The CPE Race is on ! Cisco, Avaya, Nortel, Mitel, NEC

Leading the way in the North American CPE’s race to see who the #1 Market Share company in the CPE sector is proving to be quite interesting.

At the halfway point it looks like Cisco has taken the lead, but there is a lot of year left, and some fantastic competitors.

These top 5 companies have gobbled up the lion’s share of the CPE sector, providing nearly 66% of all Customer Premise Equipment in North America. An amazing statistic, but it’s actually down from 70% in 2008. There are some strong competitors that are making up the rest of the market, but the top 5 are the companies to watch.

A bit about them and some explanations for their current success according to Allan Sulkin with nojitter blog:

- The “Marketing machine” that makes Cisco so ubiquitous has helped to establish the brand, while top-rated dealer support and training ensure that the support is there when the customer needs it. Being known as the safe choice doesn’t hurt, either.

- Consistent focus on aggressive pricing has enabled Avaya to stake it’s claim on the market behind Cisco. Bundling the UC All-in-One license fee with the Aura Communications Manager Enterprise Edition is unbeatable, and their licensing fee for the Standard Edition – only $50 – is one of the best deals around.

An aggressive pricing strategy combined with a strong product lineup allow Avaya to be a serious competitor, both at the Enterprise and especially the SMB level. As an Avaya dealer, I know that Avaya has some very aggressive (mostly Nortel targeted) discounts on right now.

A fiercely loyal customer base has allowed Nortel to hold onto the third place position. Though they may be losing some of their market share in the high end of the market, Nortel has been able to achieve stability in the lower risk/more economical market segment. The future of Nortel is certainly unpredictable at this point, but one thing is for sure – with a solid 12% of the market, there is still some value in Nortel.

Sulkin explains that NEC was able to slide into the 4^th place position over Mitel because of their recent improvements in the larger line size segment in the past quarter. Launching the UNIVERGE SV8500 system has allowed NEC to reclaim the customer base equipped with the NEAX2400 systems. In a welcomed change from the past, NEC is now using webinars to provide more company and product information to the consultants and analysts that can help spread the word about the changes in NEC.

Mitel has traditionally focused on the lower end of the enterprise market, but over the past few years they have been growing the capacity of their product lineup which has helped them gain more market share. Doubling the port capacity of their flagship 3300 and acquiring Inter-Tel has provided new direct sales/service opportunities as well as a solid team, skilled in selling managed services.

Well, in the top half of the year these five companies have shown solid and consistent performance. The competitors, many with less than 1% of the market but in total over 10%, are nibbling away at the leaders, hoping to break through the back of the pack and emerge as a real contender. With an estimated 5.5 million line stations in F2009 – this could make, or break, these companies.

Jeff www.digitcom.ca

Nortel’s Enterprise acquisition by Avaya is being investigated by the US Dept of Justice. Canadian Jeff Wiener writes to DOJ with reasons to back the deal

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U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001, USA

To Whom it May Concern:

It has recently come to my attention that the Department of Justice has taken interest in Avaya’s acquisition of Nortel’s Enterprise division. While I understand why the DOJ might be interested in this acquisition, I believe any competitive concern is without merit. As a result, I would encourage the DOJ to allow the acquisition to proceed.

I write this letter to the DOJ as both an active Avaya dealer, and a telecom industry insider. The Avaya link is important to the extent that I speak from an Avaya perspective, while my industry knowledge from nearly 20 years in the telecom market, which has provided me with intimate knowledge of the competitive landscape.

It appears the customer premise equipment (CPE) business market consists of five major players, which hold the following market share:

Cisco = 20.9%
Avaya = 15.4%
Nortel = 11.5%
NEC = 8.3%
Mitel = 8.2%

These five companies hold nearly 65% of the worldwide market share for CPE equipment, and although the company I work for, Digitcom.ca, represents both the Avaya and Cisco product lines, the technologies representing the biggest competitive threats moving forward are surprisingly not on this list.

What are those technologies, who are those companies?

