The New Frontier In Softphones–It’s About the Endpoints not the Softphone.

October 16, 2011

Social Media, Softphones, VoIP

Yes, I said it. Softphones are really passé. They are a thing of the past. It’s all about endpoints that are device shiftable. Some are getting this subtle but salient point but most are not. Let me explain.  Communications is changing quickly and it’s not vastly understood by many legacy industry pundits. At CounterPath we have the opportunity for a unique and unprecedented look at the requirements end users are demanding.  This is due to the fact that we have millions of end points deployed and have significant rollouts with the largest and smallest, newest and oldest wireline and wireless operators, ITSPs, Enterprises, SMB users and consumers world-wide. We talk to end users everyday plus infuse the requirements from channel partners (including service providers and equipment provides) to understand the whole product requirements for endpoints.  The synthesis of all this data gives us an amazing understanding of the present, near-term and future for communications services.

I am writing this post 25,000 feet above the earth on the way to BroadSoft Connections 2011.  We are a Gold sponsor of the event due to the many customers we have on the BroadWorks platform.  You probably saw our previous announcements regarding our partnership (http://bit.ly/psdcFQ & http://bit.ly/qwaNy8) which is driven via the number of mutual customers we share. This past week BroadSoft made two announcements around their softphone strategy.  One was the acquisition of Movial and the other was regarding a reseller relationship with Audio Codes and their VMAS. Although these two announcements had some in the industry scratching their heads I was not surprised by BroadSoft acquiring a softphone vendor.  Further, the BroadSoft partnering strategy on softphones – partner agnostic –  was clear to me prior to these announcements and nothing in the current actions of BroadSoft has changed my understanding. Bottom line is, CounterPath is the market leader in what we do and our mutual customers are helping to drive the deployment opportunities through the confidence in our offerings.

What’s more important, it seems there is a shift going on in the market that is being missed by many between the relationship of softphones and application servers. And more important the shift in thinking from softphones to endpoints.  Let me explain.

What we have found is communications has revolutionized itself through the hands of end users driven by technologies and innovations not in the plans of the legacy care takers of the telecommunications sector.  Here is a summary:

Social Networking. During the launch the of social networking sites many turned their backs and thought the sites were an outlet for the narcissistic few. However it was much more that.  It was a way for individuals to express themselves and paint their social story on a world-wide canvas that was never available before.  In other uses, it was a way for professionals to stay connected with industry experts to share news, ideas and lively debates for the world to see.  The true success is in the numbers.  My research shows the follow user bases: Facebook (~800M users), LinkedIn (~115M users), Google+ (~40M users), Google e-mail/Talk/Voice (~200M), Twitter (~200M users); Foursquare (~10M users).  The numbers are impressive.  Facebook alone is bigger than the Internet was in 2004.  In other terms, Facebook users spent 53.5 billion minutes on the service last May.  It’s unbelievable. Users have driven the growth by their need and desire to communicate 1:1 with their contacts that is bigger than SMS, IM, voice and video as stand alone applications.  The next step in the evolution is to mashup typical communication methods into social networking so that users can escalate their communications to the application that best suits that moment in time.  In the context of Facebook it could start with a Facebook status update that leads a user to IM and then move the conversation to a voice call that final escalates up to a video call–all based on the same conversation context.  The communications method is simply embedded in the conversation context.  CounterPath offers this today through its endpoints and FMC server offerings.

“Skype”. This past week Microsoft closed its acquisition of Skype.  But this is just a chapter in the saga of Skype. For me Skype’s impact is not the company itself.  It’s about what it did to ever change the telecommunications sector.  Now representing over 20% of ALL international traffic, its impact is undeniable.  Even more important, Skype did not only arbitrage revenue from the telecommunications sector, it destroyed it.  In the tune of billions of dollars.  Just take a look at these graphics from Telegeography:

 

The chart above shows the rise of VoIP and the relative fall of TDM.  It also shows the growth of minutes.  At first glance it’s confusing as growth is decreasing yet VoIP + TDM together is growing.  How can this be?   In a word Skype:

