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A Call to IP Phone and VoIP Device Vendors
Achieving Success in the SMB VoIP Market

• Fred Zimmerman
• Director of CPE VoIP products, Texas Instruments

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SMBs the market proclaims a hot segment
.the opportunity is ripe for VoIP vendors. The
SMB space represents a significant portion of the
opportunity, and vendors that have the right
combination of quality ease of use, and cost, are
well positioned, at least for the next several
years. - Rich Tehrani, president and editor in
chief, August 08
this year, momentum will swing towards SMBs as
they continue to evolve into more distinct
markets with unique needs. Despite the challenges
faced by SMB vendors,
we believe that SMBs will begin to
adopt VoIP in increasing numbers.
- Alan Weckel, DellOro Group, July 08

• Since its introduction in the late 1990s,
  Internet-telephone service has been rapidly
  adopted by big businesses.

But small and midsize counterparts have lagged
behind.
Now, that is changing as more small and midsized
businesses come around to the technology.
- Bobby White, technology reporter, August 07
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SMB market projections
SMB Segments, 2007
1.3 trillion
Total IT Spending 2007
Total Growth 2007-2011
Upper mid500-999 empl.24
SB Lower mid100-499 empl.37
1.3 trillion
2007 Spending
440 billion
Source IDC, The Emerging Global SMB Market
Opportunity Tapping Next -Generation "SMB 2.0"
Firms, Doc DR2008_GSRB, March 2008

• Approximately over 35 million SMBs WW
• In the US, approximately 500,000 new SMBs per year

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VoIP state of the union

• Lets get a reality checkhow far have we REALLY
  come?

Residential

• Predictions then
• By 2002 all will be in place to make VoIP the
  defacto standard for Cable telephony
• More than 20M WW cable telephony subs in 2004
• Reality now17M voice cable US subs
  Source Texas
  Instruments

Enterprise

• Predictions then
• WW IP phones in 2004 7.6M WW
  IP phones in 2006 18.7M
• Reality.
• WW IP Desk Phones in 2004 5.1M WW IP
  Desk Phones in 2006 11.3M Source DellOro
  2008 Source DellOro 2008

• VoIP markets are evolving, but not as fast as
  expected.
• SMBs can be the next VoIP opportunity!

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IP Phonea diverse market with diverse challenges
Ku
Source Texas Instruments

• Wired enterprise IP Phones
• Deployments to date primarily with proprietary
  PBX
• Majority of users utilize simple feature set
• Market is turning the corner, more IP phones
  shipped than analog
• Wired residential IP phones
• Vast majority of residential VoIP are POTS phones
  connected to gateway
• Consumer feature set (call waiting, caller id)

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SMB landscape
SMBs differ from large enterprises

• Diverse environment across SMB space
• Limited technical know-how is typical among users
• Higher turnover ongoing phone training
• Need it now requirements vs. phased approach
• Employees may be part time or working in shifts
• Access to PC is varied and capabilities are
  limited

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What does this SMB market mean to IP Phone
vendors?

• Residential VoIP features (call forward, call
  waiting) dont necessarily translate to SMB
• SMB solutions require customization
• Less concerned with VoIP vs. specific
  traditional features, functionality
• Bottom line While cool apps sell IP phones,
  functionality and quality on par or better than
  traditional analog phones is critical

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Case study the VoIP SMB opportunity
ADP IP Networked Services

• Hosted VoIP services
• Launched May, 2007
• Fastest selling product in ADP history
• Initial niche has been small businesses less than
  300 phones
• Gaining interest from large, national
  dealerships
• Recurring revenue
• Customer benefits
• Simplifies technology management
• Delivers predictable cost
• Simplifies vendor management
• Increases reliability
• Lowers application costs

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ADP IP Network Services
On-Net Calling
ABC Auto Body Shop

• Broadband Access

PSTN
IP Network
Broadband Access
PSTN
PSTN
QoS Enabled Broadband Access
ABC Automotive
ADP Hosted Voice Hosting Center
Off-Net Calling Into Public Telephone Network
Pizzeria
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Real world example ADP IP Network Services
Current customer

• Sales history
• Interests
• Repair record
• Call history
• Reminder calls

• Sales history
• Interests
• Repair record
• Call history
• Reminder calls

Datadip
CallerID
Phone call in

• Reverse phone lookup
• Log lead
• Record interests
• Set reminder calls

Database
New customer

• Customer requirements
• Easy to implement, cost effective solutions
• Data services/phone integration
• Advanced features (soft keys) to enhance response
  time/efficiency
• Optimized use of costly bandwidth to the premise
• Ability to support media generated audio
• Transparent migration from analog to VoIP (call
  park, queuing)

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In the automobile industry, customer service is
everything. It can help make or break a deal in
a matter of minutes. The dealerships we work
with simply need reliable phone service and
features that work as well or better than
current traditional phones.