Microsoft
Skype
Google
Hosted VoIP

The CPE industry is going through a paradigm shift with a VERY rapid migration away from the CPE market toward alternate means of communication, including the four threats listed above. These are the technologies that are changing our industry. The fact that Avaya is acquiring assets as part of Nortel’s bankruptcy protection process is proof the CPE industry needs some consolidation to better prepare for the future.

Surprise Surprise – Avaya’s Bid for Nortel Raises DOJ Concerns.

It seems that the DOJ has received a notice of complaint regarding Avaya’s proposed acquisition of Nortel’s Enterprise assets. First of all, kudos to the guy who filed the complaint – an individual by the name of Jim Goebel. This has obviously raised his corporate and personal profile. Maybe I should write a letter to the DOJ proclaiming the merits of the acquisition, post the letter on this blog, and then wait for the personal and corporate publicity. I’ll give that some thought.

In the meantime, how much merit would there be in such a complaint ? If, for example, there were multiple competing offers for Nortel’s Enterprise assets, all equal in scope and dollar, then perhaps it might make sense to look into whether this acquisition might be uncompetitive. To date, there are no other offers. Nortel has been in bankruptcy since January, and they have received ONE offer for their enterprise assets.

Next, let’s look at the potential buyers of Nortel’s enterprise business. I read an interesting blog on the CPE market share written by NoJitter.com earlier this week. According to the market share report, the top five companies in the Telecom CPE space are:

Cisco = 20.9%
Avaya = 15.4%
Nortel = 11.5%
NEC = 8.3%
Mitel = 8.2%

I picked the top five as the next tier includes Digium, Toshiba, and Panasonic. Toshiba and Panasonic are large companies, but, probably not interested in Nortel’s Enterprise business.

Public Mobile will NOT have a data plan at launch. Could this be their downfall ?

It seems like things will finally heat up in Canadian cellular space. Public Mobile, one of the three new carriers that will be launching their new “G” band cell service in the coming months, will join Globalive, and DAVE wireless in what looks like a new, now competitive market.

I wrote a blog posting yesterday introducing Public Mobile, and at the end of the posting I posed 2 questions to Public Mobile. The questions and answers are as follows:

1. How are you going to differentiate yourself in the Canadian market ?

Public Mobile will be unlimited. We will offer unlimited talk and unlimited text for a flat rate of $40.

38% of Canadians do not have cell phones – for many people it’s because of the unpredictable monthly costs. Public Mobile will offer a flat rate – so your bill is always the same. No surprises at the end of the month.

2. Do you think the lack of a data offering will negatively affect your long term chances of success ?

Public Mobile will have a data offering when our target subscribers require it. We will evolve the offering as the needs of our customers evolve.

Of course, the incumbent carriers, recognizing the new competitive landscape, have improved their pricing and marketing plans. Telus has been heavily marketing their Koodo cell brand. But, the stigma of years of bad service, greed, and monopolistic enterprising could cost them many customers, if for no other reason then spite.

I’m wondering if there is enough cell market to go around though – can they all really make a profit ? The big players have deep pockets, and luckily for Public Mobile (whose name sounds bland), got a great bargain on their cell license. It really will be a survival of the fittest, and I expect that after the first year one of the new entrants will be in desperate shape. The cell market is becoming extremely IP centric – sure, Public Mobile’s rates may be good, but, customers are adopting IP and data plans at rapid rates. Public Mobile’s decision to not launch with a data plan could be there downfall. I’m sure hoping not though – we need these new players to keep Rogers, Bell, and Telus honest.

Jeff, www.digitcom.ca

Coming this fall to Canada – some new cellular competition. Profiling Public Mobile

Is Public Mobile going to present a phenomenal, and welcome, case of under-promise/over-deliver, or will this be another company claiming to be the next big thing, but is all sizzle – no steak?

After announcing their plan to provide Canadians, well for now only those that live in Toronto or Montreal, an alternative to the big 3 cell providers, Public Mobile is looking to jump in bed with Wal Mart to ensure that they continue to become known as the low cost, high-frills option in the Canadian cell phone market. The company is interested in placing their products in the hands of “ value conscious” Canadians in Ontario and Quebec, and feels that their target market is available at Wal Mart and other convenience location.

