This $22B Business is Ripe for Disruption!

If I would tell you that the Telephone Industry is about to be disrupted, you would probably think that I am off my rocker, right?

We have seen so much disruption in the last 10 years, VoIP, Skype, Vonage, Whatsapp, Viber etc. etc. It is hard to believe that there is still something is still waiting for change.

Well there is! Stay with me for 2 minutes and I will explain. Almost all businesses have some kind of Switchboard aka as a PBX, Phone System, IVR, or Auto Attendant. In fact there are around 62 million active phone extensions in businesses in the USA alone.

For years businesses have installed a system on their premises. Companies like Panasonic, Tadiran, Avaya, Nortel and LG made tons from selling and servicing these systems.

Then, along came “The Cloud” and companies were told you can now save on your CAPEX, there is no need to buy a box for your phone system anymore. We will put a box in The Cloud for you and you can connect your phones to our box over the internet. Now it is the turn of companies like RingCentral, 8X8, Vonage Business and others to make tons charging businesses $30 a month (and up) per extension for their phone service. RingCentral (NYSE: RNG) is trading at crazy multiples and the landrush is on with new service providers joining the fray every day.

But, there is a catch. These “Cloud” phone companies do not innovate. They put the switchboard boxes in the cloud, but they are still complicated to use and service providers still employ large support staffs. Moreover the cost of customer acquisition is sky high and RingCentral the current leading player is losing over $30m a year.

So what will happen next? Lets look at a few points –

The majority of businesses are still on old “on premise” legacy systems. The “new” cloud systems are complicated to use. Gross Margins (before support expenses) are obscenely high.

The time is ripe for someone to come along and build a phone system for small businesses that is easy to setup, easy to maintain and costs less than the existing solutions.

Stay Tuned. Disruption is coming.

Flat Planet Group buys Omega Telecom

We are really excited to let you know that that we have closed an agreement to buy Omega Telecom a licensed telecom carrier based in Cyprus.

In the past few years we acquired a number of call centers based in Cyprus as customers and became familiar with the local telecom market. These call centers enjoy our unique services such as Local Phone Numbers in 50 countries with Dynamic Caller ID. With Dynamic Caller ID, call centers see a tremendous rise in calls answered and sales closed!

While there are 6-7 other active licensed carriers in Cyprus, there is plenty of room for innovative services such as those offered by our company. So when the CEO of Omega told us that he is interested in selling the company, it did not take us long to make an offer.

Why are we excited? Well for a number of reasons. Cyprus has become a major financial center due to it’s central location, membership in the EU and low tax rate. Many of these companies can profit from our IP services.

In addition we will now have our own range of geographic, premium (900), national (77) and toll free (800) numbers. In many cases we can offer a substantial payback for use of our numbers, which makes it even more profitable.

In the next few weeks we will finalize our plan and hire a local sales team. We are looking forward to becoming a major force in the Cyprus telecom market. Please contact me for more information. I will be happy to discuss with you more details!

VoIP for the SMB – Better late than never!

Hosted VoIP telephony has experienced another year of steady growth, as the small business market continues to be the sweet spot with most deployments in the 20-to-50 seat range, reports In-Stat.
Hosted VoIP will continue to experience dynamic growth over the next few years, with projected revenues exceeding $2 billion by 2010, the high-tech market research firm said.

When I read this quote 2 years ago, I believed that Instat was right on the money, and Hosted IP PBX services for the SMB market such as what our company offers would be very successful. Although it was slow at the beginning, the last few weeks have proved them right.

I am not sure what is the exact driver, but we have seen a sharp spike in inquiries from resellers interested in selling our hosted pbx service in the last 2 months. Most of the potential resellers are providers of traditional SMB phones systems such as Panasonic. Others are installers of computer systems who are looking for additional services to sell. For both, The Flat Planet Phone Company service is an interesting addition to their existing offerings.

In a nutshell, we provide a platform which enables you to set up your own Phone Company in less than an hour and immediately start selling. For the whole spiel go to our website!

