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The 2000’s The Telephony Decade from Hell (or was it?)

Explore the significant changes in the telephony industry from the 2000s to the present day, from the decline of big iron PBXs to the rise of open source solutions and cloud computing. Learn how economic pressures and the need to lower costs are driving new industry trends.

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The 2000’s The Telephony Decade from Hell (or was it?)

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  1. The 2000’s The Telephony Decade from Hell(or was it?) Danny Windham, CEO Digium, Inc.

  2. The telephony industry today holds little resemblance to the one in place at the beginning of the decade !

  3. The beginning of the decade …

  4. The Year 2000 Life was good! Economy was strong, industry was wealthy Y2K Drove infrastructure upgrades Nortel’s market cap was > $300B Lucent’s market cap > $250B Avaya spun out in Fall 2000 Cisco Call Manager introduced Based upon the 1998 acquisition of Selsius Asterisk was an infant – born in 1999

  5. The end of the decade …

  6. The Year 2009 Life is scary! Industry in turmoil World economy melts down Significant changes in the vendor community Avaya, Siemens Enterprise, Mitel have all become private companies And now Nortel is private Nortel acquired by Avaya for $900M PBX market down 31% over prior year (Infonetics) IP PBX down only 13% Asterisk turns 10 years old

  7. What’s different today?

  8. Significant Changes Big Iron PBXs are a dying breed Voice becomes an application running on standard hardware Separate Telephony departments are headed toward extinction Voice becomes a type of data on the data network Long distance charges no longer dominate the IT budget Voice rides on public and/or private IP circuits

  9. PBX Market Share - 2000 Source: Eastern Management

  10. PBX Market Share - 2009 Source: Eastern Management

  11. PBX Per User Pricing

  12. What happened?

  13. Industry Trend: Data networks became reliable enough to support voice

  14. Industry Trend: IP became the preferred transport for all data types

  15. Industry Trend: Voice over IP displacing traditional TDM telephony

  16. Industry Trend: Bandwidth costs plummeted

  17. Industry Trend: Communication systems becoming software products

  18. Industry Trend: Open source software disrupting proprietary alternatives

  19. Why did this happen?

  20. It’s all about the money! Running a single department costs less than running two Driving the extinction of the voice department Installing a single infrastructure costs less than installing two Driving the adoption of VoIP Bandwidth falls victim to supply and demand Cost To stream a movie - Today: $.05 : In 1998, $270 Dan Rayburn, Wired Magazine Standards-based, high-volume, computers cost less than proprietary big iron Driving voice solutions to a software model Open Source costs less than proprietary alternatives Driving the acceptance of open source voice solutions

  21. What happened?Users seeking to lower costs drove these industry trends

  22. What can we learn that can be applied to this decade?

  23. Users seeking to lower costs will drive a number of new industry trends !

  24. Industry TrendEconomic weakness driving new cost pressures

  25. General Economic Impacts Downturn in the economy has taught companies to do more with less Discretionary spending has been reduced Market conditions favor cost-effective solutions over premium branded ones Economic pressures raising awareness and interest in lower cost alternatives – such as open source

  26. Economic Impacts on VoIP • IT spending declined 3.9% in 2009 – will we see a recovery in 2010? • Gartner doesn’t see spending returning to 2008 levels until 2012 • 26% of CIOs see VoIP as a way to save money on recurring service fees • 70% of CIOs expect to make near-term VoIP investments • VoIP is the fourth highest rated investment area • 21% of VARs named VoIP the technology that will generate the most near-term growth Source: ChannelWeb 2009

  27. Industry Trend: Unified Communications adoption will rise

  28. Unified Communications Impact UC = complete communications solution supporting: Voice Fax Presence Conferencing Chat Video Market for UC Products $2.8B in 2009 Predicted to be $18B by 2012 41% of VARs predicted Unified Communications to be the area of most innovation/creativity over the next 12-18 months Forrester Group InStat 2009 ChannelWeb 2009

  29. Industry Trend: Mobility plays a bigger role in corporate communications

  30. Mobility Impacts Mobile VoIP grows 3G, WiFI, WiMax, and LTE network options 50% of all mobile traffic will be VoIP by 2019 Gartner Group - 2009 2009 – 15% of mobile phones are smart phones 2013 – Predicted to be 38% Informa Telecom and Media - 2009 4B estimated mobile subscribers in 2013 1.5B smart phones Fixed mobile convergence gains acceptance 6.3M FMC handset connections in 2009 Predicted to be 27M connections in 2014 ABI Research - 2009

  31. Industry Trend: Voice services join the cloud computing party – albeit a late arrival

  32. Cloud Computing Impacts IDC predicts three-fold increase in cloud computing spending over the next 5 years Capturing 25% of IT spending in the process PBX as an application benefits little from the elasticity of cloud computing PBX as an application can benefit from virtualization Lowers hardware costs Hosted voice service adoption will come initially from small businesses

  33. Industry Trend: Open source software continues to disrupt proprietary alternatives

  34. Open Source Adoption Trends Source: Forrester Research 2/2009

  35. Industry Trend: Asterisk remains the de facto choice for open source telephony

  36. What is Asterisk? • Open source software project that is a flexible communications engine from which many communications applications can be constructed Creative Innovation – Customer Satisfaction – Continual Quality Improvement 36

  37. Asterisk – The Project 10 years in the making More than 65,000 community members Deployed in more than 170 countries Over 2 million downloads in 2009 Over 800 active & current contributors Extensive hardware interoperability matrix Over 150 apps available Voicemail, IM integration (XMPP), speech recognition Speech synthesis, Native Skype connectivity, etc.

  38. Asterisk Ecosystem An entire industry has formed around open source telephony … Hundreds of Ecosystem members Digium Asterisk World 20 Asterisk ecosystem partners represented New Asterisk Marketplace launched today www.asteriskexchange.com Over 100 products there today

  39. So, were the ‘naughts’ really the telephony decade from hell?

  40. If you were a traditional big-iron PBX vendor or employee, then … YES!

  41. But, if you were an end-user of communications products and services – then …

  42. You saw your …Equipment costs fall by more than 33%Infrastructure management costs fall by 50% +Bandwidth costs reduced by 1000%and…

  43. The power shift…From proprietary suppliers to End Users

  44. It was one hell of a decade!

  45. The 2000’s The Telephony Decade from Hell(or was it?) Danny Windham, CEO Digium, Inc.

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