Comments on: Bonfire of the Portals! Yahoo fires the first shot in the VoIM price wars. http://saunderslog.com/2005/12/14/bonfire-of-the-portals-yahoo-fires-the-first-shot-in-the-voim-price-wars/ A daily round table on the tech industry with experts and callers from all over the globe. Join us as we pick apart the news and get to the meat of what\'s happening out there. Thu, 08 Jan 2009 16:05:26 +0000 http://wordpress.org/?v=2.6 By: Mitch Brisebois http://saunderslog.com/2005/12/14/bonfire-of-the-portals-yahoo-fires-the-first-shot-in-the-voim-price-wars/#comment-2439 Mitch Brisebois Fri, 16 Dec 2005 21:27:42 +0000 http://saunderslog.com/2005/12/14/bonfire-of-the-portals-yahoo-fires-the-first-shot-in-the-voim-price-wars/#comment-2439 Hi Andrew - It wasn't my intention to imply that end users would be paying directly for value-added services. The PSTN cash cow features are going - and so is the profit of the telcos and equipment manufacturers (Nortel, Lucent, Alcatel, etc) Take CLID - it was software that ran on proprietary OSs - Nortel's DMS for example... A clid upgrade for a single DMS 100 was $100k! In the VoIP world the OS are open and interchangeable... also users / subscribers are now very savvy - they know that a "service" that is purely provided by software - costs very little to operate. So you can't charge users for it. There's two areas in IT that will be able to claim a dollar advantage - 1. user-level communication management and 2. corporate-level process / risk management... (that's ITIL!!! - check out pinkelephant for more info)) So the bottom line is the subscriber pays for a level of network access and will will pay more for a certain level of performance (peformance does not equal bandwidth). Application developers that will gain momentum are the ones that will demonstrate an ROI tied to a SLA-type value proposition. It's not simple. I's not easy. It can be done! It's a new generation for "communications service providers" and studies indicate that customers are willing to pay more for network access. The opportunities for startups is immense!!! (Go Alec!) Hi Andrew - It wasn’t my intention to imply that end users would be paying directly for value-added services. The PSTN cash cow features are going - and so is the profit of the telcos and equipment manufacturers (Nortel, Lucent, Alcatel, etc) Take CLID - it was software that ran on proprietary OSs - Nortel’s DMS for example… A clid upgrade for a single DMS 100 was $100k!

In the VoIP world the OS are open and interchangeable… also users / subscribers are now very savvy - they know that a “service” that is purely provided by software - costs very little to operate. So you can’t charge users for it.

There’s two areas in IT that will be able to claim a dollar advantage - 1. user-level communication management and 2. corporate-level process / risk management… (that’s ITIL!!! - check out pinkelephant for more info)) So the bottom line is the subscriber pays for a level of network access and will will pay more for a certain level of performance (peformance does not equal bandwidth).

Application developers that will gain momentum are the ones that will demonstrate an ROI tied to a SLA-type value proposition. It’s not simple. I’s not easy. It can be done!

It’s a new generation for “communications service providers” and studies indicate that customers are willing to pay more for network access. The opportunities for startups is immense!!! (Go Alec!)

]]> By: Andrew http://saunderslog.com/2005/12/14/bonfire-of-the-portals-yahoo-fires-the-first-shot-in-the-voim-price-wars/#comment-2427 Andrew Fri, 16 Dec 2005 06:11:23 +0000 http://saunderslog.com/2005/12/14/bonfire-of-the-portals-yahoo-fires-the-first-shot-in-the-voim-price-wars/#comment-2427 Mitch, you're assuming that Iotum and others like it are going to be chargeable services to the end user. When I say "applications are sitting pretty" it isn't from a 'I am going to subscribe' postition, it is more of a "here is what we can offer you to differentiate.." sales position. Translation - what telco's will pick us up because we are the shizzle and they know it. Applications and the Angel behind them face a huge risk across the board "build vs. buy" if you have users, you win, and win BIG (risk is worth the gamble).. period. Unfortunately this generally comes down to sales and positioning more than technology and development. Features are free, no argument there. CLID w/name, is slag from the PSTN, not a new alloy.. Mitch, you’re assuming that Iotum and others like it are going to be chargeable services to the end user. When I say “applications are sitting pretty” it isn’t from a ‘I am going to subscribe’ postition, it is more of a “here is what we can offer you to differentiate..” sales position. Translation - what telco’s will pick us up because we are the shizzle and they know it. Applications and the Angel behind them face a huge risk across the board “build vs. buy” if you have users, you win, and win BIG (risk is worth the gamble).. period. Unfortunately this generally comes down to sales and positioning more than technology and development.

Features are free, no argument there. CLID w/name, is slag from the PSTN, not a new alloy..

]]> By: Mitch Brisebois http://saunderslog.com/2005/12/14/bonfire-of-the-portals-yahoo-fires-the-first-shot-in-the-voim-price-wars/#comment-2420 Mitch Brisebois Thu, 15 Dec 2005 14:06:54 +0000 http://saunderslog.com/2005/12/14/bonfire-of-the-portals-yahoo-fires-the-first-shot-in-the-voim-price-wars/#comment-2420 Application providers sitting pretty??? While I agree that differentiating yourself in a commodity market is done by adding "value" (innovation), that doesn't necessarily guarantee commercial success for the app creators. In the PSTN world the "killer apps" were - and still are - Caller ID w/name, and Voice Mail... and don't forget "tone" dialling. Imagine being able to charge 7-10 bucks for each of those features... You'd be rich (you'd be a telco). That's not likely to happen soon in VoIP world... Features are free. And a killer app is not a feature. The definition of "killer app" is not cool innovation - it's the one thing everyone's willing to pay extra for! In that context I've seen very little true innovation by VoIP app start-ups. The companies that might succeed are the one's with greater vision beyond the features - and yes, I believe Iotum has that potential. By offering an application alters people's behaviour is where you get them hooked. Then they'll pay. Application providers sitting pretty??? While I agree that differentiating yourself in a commodity market is done by adding “value” (innovation), that doesn’t necessarily guarantee commercial success for the app creators. In the PSTN world the “killer apps” were - and still are - Caller ID w/name, and Voice Mail… and don’t forget “tone” dialling. Imagine being able to charge 7-10 bucks for each of those features… You’d be rich (you’d be a telco).

