Alec Saunders SquawkBox

I spent half the day Monday at the Wainhouse Research Conference Service Providers Summit.  This annual event brings conferencing service providers and vendors together in a day long event that charts the state of the art and the future of the conferencing industry. Wainhouse founder Marc Beattie's speech kicked off the day, and it didn't disappoint.

Beattie's thesis is that the collision of interests around the conferencing market will create challenges for conference service providers and vendors.  As enterprise software providers, enteprise telephony companies, communications integrators and consumer crossover plays from the likes of Skype, AOL, and Google enter the mix.  Confernecing is a healthy market  — from from $2 billion just a few years ago, to $4 billion today, and project to reach $6 billion in the next 4 to 5 years.  But not all of the revenue will go today's incumbents.

Interesting stats:

• Although more and more premises based bridges are coming to market, 73%  of enterprises say will continue working with CSPs.  The limited ROI of owning your own bridge, and the inability to scale it cost effectively as the business grows are the two reasons cited.
• There was 38% minute growth in the last 12 months in North America, and 46% revenue growth from Q2 '05 to Q2 '07.  Per minute pricing is down, but revenues are up. 
• Attended audio events (earnings calls, for instance) are on the rise again.  $At $110 to $120 million per quarter, it's a healthy revenue bite. 
• 75% of the market is the US, UK and Canada.  
• By 2011, Wainhouse is predicting that revenues will be Audio - $4.2, Web $1.5.

Perhaps the most interesting thing about Marc's talk was his focus on social networking as a force in the industry.  Marc stated that social networking would be the the single largest thing – the information embodied in social networks is the key to how people get together. 

Consumer networks, like MySpace, Facebook and LinkedIn pull in excess of 100 million visitors per month.  Mostly treated as a curiosity by business people, they lack utility for work, and Marc sees them as little more than glorified contact managers. He specifically called out the lack of a "trusted network" of friends, and the inability of these systems to segment groups one from another.

If Marc was a little down on consumer social networks, he was high on enterprise social networks. He cited the example of Oracle, which home brewed a social network which grew to 2,000 users within 10 hours of being released internally. The reason for it's success inside Oracle? According to Oracle IT management "This group trusts our network because it’s inside the firewall and it’s made up of colleagues".  The great thing about these internal networks is that they simplify the discovery and use of information in the enterprise across the hierarchical boundaries of the organization. 

Marc also commented on the emergence of "outcome driven brands" — micro-brands based on audiences.  He sees the need to brand services based on the audience, as opposed to the product. 

He finished by stating that the future of conferencing services will be in the brands and ancillary services around those brands, noting that he's not yet seeing the "bundles of services" that would imply.

Good speech.  Unfortunately I couldn't stay for much more of the day.

One of the more interesting unconference sessions today was the OOMA conversation.  Dennis Peng, product manager at OOMA, took part in a conversation with Tom Howe, moderated by Jon Arnold, about Ooma. 

Dennis positioned OOMA as allowing you "own your residential telephone service".  It costs $399 for the life of the product, and includes the basic three features of OOMA - instant second line, the broadband answering machine, and unlimited US calling.  One of the initial features that generated a lot of talk was the distributed termination feature, which naturally led to a discussion of privacy. 

A number of people commented on the ways that one might be able to tap into the distributed termination.  OOMA's strategy is to monitor for customer systems, and not route calls through systems that have been tapped.  After being pressed further, all Dennis would say was that the company takes privacy very very seriously.  

Carl Ford commented that distributed termination, and monitoring implies headcount and expense.  How, he asks, can you scale the business when the fees don't? Sounds like a ponzi scheme!

According to Dennis, Ooma sees distributed termination as a stop gap. Value added services is where they want to make money.  Naturally this elicited a skeptical response from Tom, who asked how this is different from the Sunrocket / Vonage model.

Dennis' answer was very interesting.  The OOMA rich ui and developer model is one of the first very functional devices out there.  Its architecture breaks the "bus network" of the home and lets them implement new services that you can't currently implement — they're thinking about personalization and other services that come on cell phone today, but not on home phone.  When Tom pressed, asking why OOMA's services would succeed when other value added services didn't, Dennis answered that the scope of services to date have been limited. Hard to argue with that.   

