Fred Zimmerman
Director of CPE VoIP products,
Texas Instruments

“….the opportunity is ripe for VoIP vendors.
The SMB space represents a significant portion of the opportunity, and vendors that have the right combination of quality ease of use, and cost, are well positioned, at least for the next several years….”
Rich Tehrani, president and editor in chief, August ‘08
“…this year, momentum will swing towards SMBs as they continue to evolve into more distinct markets with unique needs. Despite the challenges faced by SMB vendors, we believe that SMBs will begin to adopt VoIP in increasing numbers ….
Alan Weckel, Dell’Oro Group, July ‘08
“Since its introduction in the late 1990s, Internet-telephone service has been rapidly adopted by big businesses.
But small and midsize counterparts have lagged behind.
Now, that is changing as more small and midsized businesses come around to the technology.”
Bobby White, technology reporter, August ‘07

SMB Segments, 2007
Total IT
Spending
2007
Upper mid
500-999 empl.
24%
SB <100 empl.
39%
$1.3 trillion
Lower mid
100-499 empl.
37%
$1.3 trillion
Total Growth
2007-2011
2007 Spending
$440 billion
Source:
IDC, The Emerging Global SMB Market Opportunity: Tapping
Next -Generation "SMB 2.0" Firms, Doc # DR2008_GSRB, March 2008
• Approximately over 35 million SMBs WW
• In the US, approximately 500,000 new SMBs per year

Let’s get a reality check…how far have we REALLY come?
 Predictions then…
Residential

By 2002 all will be in place to make VoIP the defacto standard for Cable telephony

More than 20M WW cable telephony subs in 2004

Reality now …17M voice cable US subs
Source: Texas Instruments
Enterprise
 Predictions then…

WW IP phones in 2004: 7.6M WW IP phones in 2006: 18.7M
 Reality….

WW IP Desk Phones in 2004: 5.1M WW IP Desk Phones in 2006: 11.3M
Source: Dell’Oro 2008 Source: Dell’Oro 2008
VoIP markets are evolving, but not as fast as expected.
SMBs can be the next VoIP opportunity!

IP Phone…a diverse market with diverse challenges
45
40
35
30
Ku
25
20
15
10
Residential
SMB
Enterprise
5
0
2008 2009 2010 2011 2012 2013
Source: Texas Instruments
• Wired enterprise IP Phones
– Deployments to date primarily with proprietary PBX
–
Majority of users utilize simple feature set
– Market is turning the corner, more IP phones shipped than analog
• Wired residential IP “phones”
– Vast majority of residential VoIP are POTS phones connected to gateway
–
Consumer feature set (call waiting, caller id)

SMBs differ from large enterprises:
• Diverse environment across SMB space
• Limited technical know-how is typical among users
• Higher turnover = ongoing phone training
• “Need it now” requirements vs. phased approach
• Employees may be part time or working in shifts
• Access to PC is varied and capabilities are limited

• Residential VoIP features (call forward, call waiting) don’t necessarily translate to SMB
• SMB solutions require customization
• Less concerned with “VoIP” vs. specific traditional features, functionality
• Bottom line: While “cool” apps sell IP phones, functionality and quality on par or better than traditional analog phones is critical

ADP IP Networked Services
• Hosted VoIP services
– Launched May, 2007
– Fastest selling product in ADP history
– Initial niche has been small businesses less than 300 phones
– Gaining interest from large, national dealerships
– Recurring revenue
• Customer benefits
– Simplifies technology management
– Delivers predictable cost
– Simplifies vendor management
– Increases reliability
– Lowers application costs

ABC Auto
Body Shop
“On-Net Calling”
Broadband Access
Broadband
Access
Application
Server
S
S u n
F i u r e
V n 2
4
0
S u n r e
V n
F i
2
4
0
SBC
ABC Automotive QoS Enabled
Broadband
Access
SoftSwitch
ADP Hosted Voice
Hosting Center
“Off-Net Calling”
Into Public
Telephone Network
PSTN
IP
Network
PSTN
PSTN
Pizzeria

