What do Open Source, Microsoft and On Demand Communications Have in Common?

Moderated by:  Jason Alley, Vanguard Communications

For years, often to the dismay of my family, my Dad (Bob Alley - former HP contact center visionary) and I have enjoyed rich conversations about the contact center and the greater communications market.  These lively conversations take place late at night on the phone, at family gatherings (yes, even at the Thanksgiving table - I know, what geeks!), while driving in the car, or via email - not our favorite channel, but every now and then something important gets printed that we have to share.  Well, this morning Dad emailed me a link to an Information Week article titled, “Open Source PBX’s Gain Momentum.”  Could it be true that Open Source PBXs account for 18% of the private branch market?  According to market research firm Eastern Management Group, that is indeed the case.  In a recent report posted on NoJitter, “Open Source PBX is 18% of North America Market,” John Malone of Eastern Management Group states, “Open Source PBXs are typically 40% or more below the cost of a conventional telephone system…Cost changes everything.  Competition, and the importance of cost as the buyers' key decision variable is mostly why PBX prices have and continue to drop 5-10 percent annually. And if nothing can touch the cost of an Open Source PBX, there's a big market people have just not been counting.”

While cost certainly isn’t everything and should only be "a" decision variable, I do agree that it can significantly change the game.  There is a great article written by Marty Parker titled, “De-Mystifying VOIP and UC Pricing Trends,” that drives home how innovations together with market pressures from newer players in the Unified Communications market are doing just that (e.g., PC/server solution providers such as Microsoft).  Marty shares, “VOIP prices may actually be 50 percent of today’s prices by 2010.”  Another market phenomenon that promises significant cost savings is the On Demand model, where communications software capabilities are provided to companies as a service (e.g., similar to what RightNow and Salesforce.com have done in the CRM market).  I ran across an interesting (though somewhat dated) article, “Communications-as-a-Service: Big Savings For SMBs,” that talks about how “a migration in the midsize market is happening toward CaaS (or Communications as a Service).”  Many software solution providers have made, and will likely continue to make, investments to bring On Demand Communications solutions to market, including Microsoft (Placeware and Tellme) and Cisco (WebEx).  It will be interesting to see how they leverage these platforms moving forward.

So, to answer my question - Open Source, Microsoft and On Demand Communications all have in common the promise of significant cost savings for enterprise communications (among other things).  Whether we like it or not, we are all being asked to cut budgets and do more with less.  While it may not make sense to jump ship today, or ever for that matter, it would be prudent to investigate and track these lower-cost alternatives as we move forward with developing Unified Communications and Contact Center strategies.

So, Dad, let’s try a new channel for a lively conversation… What are your thoughts?

Others, please join in the family fun!

Comments

[Bob Alley]

Hi Jason,

You make a good case for an open source PBX being driven by cost savings but there may be a larger play here then just cost savings. We have seen in the past that when you move to an open or quazi-open platform two key things occur. Yes, there is a drop in product prices for the customer but along with that drop an open platform attracts entrepreneurial vendors that bring innovation and solutions to the customer that a single vendor can’t provide alone. Examples of this include:

1) Proprietary network & open IP networks
2) Proprietary server platforms & Unix based servers
3) Microsoft PC (until it began competing with its software partners)
4) The iPhone and the app store

Open platforms enable innovation.

We can see key enabling technologies coming together into a perfect storm of innovation and change. Ubiquitous broadband, ubiquitous mobile broadband, smart phone platforms, inexpensive net-book platforms and a new generation of web based solutions.

The most important change of all is a new generation of technology savvy end customers that want agent assisted customer self service not discrete separate channels of communication.

An open source PBX platform fits into this environment perfectly.

Fun stuff Jason,