Let the VOIP Infrastructure Wars Begin

Much focus has been put on the VOIP service market where you have the likes of Vonage and SunRocket (just announced another big funding round today) who want to replace your landline and the non-traditional players like Skype and now Google, AOL, and Microsoft.  However, what is more interesting to watch for me is the battle between the incumbent phone equipment players and the new upstarts.  This war reached another milestone 2 days ago with Avaya's purchase of Nimcat Networks, a serverless VOIP infrastructure player.

Let me set the stage for you as it is a microcosm of what is happening in other IT markets.  Currently you have the incumbents like Cisco, Avaya, and Nortel which are dominating industry roll-outs across enterprises.  Some of these companies are next-generation players as they have replaced the old-school PBX systems of other competitors or even their own legacy systems.  While the market is still early in development, the new IP PBX guys are playing the same sales and marketing game as the old school PBX players.  Enter the next area of the market, the open source players like Digium with Asterisk and Pingtel with SIPFoundry.  Both of these companies are employing the open source model of letting customers download the product and upselling support and maintenance.  The core value proposition is similar to many open source companies - commoditize the old closed system with off-the-shelf hardware and let customers avoid vendor lock-in with a pure, open system saving on their TCO.  There are definitely some technical differentiations between Asterisk and SIPFoundry, but nonetheless, the approaches to market are pretty similar.  Finally, you have the disruptive players like Nimcat Networks and Popular Telephony (Peerio) who are promoting a serverless, peer-to-peer architecture.  With intelligence embedded in the edge, these companies promise even more ease of use (just plug a phone into your LAN and you are ready to go) and lower TCO than the other vendors.  Of course there are many issues with privacy and security when you start talking about P2P but this is still quite an interesting technology which will find its market. 

Fast forward back to Avaya buying Nimcat.  For an early stage company, promoting a new standard and new architecture is huge, uphill battle.  On the other hand, incumbents like Avaya must continue to analyze their competitive threats and move quickly to protect market share, even if they have to cannabalize their own sales.  This move by Avaya is brilliant and I look forward to seeing how it will embed Nimcat intelligence in its products and to see if a giant like this can make a disruptive technology a standard.

All this being said, I believe the real battle is not about VOIP or telephones but the real-time enterprise.  Who will control the central nervous system and lifeline of the enterprise?  If you believe we will move to a world where real-time communication (voice, video, IM with presence) will be embedded in every device, not just telephones, and every application, then you can't ignore SIP.  Microsoft is one big player using SIP or its own version of SIP to promote its vision of the world.  Microsoft's launch of the Live Communication Server 2005 with integration into Windows and Office is the first step.  The other vendor to consider as we move in this direction is the open source company, Pingtel, which is managing the SIPFoundry project and will provide an alternative to Microsoft lock-in.  This battleground is about software and not devices which is why I believe companies entering this market from a telephone-centric view of the world will miss out on a big opportunity.

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