And Public Mobile knows something about being value conscious. Scooping up the G-band for only $53 million in the wireless spectrum auction last year - nearly 80% less than what the other parts of the spectrum went for. Public Mobile has been able to show that they are serious about providing real competition to the big players: Telus, Rogers, and Bell. The question is; can they afford to be the affordable cell phone provider? With no hardware designed to be used in this spectrum, combined with a target market of 2 million customers, this will be an interesting company to watch. But everyone loves an underdog!

PM is planning on an unlimited talk/text plan for $40, with no contracts, no credit checks, and no hidden fees. It sounds too good to be true, but they are sticking to their story.

It seems like there are some out there that think PM is going to be a winner. OMERS (the Ontario Municipal Employees Retirement System) has agreed to invest up to $50 million into the PM brand to help them grow.

One concern here is whether PM can get the phones working within the spectrum, using CDMA in the g-band. They seem to have overcome this by using CDMA and a “simple software change” to make the first phone call in Canada in the g-band. Another concern is about the viability of the spectrum that no one else wanted. Will Public Mobile be heroes or horrors?

Stay tuned, because I sure will be!

More: I asked a friend and budding Telecom enthusiast Brian Cole to comment on the above. His thoughts:
I seriously think out of the three new entrants to the market, Public Mobile has the potential to do the most damage to the established telcos. The funny thing here is they are positioning themselves as a “budget brand”, but I think they will have the potential of grabbing some heavy business users as well – customers that most providers want and need. Wind Mobile (Globalive) will have to really be aggressive to compete in this marketplace. They will be battling Public on one side and the established three on the other. I don’t even know where to put DAVE Wireless; they have been playing their cards close. This will be very interesting to watch !

I sent an email to Public Mobile asking them these 2 questions:

How are you going to differentiate yourself in the Canadian market ?

Do you think the lack of a data offering will negatively affect your long term chances of success ?

I will post these answers in my next post.

Jeff, www.digitcom.ca

RIM acquires Torch Mobile. Should put the RIM browser on par with iPhone’s

Some good news for RIM mobile users.

Torch Mobile announced on Monday that it has been acquired by RIM. Torch Mobile, according to their web site, makes the Iris Browser which is an advanced, high-performance and versatile Web browser application for mobile and embedded devices. Based on the WebKit rendering engine, it is specifically designed to function in resource-constrained environments. It brings the full Web experience to mobile phones, set-top boxes, mobile Internet devices, portable media players, Ultra-Mobile PCs and other embedded devices – in a fast and user-friendly manner.

WebKit is open source, fast, easy to use, and offers an amazing user experience. iPhone, Safari, Pre, Symbian, and Android all use the WebKit open source browser. Now that RIM owns WebKit it should put them in an interesting competitive position. The browser will certainly be on par with the iPhone browser. Now we just need to find out when this will become available ?

Google Android – You’re hired !

It seems that we are all becoming slaves to our cell phones, which got me thinking about what kind of boss each particular operating system might be, be it Symbian, iPhone, Windows Mobile, or Google’s Android. Are you indentured to your phone, or do you work together to get things done?

Symbian is an old school, powerful workhorse. It does what it says it’s going to do, but not much more. The tricks that it knows, it knows well – but getting this OS to do new tricks can be a bit onerous.

iPhone is the new kid on the block, all sparkle and charm. Everyone is loving the iPhone…well, almost everyone. Apparently Microsoft doesn’t think too highly of it. The iPhone is the kind of boss that loves to hear your ideas, as long as they fit into a preplanned concept that fits the structure determined by this boss. Anything outside the norms will be disregarded and/or ignored. Most people love to work with this kind of boss – see groupthink.

Ahh, Windows Mobile. It would be too easy to go into detail as to what is wrong with the mobile OS from MS… but as a boss, Windows Mobile isn’t thaaaaat bad – it does some things well ( I especially like the reference that it is the best at integrating with other MS products – wow, who would have thought?) People say that the Windows Mobile OS is good because they think that the Windows desktop OS is good (yes – there are already enough blogs on this topic, I don’t need to touch this J ). It’s a fine example of nepotism – people like this boss because they liked the grandfather of this boss.

