Jim  Burton
JIM BURTONFounder and CEO, CT Link, LLCCo-Founder, UCStrategiesJim Burton is Founder and CEO of CT Link, LLC. Burton founded the...
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Jim Burton | July 29, 2014 |


How Information Technology Companies Took Over Communications--And What's Next

How Information Technology Companies Took Over Communications--And What's Next The market leaders in the next phase of the CIT evolution will be companies with the underlying core technologies to deliver cloud and AI solutions.

The market leaders in the next phase of the CIT evolution will be companies with the underlying core technologies to deliver cloud and AI solutions.

For many years, the communications and information technology industries have been converging. It could be argued that ISDN was the first phase of Communications and Information Technology (CIT) convergence, but that was more about integrating information (data) technologies into communications (voice) technologies than the two industries actually "converging."

In the early 1990s we saw the first notable phase of CIT convergence with computer telephony integration (CTI). Many of the PBX vendors began working with computer vendors who could see what was coming--information technology companies were starting to enter the communications technology space, but did little to prepare for the inevitable: Information technology companies competing in the communications technology space. During this time, Microsoft, Intel and Dialogic worked together on the telephone application programming interface (TAPI).

In the late 1990s, Microsoft and Intel again showed their intent to move more strongly into the communications technology arena. Along with Dialogic, Microsoft and Intel developed a server-based voice solution code named Valhalla. In 1998 Dialogic invested in a start-up IP phone vendor, Circa Communications, to provide endpoints for the Valhalla project. Intel acquired Dialogic in 1999 and Polycom acquired Circa in 2000. In 2006, Microsoft partnered with Polycom to provide voice endpoints as they entered the UC market.

While Microsoft made it clear that it was interested in communications technology, it was VoIP that triggered the start of the next phase of CIT convergence in the late 1990s. Cisco had the vision to enter the IP-PBX business by acquiring Selsius Systems, a wholly-owned subsidiary of high-end PBX vendor Intecom, in 1998. Three months later, 3Com acquired NBX, an IP-PBX company started three years earlier by an MIT student.

Cisco's entry into the voice communications market sparked a significant change for all of the legacy PBX vendors, as Cisco grew to become the leader in the PBX/IP-PBX market. While the PBX vendors saw change coming in the early 1990s, and experienced a major technology shift in the late 1990s, they were very slow to respond, and subsequently all have paid a price.

The next phase in the CIT evolution started in 2006, when Microsoft and Cisco each announced they were entering a new market they called unified communications (UC). A short while later, IBM positioned its Sametime offering as a unified communications and collaboration solution. By 2007, it was clear that PBX (IP-PBX) functionality was evolving into just another data feature or service, although many of the PBX vendors continued to position their products as IP-PBX solutions, with the questionable strategy of charging for traditional PBX functionality while giving away UC capabilities.

Over the past few years, Cisco and Microsoft expanded their CIT businesses, while the legacy PBX vendors have at best remained flat despite major acquisitions and industry consolidation.

We are now entering the next phase of the communications and information technology evolution, which is all about the cloud. This next phase includes voice and software as a service (SaaS), as well as artificial intelligence (AI), including analytics, machine learning, and data mining.

What have we learned from this, and how can it help predict the future?

• PBX vendors ignored industry trends and were not prepared to compete as the market moved from CTI to VoIP to UC.
• Cisco, an information technology vendor, became the PBX market leader in the communications technology industry.
• Microsoft, an information technology vendor, is on its way to becoming the UC market leader in the converged CIT industry.

So who will become the market leaders in the next phase of the CIT evolution? It will be those companies with the underlying core technologies to deliver cloud and AI solutions, and that would include Amazon, Google, IBM and Microsoft. In my next article I will provide my thoughts on why I see these companies as the ones to watch. I am happy to talk to those vendors not on this list as to why they were not included and what I would recommend they do to stay relevant.

Let me know your thoughts.


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