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The topic of this week's Industry Buzz podcast is the Gartner Magic Quadrant for Corporate Telephony.
The discussion is moderated by Marty Parker, and the UC Expert panel includes David Yedwab, Don Van Doren, Art Rosenberg, Nancy Jamison, and Dave Michels.
Marty Parker: Hi, this is Marty Parker with UCStrategies and it is my pleasure to facilitate the conversation today in our podcast on the topic of The Magic Quadrant for Corporate Telephony, 2011. Gartner publishes many versions of magic quadrants and each year traditionally they have been publishing one specifically on Corporate Telephony. A magic quadrant, for those of you who may not be familiar with it, is a two-dimensional matrix. On one dimension, the vertical axis is the Ability to Execute, and on the horizontal axis is the Completeness of Vision. And if you are in the top right corner, the top right quadrant, with a high degree of Ability to Execute, and a high degree of Completeness of Vision, you are categorized as a “Leader.” In this year’s magic quadrant, the people in the Leaders quadrant far and away are Avaya and Cisco, and also in the Leader’s quadrant is Siemens and Alcatel-Lucent.
If you are to the left of that, that is the Ability to Execute, but without as complete a vision because of some, usually product limitation or road map questions, you’re called a “Challenger.” You are challenging to be in the Leader’s quadrant. And there we see, in the 2011 quadrant, NEC and Mitel.
Below that, below the upper right corner is a category called “Visionaries”—that is a Completeness of Vision but not yet the Ability to Execute. And again, the Ability to Execute could be because of channel reach or globalization, or it could be because the platforms are not yet fully developed. This year in the Visionaries quadrant, we see Microsoft, ShoreTel, and Digium. Now Microsoft and ShoreTel are both barely away from the Leaders quadrant, and they have been moving up in that direction. So it is a question of when will they, (rather than) if they will. But when might they pop into the Leaders quadrant? Gartner comments a bit about that in the specific descriptions of both of those companies. Microsoft, by the way, ranks higher than everyone except Cisco and Avaya, and pretty much on a par with Cisco and Avaya relative to Completeness of Vision. So it is not that they do not have that vision but that they are still growing their platform.
And finally, down in the lower left, if you are below the median on Execution and on Vision, you are called a "Niche Player," serving specific needs in specific markets, but not in a leadership role. And Aastra and Toshiba are both in that. So we have 11 players in this magic quadrant.
I want to add a couple more things before I am handing it off to my peers for commentary. One is that Gartner very clearly states that the overall telephony market has been depressed and will stay relatively flat for some time. From 2008 to 2009, they point out the market declined globally by 17% and then it came up 10% from the 83% number, 10% in 2009 to 2010. So it is still down 9% from 2008. And then they comment that it will be growing at about a 3.5% compound annual growth rate out through 2015. Which means it will be 2014 before the market returns to the same place it was in 2008 and that, if you normalize that for current value, present value of money, that’s not a growth market, that’s a pretty flat market. So there is some concern there.
Also, they point out that really only four companies are making significant share gains in that category. And the four are Cisco, Microsoft, ShoreTel, and Digium. They comment specifically about the growth of those four companies but they comment that some of the other major companies have been showing flat or declining sales. So there is a shift...underneath the picture there is a shift in this market.
The last thing I would like to say before handing off is to just read you a couple of excerpts from the “What you need to know,” the opening paragraph from “The Magic Quadrant for Corporate Telephony.” Gartner starts by saying “companies are increasingly focusing their strategies and acquisition decisions around unified communications and collaboration technology; it is supplanting the historic domain of corporate telephony.” So they are basically saying what we have been saying here at UCStrategies for about four years, that UC with its ability to serve multiple media, multiple modes, multiple types of endpoints, and to be integrated into business processes, could very well subsume voice into UC—not the other way around.
Gartner goes on; their next sentence is, “this shift presents IT planners with new user needs and technological integration challenges, especially as telephony applications become more mobile and as knowledge workers increase their reliance on conferencing, video, IM and collaboration tools to fulfill group tasks.” Now by the way, my own comment on collaboration tools here include not only my own perspective but our Unicomm Consulting clients perspectives, products like SharePoint, IBM Quickr, IBM Connections, other social tools for business, so it is not just voice calls or collaboration. It is collaboration that is information and knowledge based around which communications is organized.
I will read one more sentence here, Gartner says, “Organizations will continue to invest in Internet Protocol telephony platforms after having mapped out telephony’s role in a clear, unified communication strategy.” So as we have been saying, build a UC strategy and then make the purchase decisions and build the roadmaps that come out of that strategy. We have been talking about that, there is a lot of content posted on our site, and we are going to keep that dialogue going. So with that, let me pass the baton to David Yedwab who has some very important observations about the nature of this quadrant and its relationship to other magic quadrants. David?