Marty Sorenson, GM, ADP IPNS
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The VoIP opportunity

• What benefits does VoIP have to offer SMBs?

• Advanced applications enable SMBs to sound like
  an enterprise
• Improved professionalism/ image
• Increased sense of stability
• Enhanced productivity
• Better customer service
• Cost savings
• Ability to expand geographic footprint

Call routing
Find me follow me
Interactive voice recognition
Integrated web-based selling
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SMB translation.
It seems obvious, but benefits of VoIP must be
translated into a unique value proposition for
each SMB
Customer

• Collaboration across industry will facilitate
  growth
• Technology providers
• Equipment makers
• Third parties
• System integrators
• Quality of service and support is a MUST
• SMB specific features and functions
• Technology advancements

Service provider
IP phone vendor
Mediagateway
Applications server
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Can you prove your quality?

• The nature of IP
• Despite proven technology, IP is
  non-deterministic
• Network dynamics can affect call quality
• Call quality management is table stakes
• IP end point instrumentation is a must
• Cannot charge the end customer for operator
  required tools

There is a real shortage of
tooling/instrumentation beyond MOS scores that
allows us to quickly identify problems along the
media path and to subsequently troubleshoot them.

Marty Sorenson, GM, ADP IPNS
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Creating an ideal communication experience
Focus on user satisfaction and everyone wins
User
Provider

• Real time QoS
• monitoring
• End point diagnostics and troubleshooting
• Alerts and metrics

OEM
TI
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Business architecture with IP Phone and quality
management elements
IPP
Router
IPP
Headquarters
IP
Gateway
Gateway
Network Probe
PSTN
BranchOffice
IP PBX
NMS at IT
Gateway
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The HD voice promise
Deployments

• Benefits
• Path to higher quality HD voice experience for
  SMBs
• Ability to transmit voice at sample rates up to
  48 KHz
• Better accuracy, clarity
• Less repetition in command structures
• No longer constrained to local loop
• Two times the audio capability, half the
  bandwidth
• CD quality sound
• New applications
• Real time language translation, etc.

Residential
Small / Medium Business
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Wideband voice value proposition

• Wideband or High-definition (HD) voice is a
  differentiating feature over the current PSTN
  that enhances user experience with a richer and
  fuller HD audio based on TI VoIP technology

• Lab subjective results show significant
  improvements are realized from wideband voice
• Even low bit-rate wideband coders exceed
  subjective perception of uncompressed narrowband
  voice

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Graphics and user interface driving broad range
of electronics
These technologies are moving from the mobile and
consumer devices into desktop IP phone
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Advanced user interfaces

• Advanced user features
• Ability to program soft screens
• Easy to use, multi-extension features
• Customize music-on-hold, advertising
• Color screens with high contrast
• User activity management
• Recognition (speech, face, handwriting)
• Drive business user benefits
• Provide user feedback
• Corporate directory capability
• Internal news, training
• Extend personal area network
• Enhanced user productivity
• Potential revenue generation

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Power
Naturally, power consumption is a hot issue for
Enterprise and SMB Business Managers

• Enterprise case study
• Enterprise with 10k phones powered at class 2 POE
• 6.5w/phone at 24x7 usage ? 56k/yr to power
  phones alone!
• However
• Phones are typically idle 16 out of 24 hours a day

• Idle mode IP phone features can save SMBs
• in energy waste and related utility costs

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Keys to SMB success

• Call to action is now to tap market potential for
  VoIP growth
• SMBs are unique requiring solutions customized
  toward their varying needs
• Quality, enhanced functionality are critical for
  VoIP adoption over traditional business phones
• Collaboration is key
• Technology advancements are furthering efforts
  toward a world where every connection is voice
  enabled.