Skype is representing the gap in total growth minutes. Interesting for sure.  But what Skype started is, again, the most important takeaway from the company’s existence.  It started a cold war with the traditional operators within the telecommunications sector that has turned hot over the past few years with Skype competitors like Rebtel, Viber and others.  It’s only recently that the traditional operators have organized themselves outside of their lagging standards bodies to attempt and answer to the “Skype effect”.  This past week Telefónica’s O2 announced a VoIP service over Wi-Fi.  They had to purchase VoIP company Jajah for $207 million in 2009 to make it happen.  Where is IMS / RCS in all this?  Nowhere, at least for now.  Skype and its competitors proved how a provider can develop rich services by just doing it.  I do want to make it clear that IMS is happening–after all LTE is a significant part of the release plans for IMS.  However it is my opinion that it’s all about providing services that enable users to uplift or escalate communications based on the conversation context. FaceTime from Apple is another example. Users typically start with a phone call, then, based on the conversation context, easily escalate the call to video. CounterPath implemented the same approach in our clients for years but have really fine tuned the experience in Bria.  Communications are easily escalated based on the user interaction.  The next step and current plan of record for CounterPath is take Bria’s communication escalation features and apply them to device shifting technologies.  This is based on CounterPath’s NCG and key partners application platforms (you will see announcements in the new year on this topic).

Smartphones and Tablets. The smartphone device category is growing and exceeding analysts’ projections. The worldwide penetration of smartphones of the current 5.8 billion mobile subsciber base is just over 20%.  Global smartphone shipments will soar to 1.03 B units  in 2015, more than double the 478 million in 2011. Further, with market penetration of smartphones expected to be over 50% by 2015 (iSuppli), and mobile video calling estimated to exceed 130 million users by 2016 (Juniper Research), service providers will be seeking video calling applications to offer their end users.  Combine this with the success of tablets and you have an incredible driver for mobile VoIP communications. Tablet shipments will reach 253 million by 2016, nearly a five-fold increase from the 55.2 million tablets that Juniper Research expects to reach the market in 2011.  Even more, over half of annual tablet shipments will have cellular connections by 2016.  The key point here is it’s all about mobility driven by mobiles and tablets with laptops (and PCs) playing a very strong supporting role.  As I mentioned, users will use different devices to answer their communications on any available device.  Similar to how we use wireless phones in our homes today tied to our fixed line number.  CounterPath and its partners are at the forefront in defining the experience for pre-IMS and IMS based networks.

VoIP is No Longer a Dirty Word. It wasn’t too long ago that many of us would have said VoIP failed.  In reality it was passing through the Gartner Hype Curve.  We are now in the Slope of Enlightenment:

The proof is in the industry numbers.  VoIP service market reached $49.8 billion in 2010, a 43 percent increase from $34.8 billion in 2008, and forecast the combined business and residential/SOHO VoIP services market to grow to $74.5 billion in 2015 (Infonetics).  The numbers are big.  More importantly, the numbers are only reflective of basic VoIP services or simple replacement services and do not consider the device shift or context based communications I discussed above.  In my opinion this is not only missing in the current numbers but is also not accounted for in the analysts’ forecasts.

So where does this leave us?  Keep an eye on CounterPath and its key partners. Metaswitch is one such partner who has worked very closely with CounterPath to build out an impressive solution based on Bria desktop, mobile and tablet.  Check out their Communicator offering.

Also, expect another significant partner to announce soon with CounterPath.  Both partners mentioned are driving operator transformation to meet the burgeoning needs and requirements of end users for contextual communications and device shifting.

It will be interesting to hear additional reaction this week at the BroadSoft Connections event.  We have back-to-back meetings with the largest operators on the planet that are looking to CounterPath for solutions as I outlined above for their endpoint strategy.  To that theme CounterPath is offering a special on its Bria for BroadWorks (by the way, the only phone authorized to use “BroadWorks” in the name). For only a few days starting today you can download Bria for BroadWorks for 20% off per license (as many as you need). Check the offer out here. Note this is only available via the CounterPath store and not through our direct sales team.  Enjoy the promotion and if you are at the BroadSoft Connections event and want to discuss this post or other related topics please ping me on Twitter (@tcarothers) or mobile: +1.408.459.8040.

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Todd Carothers

About Todd Carothers

Todd Carothers is the Executive Vice President of Marketing and Products at CounterPath and oversees Product Management and Marketing initiatives. Growing up in Silicon Valley and having witnessed the technical marvels coming out of Xerox PARC (where his dad was a patent attorney) Todd developed a deep passion for the high-tech industry. With a particular interest in Internet and mobile applications, Todd eventually found himself within the massive Telecommunications sector and companies that were on the leading edge of new services that added significant value to operators worldwide.

View all posts by Todd Carothers

One Response to “The New Frontier In Softphones–It’s About the Endpoints not the Softphone.”

  1. Jon Arnold Says:

    Very nicely done, Todd. Definitely consistent with what I see/hear, and it’s always better when you can provide the data points to substantiate the trends. We’re on the same page here for sure – keep on posting, and I hope BSFT goes well!