [NBR 8 April 2005], Ross Fowler, Cisco MD for Australia and New Zealand, casually mentioned that one of Cisco's contributions would be a "global secure network" infrastructure.
Perhaps there were too many buzzwords floating about but none of the media representatives in the room picked fully up on the reference during question time. A bit later in the day he laughed about that privately, shaking his head in mild disbelief: "Not one question about telephony," he said.
The penny dropped. Global Secure Network. VoIP and more in a high security channel. Bypassing the traditional telephone architecture. A "grail" object for the enterprise, with far-flung outposts, critical concerns about secure communications and immense associated overheads.
Robb Rasmussen, EDS vice president of global alliances and the front man for the Agile Enterprise effort said the network would be "foundational" regardless of whatever else happened -- because it would redefine the possible and work as the "backbone" of the Alliance.
It's a $US100 million-plus investment involving both companies, everything the Alliance does will be done over it and it offers military-grade security and scalability.
The negative implications for telephone carriers, who mercilessly cream the business market, are staggering. The potential benefits for companies connected to the platform, even more so.
But it's still in concept, right?
"Absolutely not," said Mr Fowler. It's pre-launch announcement, but operational -- people are using it.
One example: EDS Alliance partner Towers Perrin will run a 125,000-employee Northrop Grumman benefits enrolment programme (and other HR operations) over it this year. In the near future, Towers Perrin will open, with EDS, a HR-services centre in China -- a place where the security and reliability attributes of the network will be critical.
So, if it's so great how come we never heard about it?
In substantial part, Cisco has only itself to blame for any lack of splash about the network. Unlike most tech companies, Cisco tends to perform ahead of hype. That's fed by its workman-like approach to implementation.
Perhaps the ultimate networking pioneer, Cisco contributes so much to the fundamental architecture of the internet that it is sometimes easy to forget it has always been a company of visionaries.
Known mostly for routers and switches that make the internet possible and founded -- 21 years ago, this year -- by a couple of Stanford engineers, Cisco is not the sort of company that sets 'blue sky' futurists on fire.
It should.
But time and again over its history, that staid impression has worked to its advantage as it takes up challenges other companies put aside as too hard (or lacking immediate ROI) and spins out world-leading technologies on which we all come to rely.
The internet itself is a case in point, as is Cisco's forward-looking investments and deep involvement in the provision of broadband over powerlines (BPL), particularly through what has now become North America's leading BPL company, Amperion. [NBR 5 July 2001]
Cisco's take on things made it the world's most valuable technology company by market cap for a period in 2000 [NBR 07 Apr 2000] when shares traded around $US80. Today, like most tech companies that survived the bubble, it has come down more than a few pegs and trades on both sides of the $US20 mark. But it was ranked 91 on this year's Fortune 500 -- up from 100 last year -- with an eminently respectable 2004 revenue of $US22.045 billion, or more than $US600,000 per employee.
If routers and switches were all of Cisco's story, it might be yesterday's company, or a workhorse house -- but it has hands in so many emerging technologies that's certainly not the case.
But, back to VoIP
And the technology that looks most likely to catch short-term fire is something called voice over internet protocol, VoIP -- a phrase that reeks of the arcane engineer-speak that turns market-oriented audiences into indifferent blocks of stone.
Naturally, Cisco is the world leader in VoIP -- and over the last year, as if rousing from a deep slumber, companies around the world have started to implement VoIP systems in a big way.
Two years ago, VoIP was a technologist's fad, unreliable outside consumer space -- at least, if analysts and the tech press was to be believed.
But even then, Cisco was marketing phones designed to "converge" communications in a handset -- delivering voice, video and data on a (nearly) normal handset. Now, the company has sold well over 4.4 million of the "novelty" handsets (200,000 in Australia alone, as of 21 April) and the companies buying them -- stalwarts like Bank of America, Boeing, Ford Motor Company and Merrill Lynch -- aren't particularly known for dancing on the bleeding edge.
Not just a phone or even a phone system, but the future
What you get with the phone is "IP telephony" -- not just a handset -- and it's the elegance and reliability of Cisco's offer that's giving the company a commanding lead in the space.
Among the key benefits of this system -- beyond the ability to send data between phones as if they were computing terminals and engage in impromptu videoconferencing -- is an end to phone tag. Any user can identify herself to any networked handset and when anyone -- even those outside the network -- dials her number, the phone she's next to is the one that rings.
The global secure network is, in many ways, an ultimate expression and a fusion of all that Cisco's been doing in this space for years.
In Australia, Cisco has over 600 customers using IP telephony, including AMP, Arnott's, Freehills, Lend Lease, NIB, Servcorp, Westpac and Woodside Petroleum.
Australia is, perhaps appropriately, the first global market where Cisco has achieved total business telephony leadership. According to a Frost & Sullivan report, Cisco had 15.3% market share in all business telephony in 2004, despite the fact that Cisco does not sell traditional private branch exchange (PBX) telephony systems. This was an increase from 2003, where Cisco had 13.6% market share and ranked third.
All of which to say, VoIP alone has achieved solid enterprise traction -- it's become so respectable a business that Cisco now has competitors.
At Cisco, that means it's time for the next new thing.
Don't let the engineer-speak lull you.
This is an expanded version of an article in this week's print edition of NBR>/b>
29-Apr-2005 |