That’s not likely to happen soon in VoIP world… Features are free. And a killer app is not a feature. The definition of “killer app” is not cool innovation - it’s the one thing everyone’s willing to pay extra for! In that context I’ve seen very little true innovation by VoIP app start-ups. The companies that might succeed are the one’s with greater vision beyond the features - and yes, I believe Iotum has that potential. By offering an application alters people’s behaviour is where you get them hooked. Then they’ll pay.

]]> By: Andrew http://saunderslog.com/2005/12/14/bonfire-of-the-portals-yahoo-fires-the-first-shot-in-the-voim-price-wars/#comment-2406 Andrew Wed, 14 Dec 2005 22:33:42 +0000 http://saunderslog.com/2005/12/14/bonfire-of-the-portals-yahoo-fires-the-first-shot-in-the-voim-price-wars/#comment-2406 I am not completely convinced the telco's won't simply start prioritizing traffic, so I am not counting them out yet. They don't exactly have a legacy of losing, and with the amount of lobbying power... Do any of them really get it? by them I mean portal and IM providers. Skype is voice centric, a very small amount of bloat and you can be up and running quickly "it just works" the others are replicating traditional phone service, which is a huge mistake - 2 cents or 1 cent, to be honest I dont' think it matters. It is ease of use, ease of sign up, features and "non telco" thinking that really makes a service usable. I don't think price weighs into it that much. Yahoo doesn't offer an API to integrate hardware, neither does MSN, no conferencing, no sharing of contacts, no integration to other software etc.. essentially no community. Applications providers are sitting pretty right now, in a race that is won by features - big providers are blind not to recognize what innovative applications bring to the table. VoIP isn't PoIP. I am not completely convinced the telco’s won’t simply start prioritizing traffic, so I am not counting them out yet. They don’t exactly have a legacy of losing, and with the amount of lobbying power…

Do any of them really get it? by them I mean portal and IM providers. Skype is voice centric, a very small amount of bloat and you can be up and running quickly “it just works” the others are replicating traditional phone service, which is a huge mistake - 2 cents or 1 cent, to be honest I dont’ think it matters. It is ease of use, ease of sign up, features and “non telco” thinking that really makes a service usable. I don’t think price weighs into it that much. Yahoo doesn’t offer an API to integrate hardware, neither does MSN, no conferencing, no sharing of contacts, no integration to other software etc.. essentially no community.

Applications providers are sitting pretty right now, in a race that is won by features - big providers are blind not to recognize what innovative applications bring to the table.

VoIP isn’t PoIP.

]]> By: julien http://saunderslog.com/2005/12/14/bonfire-of-the-portals-yahoo-fires-the-first-shot-in-the-voim-price-wars/#comment-2402 julien Wed, 14 Dec 2005 19:23:26 +0000 http://saunderslog.com/2005/12/14/bonfire-of-the-portals-yahoo-fires-the-first-shot-in-the-voim-price-wars/#comment-2402 "By focusing on underserved markets like France, Germany, Hong Kong, Italy, Singapore and Spain, they’re hoping to have similar impact" I thought i would jump in on this one. France is not an underserved market. It is the opposite, i will not go all the way back to the minitel (http://fr.wikipedia.org/wiki/Minitel) but France Internet market is really competitive. France telecom had the control over phones but the ITSP market is a lot more competitive with Free, neuf telecom, cegetel...the price war on internet keeps going (15E for 20M ADSL/mth) and ITSP had and have aggressive strategy to roll out new services like VoIP and IPTV. France is leading europe for VoIP adoption because ITSP made it affordable and easy to use for consumers with all in one box (internet, phone and video). This early roll out and competitiveness could explain why Wengo the VoIP service from neuf telecom has offered prices as low as Yahoo new service for the past 6 months. If it is the ITSPs drive VoIP in France, it sures looks like it will be the portals in North America “By focusing on underserved markets like France, Germany, Hong Kong, Italy, Singapore and Spain, they’re hoping to have similar impact”

I thought i would jump in on this one. France is not an underserved market. It is the opposite, i will not go all the way back to the minitel (http://fr.wikipedia.org/wiki/Minitel) but France Internet market is really competitive. France telecom had the control over phones but the ITSP market is a lot more competitive with Free, neuf telecom, cegetel…the price war on internet keeps going (15E for 20M ADSL/mth) and ITSP had and have aggressive strategy to roll out new services like VoIP and IPTV. France is leading europe for VoIP adoption because ITSP made it affordable and easy to use for consumers with all in one box (internet, phone and video).
This early roll out and competitiveness could explain why Wengo the VoIP service from neuf telecom has offered prices as low as Yahoo new service for the past 6 months.

If it is the ITSPs drive VoIP in France, it sures looks like it will be the portals in North America

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