The smartest providers are finding new ways to attract customers and generate recurring revenue.
Today’s VoIP resellers can rest assured that there’s simply no shortage of business opportunities being presented by VoIP. Consider this: Palo Alto, Calif., based Radicati Group Inc., recently forecast that nearly three-quarters of corporate phone lines will use VoIP within the next 3 years. Jumping on board are businesses ranging from mom-and-pop shops to blue chip companies such as Bank of America and The New York Times Co. But as competition heats up, and PBX prices decline, many VARs (Value-Added Resellers) are seeking new ways to win customers -- and revenue.
Topping the list of fresh opportunities is VoIP software. “In the past, telephony solutions consisted of actual PBX hardware,” says Jayanth Angl, a research analyst at Info-Tech Research Group. “But today, things are becoming more software-based. So it’s a different model where VARs are selling system hardware but also selling software licenses, plus additional services.”
It’s a trend currently being played out among today’s top vendors. Take, for example, Microsoft. The Redmond giant expects 100 million business users to make VoIP calls on its Office Communications software within three years. That is more than double the size of the current VoIP market. Two versions of Microsoft's Office Communications software are now in beta testing. Jeff Raikes, president of Microsoft's business division, says, "Software is set to transform business phone systems as profoundly as it has transformed virtually every other form of workplace communication."
Eager to ride the software wave, Nortel partnered with Microsoft last year to form the Innovative Communications Alliance. As part of this initiative, Nortel and Microsoft will transition traditional business phone systems into software, with a Microsoft unified communications software platform and Nortel software products to provide further advanced telephony functionality. According to Nortel, this software-centric approach will provide the easiest transition path for businesses, helping them reduce the total cost of ownership and better protect current investments.
No longer reserved for deep-pocketed enterprises, VoIP solutions are now becoming increasingly user-friendly and cost-effective for small and midsize businesses (SMBs). VARs would be wise to reach out to these potential customers, according to industry experts. “These smaller organizations really weren’t addressed by the larger solutions. They really do have different needs and they’re looking for ways to improve productivity,” says Angl.
In fact, so hot is the SMB VoIP market that many vendors are jockeying for market dominance. In late April, Mitel Networks announced its plans to acquire Inter-Tel. The acquisition, valued at about $723 million, accompanies a big push into the VOIP SMB space by Cisco Systems, Nortel Networks and Microsoft. "By coming together, we move to the No. 1 position among SMBs for IP telephony," said Don Smith, CEO of privately held Mitel Networks, in Ottawa, Canada.
Although it’s still early in the game, VARs would be wise to cast an eye towards mobile VoIP. Mountain View, Calif.’s Jajah Inc. announced a new mobile VoIP service that allows smart-phone users to make low-cost and, in some cases, free international calls. Customers simply enter Jajah’s mobile Web portal through their handset's browser, enter their user name and password and then make either a free or low-cost call. Then there’s Fring Inc. which gives users access to P-to-P (peer-to-peer) VoIP offerings such as Skype and Google Talk. In February, Microsoft demonstrated its new Microsoft Windows Mobile 6 Smartphone software at the 3GSM World Congress in Barcelona, Spain. The system aims to enable carriers and device makers to add VoIP functionality to Windows Mobile devices. British Telecom in Europe, as well as HP, are reported to be among the first that will provide smartphones with new VoIP offerings for their business customers.
“We’re definitely seeing a lot of interest [in mobile VoIP] in some specific verticals,” says Angl, pointing to warehouse environments in particular. Nevertheless, Angl warns that mobile VoIP remains a “very niche” market.
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