Jon Arnold chimed in at this point, and said that the experience of using OOMA was fantastic, which Tom also concurred with. 

Dennis finished by talking about their vision for the future.  He noted that this is the first time phones in the home have been networked.  As their services rolled out, they wanted to have more and more value added services, not just related to voice but to other media. Naturally, it begs the question — when do these folks intersect the home networks that Microsoft and/or Cisco are building.

I just exited the Pulver keynote, and heard both Tom Evslin and Jeff Pulver extolling the virtues of social communications. Evslin sees the arrival of social networks as the next phase of all communications.  As he sees it, social networks are the opt-in self administered directories we've all been talking about for a very long time.  In the social world, you add yourself to the directory and expose the information you want. 

Pulver also sees the emergence of the social networking platform as the next driver of communications applications.  The open platform allows any kind of application to be built, and it's the first time it's been possible.  As he put it so eloquently "nobody went into their garage to build new services for AT&T… or AOL".  He also suggested that the incumbents focus on being bitpipe providers. 

Vintage.  Pulver is fired up and passionately focused on what he thinks is the new trajectory for VoIP.

It's day 1 of VON.  Like many, I'm looking forward to Jeff's comments this morning, and then I'll be heading over to the Innovators Track / Unconference for most of the day.  If you're looking for me, that's where me and my laptop will be parked. 

(continued from The Accumulation of Social Capital)

Clearly users benefit as social networking applications build more extensive and richer relationship networks. Aside from advertising, however, what businesses can be built from these networks?

The network owners themselves are trying to compete in three businesses – applications, the social networking application itself, and more recently providing a social networking platform that others can benefit from.  Social networking platforms and applications are likely to be most extreme examples of "network effect" systems build to date.  So, for the sake of argument, let’s assume that one platform and one social network, whether open or proprietary, will eventually emerge dominant. Then what types of applications can be built?

The most basic applications for social networks are shared relationship applications — those applications which are designed to propagate the network by bringing others into the network. These are applications designed to accumulate social capital rather than exploit it in some way.  Silly examples abound on widget driven networks like Facebook and MySpace — Vampires, Food Fights and the like.  These applications use an enticement of some kind to encourage users to spread them.  They exist only to grow their networks, and can be monetized through simple advertising based models.

Shared experience and shared resource applications provide the means for people to share experiences, such as physical events or web conferences, or resources such as files, media servers, and media services throughout the network.  Again, this class of applications relies on an established network being in place.  Business models can range from advertising driven systems to premium service offerings.

Shared information applications propagate information and information requests throughout the network.  These can be as simple as "ask a question" or as complex as a crowd sourcing application.  Recruiting is another very common information sharing application.  This class of applications relies on the existence of an underlying networking, and exploits weak links and reputation in order to find answers quickly.  Multiple business models are possible with these applications, depending on the value of the information being conveyed.  Of all the classes of social applications, these rely most heavily on accumulated social capital and reputation. 

Platforms and business models vary widely depending on the social networking application building them.  The free and open model of Facebook is one that seeks to create and exploit a virtuous circle model — an open network and APIs attract developers who add value by creating new applications which in turn attracts more users leading to more developers and so on.  This model tends to produce a bit of a wild west atmosphere from which dramatic innovations may be found amongst the masses of trash that are inevitably produced.  In contrast, MySpace’s attempt to control the use of it’s primitive APIs, and it’s demands for a revenue share tend have tended to produce a less innovative environment. LinkedIn’s as yet undelivered platform will further constrain which developers may deliver applications.  If social networking applications were real estate projects, Facebook would be a planned subdivision, MySpace a low rent trailer park, and LinkedIn a high rent and exclusive condo.

Depending on what classes of applications are supported, the platform must supply different underlying resources and capabilities.  Applications class also has implications for privacy which the platform must consider.

More on that in part 3.