For me it is really exciting to see an idea sprout into a money making service. Flat Planet is a win-win proposition for the both the business owner and reseller. For me it is a great feeling to sell something that is both profitable and beneficial for all involved. Nothing makes me happier than showing a new reseller how to set up his own phone service. Well, let me qualify that — Nothing in my business life….
After all there is a life after work 🙂

I think I made a mistake…

Actually 2 of them. About a week ago, I wrote about the Digium/Asterisk agreement with Skype. In my post I expressed the opinion that Skype was the winner, since in one swoop they opened up the Skype network to the business market.

In a discussion that evolved from my post, on Facebook, Olle E. Johansson (one the leading Asterisk developers) disagreed with me. Olle’s point was that networks come and go, today Skype might be popular, but Gtalk might take the lead from them in a couple of years. However, if Asterisk becomes the primary operating system for IP communication (it is on the way there!), then this will be just another deal on the way to Digium becoming the leader of the telephony/communications world ….

On second thought I must agree with Olle. The more I work with Asterisk, the more I realize that the sky is the limit!

My second mistake concerns my post on IDT, I wrote that it may be a good idea to buy the company with over a billion dollars of sales and a market cap of $50m. However after I read this article, I realised that with their current capital structure the ones who hold the keys to the company are management and it doesn’t look like they can let go… Too bad, IDT was an innovative leader at one time.

Virgo Publishing Acquires Certain Assets of Pulvermedia, Plans IP Communications Product Launch

I just received this press release which I am sure will interest anyone who covers the VoIP space.
No comments for now….

For Immediate Release

Virgo Publishing Acquires Certain Assets of Pulvermedia, Plans IP Communications Product Launch
PHOENIX — October 1, 2008 — Virgo Publishing, a business-to-business information services company, announced it has acquired certain media assets formerly owned by Pulvermedia through a foreclosure by TICC, Pulvermedia’s secured creditor. DeSilva+Phillips, LLC, the New York-based investment bank specializing in media and digital media, provided financial advisory services in this transaction.

With the assets — primarily databases and trademarks — Virgo Publishing plans to launch new industry-leading products as part of its Telecom Division.

“Virgo Publishing has a substantial presence in the telecommunications space. With the acquisition of these assets, Virgo has an opportunity to expand its leadership role in this dynamic industry sector,” said Mike Saxby, group publisher — Telecom Division for Virgo Publishing. “The benefit for our audience and our customers will be tremendous as we are able to leverage these assets into new online, print and event resources.”

Virgo Publishing produces business-to-business magazines and conferences across four verticals. Virgo Publishing’s Telecom Division includes four titles: xchange, PHONE+, Billing & OSS World and New Telephony. It also includes two trade shows: Channel Partners Conference & Expo and Billing & OSS World Conference & Expo.

The company has a track record of success in the telecom industry. PHONE+ marked its 20th anniversary in 2007, and xchange and the Channel Partners Expo each are enjoying their 12th year of success. Billing & OSS World magazine has been a segment leader for 13 years, and Virgo will host the 17th Billing & OSS World event in April 2009.

Virgo Publishing acquired Billing World and OSS Today Magazine and the Billing & OSS World conference and exhibition from TeleStrategies Inc. in September 2007.

“On the anniversary of our successful acquisition of the Billing & OSS World properties, we are confident that our seasoned team can produce results in yet another growing area of the telecommunications business — IP communications,” said Saxby.

Virgo’s telecommunications editorial team has more than 100 years of experience combined.

Virgo’s new products, which will expand on the VON brand, will be focused on IP communications technologies and business strategies for service providers and enterprises worldwide. A beta launch of a new Web site is scheduled for late October. An e-mail newsletter will follow in November. A new bimonthly print magazine will debut with a January/February cover date. In addition, a conference and expo is being planned for 2009; dates and locations will be announced soon.

“The IP communications marketplace has unlimited potential, an industry we have just begun to tap. Service providers need to avail themselves of every opportunity and resource to drive their IP communications businesses forward. Currently there’s a major void in the media marketplace targeting ITSPs. I applaud Virgo’s ambition to create such a resource for the service provider community and support their efforts. Their depth and synergies within the telecommunications markets provide them a platform from which to create industry-leading products in this growing arena,” said David Byrd, vice president of marketing and sales for Broadvox LLC, a provider of integrated managed VoIP services to SMB, enterprise and carrier customers.