Real world example: ADP IP Network Services
Current customer
•
•
Sales history
Interests
• Repair record
•
Call history
• Reminder calls
• Sales history
• Interests
• Repair record
• Call history
• Reminder calls
Phone call in
Caller
ID
Data dip
Database
• Reverse phone lookup
•
Log lead
• Record interests
• Set reminder calls
New customer
• Reverse phone lookup
• Log lead
• Record interests
• Set reminder calls
Customer requirements
• Easy to implement, cost effective solutions
• Data services/phone integration
• Advanced features (soft keys) to enhance response time/efficiency
• Optimized use of costly bandwidth to the premise
• Ability to support media generated audio
• Transparent migration from analog to VoIP (call park, queuing)

In the automobile industry, customer service is everything. It can help make or break a deal in a matter of minutes.
The dealerships we work with simply need reliable phone service and features that work as well or better than current traditional phones.
– Marty Sorenson, GM, ADP IPNS

What benefits does VoIP have to offer SMBs?
• Advanced applications enable
SMBs to “sound” like an enterprise
• Improved professionalism/ image
• Increased sense of stability
• Enhanced productivity
• Better customer service
• Cost savings
• Ability to expand geographic footprint
Find me follow me
Interactive voice recognition
Call routing
Integrated web-based selling

It seems obvious, but benefits of VoIP must be translated into a unique value proposition for each SMB
Customer
• Collaboration across industry will facilitate growth
– Technology providers
– Equipment makers
IP phone vendor
– Third parties
– System integrators
• Quality of service and support is a MUST
• SMB specific features and functions
Service provider
• Technology advancements
Applications server
Media gateway

• The nature of IP
– Despite proven technology, IP is non-deterministic
– Network dynamics can affect call quality
• Call quality management is table stakes
– IP end point instrumentation is a must
– Cannot charge the end customer for operator required tools
There is a real shortage of tooling/instrumentation beyond
MOS scores that allows us to quickly identify problems along the media path and to subsequently troubleshoot them.
– Marty Sorenson, GM, ADP IPNS

Focus on user satisfaction and everyone wins
User
• Real time QoS monitoring
• End point diagnostics and troubleshooting
• Alerts and metrics
Provider
OEM
TI

IPP
Business architecture with IP Phone and quality management elements
Router
IPP
Headquarters
IP
Gateway
Gateway
Network Probe
PSTN
Branch
Office
IP PBX
Gateway NMS at IT

• Benefits
– Path to higher quality HD voice experience for SMBs
– Ability to transmit voice at sample rates up to 48 KHz
– Better accuracy, clarity
– Less repetition in command structures
– No longer constrained to local loop
– Two times the audio capability, half the bandwidth
– CD quality sound
– New applications
• Real time language translation, etc.
Deployments
Residential
Small / Medium Business

• Wideband or High-definition (HD) voice is a differentiating feature over the current PSTN that enhances user experience with a richer and fuller HD audio based on TI VoIP technology
• Lab subjective results show significant improvements are realized from wideband voice
• Even low bit-rate wideband coders exceed subjective perception of uncompressed narrowband voice

These technologies are moving from the mobile and consumer devices into desktop IP phone

• Advanced user features
– Ability to program soft screens
– Easy to use, multi-extension features
– Customize music-on-hold, advertising
– Color screens with high contrast
– User activity management
– Recognition (speech, face, handwriting)
• Drive business user benefits
– Provide user feedback
– Corporate directory capability
– Internal news, training
– Extend personal area network
– Enhanced user productivity
– Potential revenue generation

Naturally, power consumption is a “hot” issue for Enterprise and SMB Business Managers

Enterprise case study:

Enterprise with 10k phones powered at class 2 POE

6.5w/phone at 24x7 usage  $56k/yr to power phones alone!
 However…

Phones are typically idle 16 out of 24 hours a day
Idle mode IP phone features can save SMBs in energy waste and related utility costs

• Call to action is now to tap market potential for VoIP growth
• SMBs are unique – requiring solutions customized toward their varying needs
• Quality, enhanced functionality are critical for VoIP adoption over traditional business phones
• Collaboration is key
• Technology advancements are furthering efforts toward a world where every connection is voice enabled .