E.B. Writers of Dallas

Unified communications a promising hosting offering

Esther M. Bauer, correspondent | Web Host Industry Review March 2009

Web hosts face a range of influences – many of them self-serving – in their efforts to identify the right new pieces to add to their offerings. It’s a murky world of buzzwords and sales pitches. But there’s plenty of promise, and money to be made in a well-chosen value added service.

For buzz, for promise and for the enthusiasm of the people involved, it’s hard to find a better candidate than “unifi ed communications,” an emerging hosted service model that developers and analysts consider poised for flourish in the next few years.

Market research firm IDC, in a just completed study, predicts the hosted unified communications market will grow to 1.365 million seats by 2013, a compound annual growth rate of 55.4 percent. Revenue from the service is forecast to grow from $50.6 million in 2008 to $415.9 million by 2013.

“We are already seeing the trickling of unified communications into a hosted environment. Service providers, especially the larger carriers, have been working on their platforms, and if they haven’t already released their hosted UC solution, they will be doing it soon,” says Rebecca Swensen, IDC research analyst, enterprise mobility and IP communications services, and author of the report.

Many definitions exist for unified communications, but IDC considers it to be a software infrastructure platform that consolidates directory, routing, and management of communications in order to deliver applications to a variety of client devices, including desktop and mobile phones.

The solution must include at least three of these features: advanced IP telephony calling and management; web, audio and video conferencing; instant messaging; and pervasive presence management and awareness.

In addition, pushing PBX functionality to the mobile device needs to be either an available feature or on the roadmap of near-future releases of the hosted UC solution, Swensen says.

The growth of the UC market has obviously been infuenced by the economy with providers finding it harder to sell more expensive solutions as opposed to a regular hosted voice solution.

“We’re expecting that you’ll see hosted UC-like services through the hosted voice platform more right now because of the economy and they are a cheaper service,” says Swensen. “It’s just bad timing for this market because this would have been the year that it was pushed really hard and would have gotten a lot of traction.”

The UC market will still be pushed hard because a lot of service providers have already invested heavily in their platforms.

Not surprisingly, one of the larger players positioning for the UC business is Microsoft. The company formed an alliance with Broad-Soft, last October, to off er channel partners a hosted solution for businesses.

San Francisco-based Call Tower offers another solution for unified communications through its partner program.

On the other end of the spectrum, Unison Technologies, a New York-headquartered company, last August began selling its unified communications products that combine telephony, email, instant messaging and collaboration in a single server and desktop clients. It claims a user base of 6,500 so far.

In December, the company began offering what it calls a sponsor-supported version of Unison Server and Unison Desktop free for users. With the free version, advertisers convey their messages on the desktop screen. Unison Desktop is available for Windows or Linux.

The products bear some similarities to Microsoft Exchange and Microsoft Outlook with a server on the front end and a client at the desktop, says Rurik Bradbury, chief marketing officer of Unison.

“The difference is it combines all communications on this one system. The server would replace not only the email server like Exchange but also an instant messaging and unified communications service like Microsoft
Office Communications Server and also the PBX,” Bradbury says.

Unison Desktop allows users to control all of their unified communications from a central point.

Just recently, the company started a partner program that allows hosts to offer unified communications to their customers. Unison offers an on-premise license fee of $50 per user, per year. For hosters, a monthly licensing fee also is available.

“The good thing for hosting companies is they can charge much more for a complete integrated communications set than they can charge for just an email box. We are looking at probably $40 to $50 per user per month as a retail price for it. It’s up to the hosting companies what they want to charge their customers,” says Bradbury, noting that the company has yet to set actual licensing figures for hosts.

A host can nevertheless realize healthy margins from the resale of Unison to their customers whether they opt for the free or paid versions, he says.

This summer, the company plans to release Unison Mobile server, which will fully synchronize email, contacts and calendars.

“Unified communications is the next big wave for hosting companies,” Bradbury predicts. “You become not just an email provider but a complete communications provider to your customers.”

And customers who were once reluctant to buy a hosted VoIP service because of quality issues seem to be shifting their perspective as Internet connectivity becomes more reliable.

Unison has partnered with hosting software developer Parallels to offers its products on Parallels Virtuozzo Containers so hosts and businesses can deploy a virtual unified communications software as a service rapidly with a low cost of ownership.

Not all industry observers are in agreement about the unifi ed communications landscape.

“I don’t see at this point that there’s necessarily savings from buying a unified communications solution versus getting this stuff a la carte,” says Dan Golding, VP and research director at Tier 1 Research. “From an economics point of view, I think that’s completely unproven.”

While businesses deploy UC for the functionality, they can get hosted email and hosted VoIP inexpensively a la carte, he says.

Still, Golding has advice for any host who wants to get in on what they foresee as a coming
bonanza. Because of the expense and complexity of building their own UC solution, hosting providers of any size should seek out a partner with an existing offering.

“I think going with one of the current hosted email providers who does offer a converged communications solution is a much better way of doing this than doing it yourself because these tend to be very complex solutions, especially in a multi-tenant environment,” says Golding. “The right thing to do is to partner rather than to do it yourself.”

Whether unified communications is a must have for businesses or just a nice-to-have remains a matter for
debate.

Even for large providers like Rackspace or The Planet – companies with hundreds of millions of dollars in revenue – it’s still a very speculative thing to do, he says, because no one knows if there’s going to be the demand from the customer base.

“Hosting companies are doing very well even in the bad economy. But what you have to do now is focus and relentlessly execute on your core competencies and leave the experimental
stuff for when we have recovery.” 􀁑