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Will SD-WAN Crush Cisco?

As more and more providers add SD-WAN, what happens to Cisco (and ADTRAN and Juniper)?

Think about this: SD-WAN providers use an appliance as the CPE or end-point. This appliance can function as a switch, router and more. It can be a firewall, a wireless access point and more.

Most of the big name LECs (ILEC and CLEC) have added SD-WAN technology to their portfolio. Even lesser known former CLECs like TelePacific, NITEL, Transbeam and AireSpring are offering SD-WAN technology. That means less Cisco boxes being deployed.

Not only is this a problem for the hardware vendors like Cisco, ADTRAN, Juniper, Brocade and Extreme Networks (mentioned because of recent news), but this is a problem for VARs and MSPs.

Long ago, I explained that VARs selling carrier services was like CLECs selling AT&T services – you are fighting against your biggest vendor. Now those same vendors are going to take away the Box Business that floats their business. VARs still make money selling boxes (so do Avaya partners!). The margins have shrunk. The sales have declined a little year over year, but not enough to make many change their lines of business or their model.

EarthLink announced 4000 locations on its SD-WAN as it merged with Windstream. If EarthLink can sell multi-location retail and restaurant chains, the SMB market is in play. The bread-and-butter of the VAR.

I am not throwing around FUD. I’m saying that every industry comes under attack by new technology. The new techis SD-WAN; the legacy business is Cisco and VAR – as this segment moves to a bigger managed services provider and hardware-as-a-service.

Tags: cisco, earthlink, jobs, msp, SDN, sdwan, VAR, var, WAN
Related tags: adtran juniper, cisco adtran, cisco, business, selling, technology

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Telecom Tidbits #2447 – Mar 03, 2017

Telecom Tidbits #2446 – Feb 23, 2017

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The Last CLEC Pivot – Jul 14, 2016

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Is Hosted PBX the Emperor’s New Clothes? – May 27, 2016

The Monitoring Master Move – Nov 20, 2015

What Business Model Should the VAR Examine? – Mar 30, 2015

One Really Big VAR – Mar 01, 2012

Jumping on the Cloud Bandwagon – Mar 07, 2017

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March 14, 2017 , On Rad's Radar

Music and the Mass Market

“Maybe decades ago you could aim your songs at a mass market, but music does not really have one of those anymore. Artists have to figure out whom they’re speaking to and where they’re speaking from. The rest of us do the same. For better or worse, it’s all identity now.”

Interesting article about identity – product to consumer identity in music on NYT.

Seth Godin repeatedly says that there is no mass market. Yet time and again providers want the whole ocean. There are too many segments to the marketplace. There are a number of different buyer persona. There are different reasons to buy. It can’t be treated as a single market buying Cocoa Puffs.

“But music is still, pretty obviously, tied to people.” So is user adoption of your service. User adoption is critical for lower churn, more engagement and for the business to actually get something out of the purchase.

Tags: marketing, sellecom
Related tags: market, music, identity

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Customer Segmentation – Jan 24, 2017

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Research Firms Missed Again on UC – Aug 24, 2016

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Momentum Trolls Windstream (Going Up-Market) – Feb 02, 2016

Monday Morning Thoughts on Sales and Strategy – Feb 01, 2016

What Can You Learn from Target? – Mar 10, 2015

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March 10, 2017 , On Rad's Radar

M&A Update (#2448)

So many transactions. Companies are being bought and sold like a game of Go Fish.

Avaya sold its networking business to Extreme Networks for a paltry $100M (It is about $200M in revenue). That $100M does not make a dent in the billions in debt that Avaya is trying to scrape off in bankruptcy.

HPE is acquiring Nimble Storage for $1B.

LUMOS is being taken private by EQT Investment Startegy for almost a billion dollars. This comes following LUMOS buying three data center from DC74 and Clarity Communications, a fiber operator in NC.

FirstLight Fiber’s main PE owner, Oak Hill Capital Partners, has acquired Finger Lakes Technology Group in upstate NY to fill in its fiber route. The data centers, Cisco business and fiber network all go with FLTG to FLF. FirstLight recently announced similar transactions with Oxford Networks and Sovernet Communications.

Another RLEC was picked off by private money: “Hargray Communications has agreed to be sold to an investment group led by the Tom Pritzker Family Business Interests. Redwood Capital Investments and Stephens Capital Partners are also investors.

In other news, Amazon AWS launched some new Cloud-Based tools to help enterprises manage their call centers. They already built the tools for internal management of their own call centers, so now they are just leveraging more internal IT/tech for revenue.

8×8 is funny. They hire a banker and put up the for sale sign; then buy something. 8×8 acquired Sameroom, an inter-connection platform for various chat apps including Slack and Skype. ComputerWorld has a good article on the pivot of Sameroom and the 30 year history of 8×8.