David Yedwab: Thanks Marty. My first comment is, this is only one of three magic quadrants dealing with unified communications that Gartner produces annually. The first was done about a month or so ago on UC specifically. This is on Corporate Telephony and the third one is UC as a Service or Hosted UC Services, which should be coming out, I would think, over the next month or so. And I wonder whether there really should not be more than just that because while these magic quadrants represent the vendors and the UC as a Service represents the major service providers, none of the magic quadrants really addresses the channels that are delivering solutions to all but the largest customers. Which actually is a second observation... This is Corporate Telephony, a Magic Quadrant of Corporate Telephony, that really addresses larger enterprises, not small businesses or even medium size businesses, but really very large businesses. I would say well over 1,000 employees, multi-locational and maybe even multi-national. The market for businesses and communications as a whole, may be somewhat different than is depicted in this magic quadrant.
Also, important to note is, that while we wonder whether we should have those multiple magic quadrants around unified communications, at least the Corporate Telephony one deals with real time communications in a unique way since telephony is one of the two, if not three major, real-time requirements of communications. Video and to some extent presence availability is the third of the real-time communications requirements within unified communications. And at least, by separating the Corporate Telephony quadrant, we address at least one of the real time aspects. And perhaps that is some of the reasons why some of the vendors are not yet in the leader’s quadrant. Thank you and I believe I am turning it over to Don.
Don Van Doren: David, thank you very much. I appreciate your insight. I want to go back to something Marty pointed out. I think it is really interesting about how Gartner states more clearly this year than last year, that the corporate voice telephony decision really must be made in conjunction with, and in some sense, subservient to the UC solution. They are going to clearly start playing this out, I think, in the way that they are doing it and as Marty noted this is something that we have been talking about of course, for a very long time. I think the other thing that is sort of interesting is this notion that they raise in sort of a market overview, that incumbent vendors had advocated a strategy of migrating at your own risk. That is no longer valid. The risk of using like aging legacy platforms that are beyond their useful life or end of support date, thoroughly increases. So I think we are starting to see a shift there, too, in that the companies may look at that and conceivably draw the wrong conclusion. They might immediately draw the conclusion for example, that their step needs to be to immediately upgrade to their incumbent vendor’s IP PBX solution. And as we have pointed out for a long time, IP PBX, moving to that is not the same as moving to unified communications and it certainly does not solve all the issues or address all the opportunities that are available there.
And finally, again Marty mentioned the comment that Gartner points out that having a roadmap is really key and I think obviously that bodes well for the communications consultants among us, who are focused on helping enterprises work through some of these issues. Art?
Art Rosenberg: Thanks Don, yes and I am very much in agreement that I would just like to drill down a little bit. In terms of this strategic planning, my feeling is that there is way too much of an emphasis on reducing costs. Reducing costs is always useful, (I’m) not saying it’s bad. But if you are planning for how your business operations are going to change, it is not just cost, it is how people will be functioning, and working together within the context of the business processes, which includes the applications. And this is, I think, a key area, especially with mobility and mobile apps that business productivity is going to combine with individual end user productivity, to move business operations more efficiently and more effectively in the future. Especially with the move away from traditional telephones, which were just voice oriented and you really could not do too much with that other than have a conversation. But people want information and information by voice is kind of limiting, it is just voice. So the thing that I wanted to highlight is that their strategic planning should be based on how the business processes can be changed, not from just UC but also from mobility and mobile UC, if you will. Because that is what is going to change how people are going to be effectively using the technology and integrating with online applications so that you have CEBP in the picture and not just person to person contacts, but business processes that need to be delivering information in a time-sensitive way. Especially in areas like health care. So I think the emphasis on costs is not to be dismissed. But you do not start with costs; you start with how your business operations and business strategies can be affected.
Marty Parker: Nancy, did you want to comment on this?
Nancy Jamison: You had to throw CEBP in there, didn’t you? My only comment is that since we have been talking about how the whole market has been evolving for the last four years, it is going to be interesting should they add another Magic Quadrant having to do with channels and such, or should eventually I think what happen is we won’t need this many. Because the big things have been adding UC. Of course they did not talk about contact center, and then also the delivery models, hosted and cloud, etc. So I think that within a couple of years, even though this is targeted at large enterprises, we have not talked about the other markets... But we might see that this might go away. We might end up just having a combined Magic Quadrant. I am not speaking for Gartner, I am just talking about the need of having separate ones when we clearly see that the industry is moving in one direction.
