Enterprise UC

Unified Communications in the enterprise is a huge 13-15B business as of 1Q 2011.  Market ownership is divided almost as a duopoly between Avaya and Cisco.  There are several reasons why smaller players like the ones noted in the research below are unable to crack this duopoly.  Some of the more important ones are as below:

  1. Large companies like Microsoft are solely software vendors – they try to build UC solutions( Lync, Exchange )  with OEM vendors (AASTRA) providing phones and gateways. This never works because inter-opping a piece meal solutions is easier said than done.  Enterprises are not  interop forums – they need a communications network right off the shelf.  Lack of hardware infrastructure (both manufacturing expertise and also internal leadership experience and strength) is an insurmountable weakness.  Defensive acquisitions can give these companies that much needed hardware suite to go with their strong software offerings.
  2. Siemens, IBM and Alcatel-Lucent are legacy and old world conservative companies with monolithic solutions – transforming those humongous PBX “hall size hardware”  into pure IP solutions  for the enterprise market is more than a little challenging.   What we have now are patchwork TDM solutions with IP side functionalities = these firms implement their legacy feature sets onto these hybrid solutions and hence gain a sliver of the segment.
  3. Most of the larger PBX  based firms start at the top of the product  hierarchy working their way down with contact center solutions, SBC’s and high end gateways which are hacked versions of their  legacy PBX’es.   These still have interfaces and API’s which make it difficult to support current applications like CRM, Salesforce.com etc.  Another way of stating this is that services and features sell solutions and not the other way around.
  4. Smaller firms like Interactive Intelligence and Mitel try to swim up the river by focusing on scalability – this comes a cropper as well because of the lack of intrinsic scalability or 5 or 6 9’s in their fundamental design.  This is like trying to load up the Prius with more power so that it can compete with the muscle cars at Nascar  – a very “average” idea indeed.
  5. Somewhere in the middle lie Cisco and Avaya. Cisco with its strong routing and switch background easily implement and support large enterprises  with IP solutions and so enterprise UC is merely an extension of their DNA. Avaya built an enterprise based company with a specific segment focus and hence they rule as well.

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