Beyond VoIP

CHICAGO — Judging by the talk of the panel of experts at Supercomm 2004,
the telecommunications industry’s trade show in Chicago this week, there’s not
much new to hype in VoIP .

The buzz term at Monday’s panel discussion, “The Next Level of VOIP,” is IP
convergence, that conglomeration of voice, video and data over an IP
connection, which will deliver speedy returns on investment (ROI) and make
people work faster, according to the vendors who pitch their product line.

It’s only been a little less than a decade since Israeli-based VocalTec
first came out with its Internet Phone Software, and in that time VoIP has
managed to ride the ups and downs of the tech industry, namely the bust of
the dot-com bubble and the Telecom Nuclear Winter that started in 2001 and
continues to this day.

It’s to be expected that hardware and software vendors (IBM and Cisco executives were on the panel)
would have a lot to say about the long-term promises of the technology that
could and likely will replace the Public Switched Telephone Network
used by a majority of the world today.

But industry analysts on the panel also consider VoIP
merely a small stepping stone to integrated voice, video and data, and that
people should be looking over the voice horizon.

Jon Arnold, senior Frost & Sullivan analyst, likened the technology disruption that VoIP
brings to the table to the advent of the train, which, with its
tracks, brought the east and west coasts of the United States together, thus
putting the Pony Express out of commission.

“The train connected communities that weren’t connected before,” he said.
“IP will transform our economy eventually with silicon chips becoming more
inexpensive, broadband becoming cheaper and more plentiful and more

What does IP convergence do in the real world? Officials say the promise is
huge, especially in customer-facing environments where, in order to keep
customers, you as a company have to show you care. One example of this is
a customer who calls into the support center to buy a product, but the
rep is in the back using a PDA to go through inventory. Not to worry.
The call is routed to the rep’s PDA, where he or she accesses the company’s
customer relationship management database to get the
customer’s information and then access another database to find the

“New apps are going to matter more than people think,” said Chris Fine, a
vice president at Goldman Sachs. “Many people think VoIP technology is
enough, but specific applications will enable new communications and new

Fine’s research indicates that the mainstream use of VoIP technology isn’t expected for another
year, though it’s quickly reaching a maturation
point. Every quarter, the firm surveys 200 CIOs for their opinions on a
wide variety of IT-related topics.

In its latest study, Fine said, 65 percent of companies say they don’t plan
on a VoIP deployment this year, though 23 percent of that 65 percent say
it’s because they’ve already deployed a VoIP product. Of the “No” answers,
ROI, total cost of ownership (TCO) and reliability are still factors
preventing them from taking enterprise VoIP seriously.

Private Branch Exchanges , used to route analog voice traffic,
have a shelf life of more than a decade or more, which falls outside the
normal lifecycle found in today’s server world. Even so, many company
systems are at their end-of-life and analysts expect businesses to swap out
their Plain Old Telephone System for VoIP.

The Goldman Sachs survey results show a large number of companies will begin
serious field tests by the end of the year. The reason? There are several, according
to Fine: major vendor (hardware and software) support in the industry;
vendors providing for a migration strategy, rather than rip-and-replace;
data network managers have more power than voice managers; improved quality
of service (QoS); and increased reliability.

Cisco, Nortel and Avaya
are the top VoIP hardware vendors, garnering 53 percent, 20 percent and 13 percent of
the market, respectively. Cisco, which is close to pulling in $1 billion
a year in VoIP hardware sales, according to Fine, is using that success to
help bolster its switching technology — which accounts for 40 percent of its
yearly revenues — and the rest of its product line.

IBM, on the other hand, plans on consolidating its 900 PBXs around the
world into 11 centralized databases running voice, video and data on an IP
network. Big Blue is firmly committed to the technology and will base its
IP convergence software on the WebSphere platform.

Developers at the Armonk, N.Y.-based software giant are already working on
software that takes advantage of IP technology. Fred Spulecki, IBM director
of voice applications for the office of the CIO, showed a screen shot of an
existing IM application, which features a “Voice” button. One click allows the two (or
more) people text chatting to switch instantly to voice communications while
sending data files to one another.

“There have been three years of drought in IT spending,” Fine said. “So the
next item that people buy is likely going to be IP.”

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