Art Rosenberg: Nancy, this is Art. I have a question. In terms of how do we perceive the markets. You know we separated before in terms of the large enterprise and the small enterprise, but functionally –forget how they implement these things—but aren’t they all going to be doing similar things?
Nancy Jamison: Yeah, I think they are going to be doing similar things. Right now if you are a small business, you do not necessarily go and look at all the bells and whistles that you might need for a larger enterprise, especially within UC if you do not have that many people. But you are right, they are, it is going to be interesting to see what happens four years down the road, two years, three years.
Art Rosenberg: So maybe strategy is not so much for implementation, as strategy is for direction. What do we need to do, what are the business processes that need to better performance, better efficiency and so on? And once you know what that is, then you can talk about implementing and who with and how. Whether it is hosted, or premise based, or manage services, but first things first.
Nancy Jamison: Interesting thing you said about integration. Because I noticed this morning when Avaya acquired Sipera and one of the bullet points was that it is now an “owned asset” rather than unowned asset. So that is like, OK, we now have this in our portfolio, we are integrating with some third party, blah-blah-blah-blah. I thought, it will be interesting.
Art Rosenberg: What they are trying to say is that they are removing the obstacle of integration, right?
Marty Parker: Well, it is clear they are saying it is necessary and I thought it was interesting that Sipera is primarily a software-based session border controller, which is a trend we are seeing.
Art Rosenberg: Right.
Marty Parker: It is certainly a challenge to those that have been producing SBCs in a hardware format.
Dave Michels: I find the Gartner Magic Quadrant on Corporate Telephony a little confusing because they publish separately a magic quadrant on the unified communications space, which we had a podcast on afew weeks ago. And it isn’t clear to me how they are distinguishing corporate telephony from unified communications. Now I understand the difference between corporate telephony and unified communications, but I’m not sure Gartner does. For example, in both reports they have Microsoft Lync, but in the case of Microsoft Lync, voice is the add-on to a UC solution. So I understand why it’s in a UC report; I don’t understand why it’s in the telephony report. And then when I read the report on telephony, they talk about a lot of the UC type of features and capabilities and so, I’m a little confused by that. Again, with Microsoft they talk about its collaboration-centric approach. Well, that’s great. They also talk about wideband audio being a feature. I think every vendor on the chart supports wideband audio as their default solution, and so I’m surprised why Microsoft got that called out. So I’m just real confused on what they’re considering important in corporate telephony, and when they place these products...well actually, I take that back, they don’t place products, they place vendors on the chart, which also confuses me. Each of these vendors has multiple solutions, you’ve got products like NEC, they have the DSX, the UX series, the SV series with three different platforms, you’ve got SpheriCall; I don’t understand how you could put a single NEC dot on this quadrant, because these products have different features and demographics. Same with Mitel and their MCDN 5000, and it just seems very confusing to me what they’re really doing in this magic quadrant.
Looking at some of the individual placements of the dots, I’m also confused. Digium, for example, if you read the text, they got punished for being a small vendor. They said there are certain risks when you have a small vendor. That’s true and understandable to some degree except for that Digium—they’re really talking about Asterisk by the way in the report—and Asterisk is open source. So yes, there’s risk that Digium may go away, but if they do go away, you still have the complete code. Compare that to say, Microsoft and ResponsePoint a few years ago, a very big large company and their product went away and those customers got left with an abandoned product without the source code. It just seems a little strange the way they evaluate some of this stuff.
They also didn’t evaluate anything to do with hosted. Now I understand they have a separate report for hosted telephony, but the way the space is kind of morphing, and the way that customers are looking at self hosting, with centralized and virtualized solutions, they didn’t talk about that. There is also a lot of discussion about hybrid solutions, and hybrid models, and there was no discussion about that. I don’t understand how you can have a hosted report, a corporate telephony report, and a UC report and treat these all completely separately when indeed the space is not treating them separately. Also on the chart, you have Mitel and NEC I think in kind of an unusual place. They are the only vendors on the chart that are making a big deal about SLA, around virtualization, around high availability, software-based solutions, mobile clients, yet they have them with a high on ability to execute, but low on vision. And that kind of struck me as...if anything it would be vice versa, because they have some channel challenges. And so I really find the corporate telephony report a little confusing and even a little misleading, and I’m not sure how corporate CIOs or buyers are really supposed to interpret this when they make their buying decisions.
Marty Parker: Okay, well thank you everyone for listening to our conversation about this important Magic Quadrant and we would welcome your comments and posts once we have put this up on our website, you will be able to add comments to the transcript and we appreciate your participating and listening to our conversation, thanks again.
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