Now, here comes Google Android. This is a new type of boss, forward thinking and open to options. The Android is willing and able to work in many different environments and is not going to hose you at every chance it gets. In contrast to the iPhone business model, the Android boss is willing to work with you to develop new and exciting apps, all using an open source model. Experts working with experts = awesomeness. These guys say it best (albeit a while ago). As slaves consumers, we want the ability to do what we want, in the environment we want. Google is able to deliver this to us, and we will remain their humble servant for as long as they take care of us.

As AT&T, Apple, and Google battle it out the Canadian consumer is asleep

Google, Apple, and AT&T have been feuding over the last couple of weeks over what seems like Apple’s denying Google Voice Apps on the Apple App store. The US Government’s FCC has gotten involved, the press, consumers … and both Apple and AT&T have been forced into explaining their positions on the issue. With AT&T’s recent statement claiming they had no involvement in the matter it now looks like Apple is being pressured to explain.

AT&T released a statement yesterday stating:
“To that end, let me state unequivocally, AT&T had no role in any decision by Apple to not accept the Google Voice application for inclusion in the Apple App Store. AT&T was not asked about the matter by Apple at any time, nor did we offer any view one way or the other.

“AT&T does not block consumers from accessing any lawful website on the Internet. Consumers can download or launch a multitude of compatible applications directly from the Internet, including Google Voice, through any web-enabled wireless device.

Now it’s Apple’s turn to explain. Consumers are upset and something’s getting done about it.

What’s got me frustrated is Roger’s denying the Skype app on the Apple Canada App store. Rogers is the only jurisdiction in the world that doesn’t allow the Skype app on the Apple App store. It’s uncompetitive, monopolistic, and non consumer friendly. Rogers has a monopoly on the iPhone in Canada, and isn’t giving consumers the choice of where and how they should spend their dollars. Rogers and Bell should be regulated like the utilities that they are. Maybe the Canadian government should hold a hearing on breaking up Rogers and Bell. In actual fact, Rogers controls both the pipeline and the content on that pipeline. And when that happens, these uncompetitive moves are the end result.

The US government recognizes the problem and has acted accordingly. Why isn’t the Canadian government or CRTC doing anything about it ? People – it’s time to speak up.

Avaya-Nortel Merger: Why It’s Likely to Succeed

I’ve just read Eric Krapf’s post titled: Avaya-Nortel Merger, why it’s likely to fail. In it Eric sites many reasons why he believes, as the title suggests, that the MERGER take over between Avaya – Nortel will fail. Although well written, and arguments well presented, I believe Eric is way off base. 3 weeks ago I also questioned the take over, further research has now proven otherwise. Some of Krapf’s reasons include:

KRAPF:
Companies overpaid and have too much leverage–crushed by debt & then the bloodletting begins

THETELECOMBLOG.COM
I suppose the presumption here is that Avaya is going to overpay. Is $475 Million a reasonable offer, or a steal ? I suggest $475 Million is a steal. Although I believe that Avaya will ultimately be forced to pay more then $475 Million, and that Nortel Enterprise will end-up a bidding war selling for $800 Million, even at that rate, should Avaya decide to purchase, could make their money back in a very short time.

KRAPF:
Poor strategic and tactical planning–once the deal is done, the executives can’t decide what to do next (call it “the Iraq problem”)

THETELECOMBLOG.COM
I’m sure that there are some very smart people (many of whom I have met personally) sitting in a dark smoky room planning and strategizing how they will make this take over succeed. Krapf suggests poor strategic and tactical planning – conjecture really. Nothing backing this claim up !

KRAPF:
Cultural clashes–Geeks-Suits, Europeans-Americans, Data heads-Bell heads

THETELECOMBLOG.COM
Cultural clashes – this is a take over, not a merger. Zafirovski has left the building. BOD has been reduced from 9 to 3.
Geeks-Suits – A year ago maybe. Avaya’s got a new chief in town and he’s doing a fantastic job.

KRAPF:
Strategically ill-conceived–even when the entire industry doesn’t see the value, somehow the buyer knows something everyone else doesn’t

THETELECOMBLOG.COM
The industry does see the value. Nortel’s got some major market share. Customers have been buying that value for a LONG time. Nortel has a LOT of product in the market. Lots of maintenance contracts, government contracts, customers, channel partners … and that revenue will now goto … “principally” AVAYA !