Worth noting: “Today 8×8 introduced the world’s first Communications Cloud, which combines unified communications, team collaboration inter-operability, contact center, and analytics in a single, open and real-time platform. The company also announced a number of new business application integrations, aimed at enhancing business workflows by making real-time communications, collaboration capabilities and intelligence available for third-party cloud applications, all customizable via an Open Cloud approach to fit individual enterprise needs.” Note the words inter-op, analytics and integration. These will be the key to real UCaaS or UC&C or WCC (or whatever we call it next). These are the factors the separate the sale of UCaaS from Hosted VoIP. One is valuable, bringing productivity and business change. Hosted VoIP is just dial-tone replacement.

Today is International Women’s Day! I am recognizing it by re-posting my Women in Tech prezo from ITEXPO and an article on gender diversity from Fred Wilson.

Tags: 8×8, amazon, collaboration, data center, fiber, mergers, network management, rlec, UC, vc, women
Related tags: capital partners, business, communications, fiber, cloud, centers

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Tidbits #2438 – Jun 07, 2016

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The Mighty Light of Wall Street – Sep 01, 2016

OMG! More M&A – Jun 20, 2016

Telecom Tidbits #2435 – May 16, 2016

Musings on the Polycom Deal – Apr 18, 2016

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March 8, 2017 , On Rad's Radar

How Enterprise Voice Has Changed

Want to know how much Enterprise Voice has changed? Check out the companies that are keynoting the two biggest VoIP events.

ITEXPO Keynotes in February were from iconectiv; Jeff Pulver; vmware; IBM; Onvoy and RingCentral.

Enterprise Connect keynotes this month will be from MS Office365, Google G Suite, AWS, twilio and Cisco. Not Verizon, AT&T, CenturyLink, or even Windstream or Comcast.

I’d like to hear a Slack keynote.

Tags: expo, itexpo, UC
Related tags: enterprise voice, voice changed, enterprise

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March 7, 2017 , On Rad's Radar

Jumping on the Cloud Bandwagon

More master agencies are claiming the cloud, so to speak. They are signing up cloud providers faster than the ink can dry on the agreement. (Ben Bronston must be busy.)

They are jumping on the bandwagon for a number of reasons.

One is Consolidation. The new landscape of Ethernet is cable and ILEC. The CLECs are mostly all gone. You have to expand the catalog beyond just network operators and VoIP.

The other reason is price pressure. Pricing across all telecom products – mobile, bandwidth, Ethernet, VoIP – has been declining about 3-10% year over year, creating a problem for the operators and partners. When pricing craters, you have to sell more and more and more to maintain the same commission level. At some point, just selling network isn’t going to work because you can’t close enough deals or even fill a funnel fast enough.

When 1GB pricing is less than what 10MB pipes were just six years ago, think about how much you have to sell and how fast.

Even the current price war in VoIP/UC isn’t helping. Because there isn’t enough Demand for UC – the demand is for POTS replacement and dial-tone – the price per seat has dropped. It hovers just below $20 right now.

I understand that the customer wants the cheapest price – and it is easier to take the order when you find the lowest price – but you have also just lowered your commission.

Providers are starting to cut commission points when they lower the price. Partners and Channel Managers aren’t happy. Well, then sell it at rack rate.

So carriers consolidation means fewer vendors and pricing compression means less overall commission. More vendors are needed. Luckily over 600+ vendors have entered the space in the last three years while more than one-quarter of the partner channel have moved on. Retirement, M&A, and business shift/pivot have resulted in a lot less sales partners at a time when there are so many more vendors to choose from.But to be realistic choosing a UC vendor among the 2000+ available is like picking Red Delicious apples at the grocery store. They all look the same. How many do you want to smell and test for firmness before you pick one?

The cloud computing piece, as we found out two weeks ago, is owned by Amazon. AWS and S3 are hosting about one-third of the web!!!! Rackspace, CenturyLink, Azure, Google Compute, IBM/Soft Layer and the others haven’t really stepped up their marketing game (even in the wake of Amazon’s outage.)

Businesses are moving to SAAS, IAAS and other computing environments. Partners are in a position to offer assistance to businesses in this regard. It is uncharted territory for many, but the business model has shifted to wallet share. If you want to survive (and thrive), it is about getting more wallet share from the customer. That means selling them email, Office365, VoIP, colocation, security and more on top of the network and bandwidth that makes up the typical sale.

We have seen a number of press releases in the last 4 months about SD-WAN – mainly about SD-WAN providers signing up with carriers and with master agencies. SD-WAN the new UCaaS!!! This technology could be the next big thing, but they said the same think about IP Centrex (VoIP) over 15 years ago and about WebRTC.

Our biggest problem: We push Product. That’s right. We are a bunch of Product Pushers. We would make ideal drug dealers because we don’t create demand, we just push a product on someone who wants it.

We don’t sell Solutions. We don’t even offer Solutions. The vendors don’t offer solutions either. They pimp products. It makes all of this really hard to sell.

Tags: amazon, cloud communications, cloud computing, cloud services broker, ethernet, master agency, SDN, sellecom, WAN
Related tags: offer solutions, wallet share, master agencies, price, vendors, pricing