“Virgo Publishing has a long track record of success in publishing and events for the telecommunications marketplace. Taqua has worked with the company for a decade and found a receptive audience among the readers of xchange. We are looking forward to the potential opportunities afforded by the new launch,” said Frederick Reynolds, vice president of marketing for Taqua LLC, a supplier of next-generation switching systems and applications.

Additionally, the database assets Virgo acquired related to the distribution community will be added to the company’s existing channel-related brands, PHONE+ and the Channel Partners Conference & Expo.

Skype & Asterisk – A Marriage made in Heaven?

There has been a pretty big buzz since yesterday when Digium announced that Asterisk will now include a Skype channel driver!

A first look this seems to be a very big announcement so lets look at what has changed and then if it is really earth shaking as some have described it to be.

Until now, Skype has been nothing more than a glorified IM program with a very good voice interface. Asterisk on the other hand is a tool box which enables almost any kind of communications application.

As many voip pundits have written frequently that while Skype while has a gigantic user base and voice quality better than most voip services they have missed the IP communications boat. Skype
could have taken the business world by a storm and introduced voice into mainstream business processes. Instead they stayed in the peer to peer IM world. Think for a minute, how many businesses do you know who actually use Skype for their mission critical applications??

So what has changed? Well now you can use Skype and connect it up to your business applications via the Asterisk toolbox. Skype is no longer stranded on the IM island. Skype has in one shot, integrated itself into the business world. If done right, that may be earth shaking. If done right.

Who is the winner here? Well in my mind – Skype is the clear winner. Asterisk users and developers do not gain much. Businesses already have softphones and click to call solutions, adding a Skype interface is just another interface, not a new paradigm to get excited about. Skype on the other hand in one smart move has broken into the business world. Now that is a smart move!

Want to discuss it more? Join Alec Saunders today on Calliflower. Alec will be hosting a discussion on this interesting subject.

All in a blogs day…

I was chatting earlier today with my favorite IP Communications analyst, Jon Arnold. Jon mentioned that he had missed me at ITexpo in LA and the report is posted on his blog. While reading Jon’s ITexpo report, I also notice his post about pal Thomas Howe winning yet another mashing contest.

So, there I was off to Thomas’s blog to read his report on his latest mashup adventure. While on Thomas’s blog I was happy to read (as a former Chicagoan..) about the big buzz that Chicago based (note – gotta learn more about them) is making….

You get the idea, I could go on and on… but I guess I have to get back to work, reading blogs ain’t gonna make me money … but it is sure an interesting way to spend the day!

BTW – mashups are becoming a big business and Thomas Howe is the man to follow!

Cisco takes a Jab at Jabber

By now you probably saw the post on Techcrunch that the Big C has bought up

Just to set the record straight, they have bought the team and not of course the jabber open source project. For those of us who are not familiar with Jabber, there is a good definition on Dean Collins blog.

There still is the question, what does that mean for future development of Jabber. What are Cisco’s intentions? How will this work out, after all Cisco culture may be a little foreign for the Jabber geeks, but it will be interesting to follow!

One of the better comments I saw on this acquisition was on Techcrunch by Remko Tronçon –

Wow, talk about how confusing bad wording in an article can be. It was mentioned before, but Jabber, Inc. is one of many *companies* that was built around the XMPP (also called Jabber) protocol, and was acquired by CISCO. Compare it to buying a company called “Web, Inc.”, which does not mean you buy HTTP and can do whatever you want with it.

VoIP works Miracles!

Last night I got an email about a customer who is using a traditional telephone solution. He is moving into a new office and his phone system will be ready only in a week… Can I help?

With VoIP it is a no brainer, in less than 5 minutes we allocated a few sip accounts on the Flat Planet server, this morning one of the FPP resellers will send over preconfigured IP phones and the customer is good to go.

Now try that with POTS 🙂