KRAPF:
The buyer forgets it’s really acquiring people
The Avaya-Nortel deal is really about bringing together very talented people quickly (my worry is that many of the really good people may already be gone) to create something unique which offers genuine value to customers looking for communications technologies, services, and support. The deal and its ability to succeed is ultimately about employees, customers, channel partners, and suppliers. It is about making the deal happen with speed, minimal debt, and minimal impact to these key groups of people.

THETELECOMBLOG.COM
Yes, good point Eric. And, as I stated earlier, Avaya has some amazingly talented business folks running the show. Avaya 2009 is not the same as Avaya 2007. Avaya 2007 was a stodgy, slow moving organization. Avaya 2009, post the Silver Lakes, TPG acquisition, has morphed into an entrepreneurial well oiled machine. A year ago I might have been more inclined to agree with you Eric. Not today. When I met Charlie Giancarlo last June, and then Kevin Kennedy in January of this year they both preached the same message. “Avaya WILL become a dealer centric organization within 3 years.” And the changes in the last 6 months have been outstanding. Avaya has made some big commitments in the last year, and they have followed through. And this is a BIG ship to turn around – kudos to Kennedy and his team for what so far seems like a job very well done. Granted, there is still some work to do, but, given what I have witnessed in the last 6 months the NEW Avaya is completely different from the OLD Avaya.

Yes, Avaya has been promising channel changes for the last 8 years. They’re doing it. I see the difference. Digitcom is a channel partner. I just finished a full day’s Channel Summit meeting held at Avaya’s Canadian head office. This isn’t something they would have done a year ago. That’s because this is a NEW AVAYA. Their focus is channels.

KRAPF:
I have an idea of who should–without naming names, I can tell you the profile of the “company” that has the best chance of pulling it off. The acquiring firm needs to be a private equity group with leadership who knows the communications business, has an intimate understanding of Nortel Enterprise, genuinely knows the people side of technology, and can quickly convince customers that it makes good sense to once again buy Nortel products and services.

THETELECOMBLOG.COM
Eric, you just described Avaya !

More: You can read some more comments on AllAboutNortel.com regarding this post.

Shhh … Watch what you say. Your call might be recorded by Avaya IP Office Contact Store e7dz5sa2v6

Call Recording: If your business is in the customer service, order taking, delivery of product, financial services, or a myriad of other industries, the ability to record phone calls and play them back may come in handy some day.

Most phone systems support this basic functionality. There are two different types of silent call recordings:

Ad Hoc
A system that supports ad hoc silent call recording will allow users to press a button on their handset and record the call in progress. It should record for the entire duration of the call. Depending on the jurisdiction you are in, on occasion, you must announce that the call will be recorded. Therefore, when you press the RECORD button, the system will provide a beep, or tone, to inform the caller that the call is being recorded. However, almost all phone systems will allow the system administrator to remove the recording tones from the system, so if you wish to record the call, it will just silently record without playing any tones.

Once the call has been recorded, it will usually dump the recording into the user’s voicemail box. Again, most systems will send the recorded call not only to the user’s voicemail box, but will also send the recorded call out to the user’s e-mail address as an attached *.wav file. I use this feature on the Avaya IP Office from time to time.

Full Recording
Full recording will allow for all the company’s incoming and outgoing calls to get silently recorded. This can usually be activated on a set-by-set basis – in or out, by extension, or by ACD queue. Again, the Avaya IP Office system will send these recorded calls out to the user’s voicemail box, out to an e-mail address as a *.wav file, or to a program that will store all recorded calls for easy access later. For example, you wish to hear all recorded calls for X 221 for May 1 from 10 AM to 2 PM. The program will present all recorded calls recorded during those times.

Contact Store is an Avaya IP Office product that will archive, and catalog recordings and allow you to retrieve the calls in an easy to sort fashion for later retrieval. You can sort by phone number, extension dialed, date, time … So, imagine a scenario where something happens within your customer service department for example, let’s say an extra “0” is added to an order – well sometimes it helps to know just where that mistake was made.

Jeff