Another long inward gazing period, this time in my professional life: Cisco buying Tandberg… I seem to have these long periods of silence where I don’t get time enough to reflect to hash out something of a quality that can go into a post.  It’s been an interesting year, with product and technology integrations, and learning to be effective in a much larger organization! I may or may not blog about that another time 🙂

One thing I have been pondering for some time is the fundamental strategic question for vendors in the video conferencing industry: are we in a PBX-type industry or in a mobile-type industry?

Let me explain:  The Private Branch eXchange (PBX) industry offers enterprises closed eco-systems where phones and the phone central (or central telephony server) typically are bought together and where proprietary functionality only works well if you standardize on one vendor.  You can get basic interoperability with other PBX vendors’ phones, but although possible, you will most likely not hook up phones from one vendor to the PBX of another vendor. The basic interoperability between vendors is good enough: you can make calls either through the public phone system or to another PBX in another part of the company. The battle is about becoming the preferred enterprise PBX vendor.

In the early days in the mobile industry, Ericsson, Nokia, and other mobile equipment vendors had tight integration between their infrastructure and handset businesses. This was necessary to ensure that things actually worked. Over time, the business drivers for handsets changed dramatically and the success factors were no longer tied to the infrastructure.  Indeed, the businesses were split out, creating entities like Sony Ericsson and Nokia Siemens. There was one prerequisite for this dynamic that has not been present in the PBX industry: standards that regulated handsets’ communication with the infrastructure (most notably GSM) making it possible to choose handsets independently of which vendor a mobile operator uses for its mobile infrastructure. (Interestingly, this dynamic worked slower in the US where mobile operators to a large extent kept the closed-world business model)

To simplify, the key difference is choice and maybe more importantly, whose choice?  In the PBX industry, it is sufficient to reach the telephony or IT guys and convince them to buy. The employees don’t really have a say in which deskphone they will get on their desk.  In the mobile industry, the moment consumers got a choice, handset vendors could address different consumers’ needs, independent of the thoughts of (the often conservative) mobile operator. In fact, (and particularly in Europe) many employees see choosing their own corporate mobile phone and still being refunded as a perk that any decent employer should allow (hello, wake up Cisco!).

So, what has this got to do with the video conferencing industry?! Well, so far we have sold video conferencing equipment mostly the way PBXes have been sold.  But there is one important distinction: the number of touch points between video conferencing equipment and other communication systems, whether voice, video, IM, or presence.  In the old PBX world, you were satisfied with voice-only at “the edge” of your PBX system, i.e. when a call left your PBX, you didn’t care if the 700 odd PBX features didn’t work elsewhere… because voice was the primary application of a PBX system. Now there are so many different systems offering communication capabilities in the enterprise, that voice-only no longer does the trick.

Am I arguing that you no longer can sell PBX systems as isolated islands? Yes, I do.  And I want to go further than that: I believe this rich communication functionality is something that must be extended outside the enterprise as well. Banks should be able to offer financial services into your home without you going to the bank’s branch office. Enterprises should be able to sell to their customers using high-fidelity telepresence, and enterprises should be able to collaborate with their suppliers with rich collaboration tools.

Video conferencing is (still) not a mobile-type industry, however, the number of people involved in choosing all these communication systems, even within an enterprise, makes it impossible to innovate and offer customers a compelling value proposition without offering rich functionality across vendors.  How you view this simple question as a vendor has a huge impact on your strategy.

2 Thoughts on “Is video conferencing vendors in the PBX industry or in the mobile industry?

  1. Nice post Greger! I haven’t thought about it this way, but I have always thought about enterprise focus vs service provider focus. Is it the flip-side of the same coin?

    Enterprise focus allows vendors to offer rich functionality within that island, but outside that scalability suffers since a couple of bottle necks appear (eg. dial plans running amok, inherent unscalability of infrastructure etc.), let alone the richer cross-vendor interoperability that you mention.

    For scaling, piggy-backing videoconferencing to service-provider technologies such as MPLS does not automatically make VC fit for SPs. This IMHO unnecessary arranged marriage sounds like a hack because the underlying challenges are not addressed and you end up with the characteristics of whatever technology you are piggy-backing on. This is bad news, cross-SP MPLS is not exactly a stellar success story.

    Take again dial plans: by piggy-backing PBXs to the already existing dialplans of telecoms, PBX vendors avoided the hassle of establishing a scalable dial plan and inherited backwards compatibility. But they ended up with the poor man’s audio-only interop you mention.

    Once scalability is addressed, we can tackle rich interop. This is tricky: most of the newer bells and whistles in VC revolve around “making the network more intelligent”, which entrenches vendors in the enterprise-focused strategy.

    No solutions in this post.. 🙂

  2. Thanks, Hani. You’re making some very good points here. And I would agree, the enterprise vs service provider dichotomy is a closely related one. The topics you mention deserve a separate (or more) blog postings and I have a few different angles I would like to cover. However, one point I think deserves being mentioned in the context of your comment is that service providers have been extremely successful at bringing packaged, standardized communication services to enterprises (and SMBs). The keyword is “standardized”, because the moment the customer needs (a lot of) systems integration, integration with enterprise applications, or other form for tailoring, the service provider business model breaks down. Video conferencing has not been ready for this type of packaging up to now. I believe some services are now mature enough to fit the service provider business model. The successful service providers will work with their vendors to develop video and telepresence services that offers pre-packaged services that solve the customers problems in a way they want to buy it. (Another related discussion is tier 1/2 vs smaller service providers vs dedicated managed service providers…)

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