Finding an IP medium

For those of you who can remember that far back, the take-up of IP telephony (IPT) is a reminder of the Year of the Lan in the 1980s.

There are signs that IPT is ready to enter the mainstream, but it is taking its time. The Year of the Lan extended itself to the Decade of the Lan. Let us hope IPT doesn't take that long.

What is the uptake of IPT in the channel?
EuroLAN Research interviewed a panel of resellers, VARs and systems integrators to find out whether voice resellers had embraced IPT more than data resellers.

The average annual turnover of the 50 resellers interviewed was £11m, and on average they employed 61 staff.

The results underline EuroLAN's belief that voice resellers earn a greater portion of their revenue from IPT. This is due to various factors. First, they adopt it more readily than data VARs because they are seen as offering an easier route to IPT.

Second, their installed base is, consciously or not, buying IP-enabled systems and is ready to migrate to 'IP everywhere'. This contrasts with data resellers' fear of moving to the Old World of telephony and having to learn traditional voice skills before moving to IPT.

The call centre specialist is selling twice as many IPT systems as the voice reseller because call centre and contact management applications are ideal converged solutions.

It is estimated that about three quarters of IPT sales are hybrids with traditional PBXs, and not pure IP systems. This reinforces the position of the voice reseller, because hybrids require traditional voice skills.

Which vendors are data resellers selling?
Unsurprisingly, the picture for data resellers reflects the market dominance of Cisco, with over half the firms interviewed naming Cisco as their lead IPT vendor. Avaya and Nortel Networks shared second place, with 3Com a surprisingly distant third.

Voice resellers sell Avaya IPT
In a reversal of the above, the voice resellers interviewed focus on Avaya and depend far less on Cisco. The surprise was the poor representation of Mitel and Siemens, but closer analysis showed them often ranked as a second choice.

This may indicate a lack of completeness in the solutions, although both firms partner to achieve total solutions - Mitel with Hewlett-Packard and Foundry/Siemens with Enterasys.

Is partnering the key?
Since few voice resellers have any knowledge of data/IP and few data resellers understand how to handle voice calls, it is now suggested by vendors and consultants that partnerships are the way forward. EuroLAN believes that acquisitions are more likely and that voice resellers in particular are good targets.

After expressing these views a couple of years ago we were gratified to learn of a large network integrator heeding the advice and acquiring not one, but two voice resellers.

Conclusion
Analyst figures often state unrealistically large shipments for IPT, but these include IP-ready PBXs and switches, not just pure IP systems.

There is a crossover of IP-based systems and traditional PBX systems described by Avaya chief executive Don Peterson in his latest financial conference call. "Our telephony business is at an inflection point based on this belief," he said.

But there are factors within the channel that may prevent this crossover from happening:

• The difference in margin that voice products generate compared with data products. A recent US survey found that Avaya offers discounts of about 40 per cent, compared with Cisco Call Manager's 20 per cent. The crossover to IPT threatens to squeeze the voice reseller.
• Voice resellers will lose out to data resellers unless they can provide high-end consultancy services to bolster the loss of margin on converged products.
• The SME market has caught the attention of the two large vendors that featured heavily in these results; Avaya launched its Small and Medium Business Solutions division and Cisco has a renewed focus this year. But this market demands value, and requires solutions. These solutions are often scaled-down versions of enterprise products. No market needs call centres and customer relationship management more than SMEs, but the perception is that small firms suit large call centres in industrial buildings. A solution specific to this market is needed.

Keith Humphreys is managing consultant at EuroLAN Research. Contact (01202) 670 170.
www.eurolanresearch.com

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