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Where Is the Enterprise Communications Industry Headed?
In the weeks since Enterprise Connect, the enterprise communications industry's flagship event, I've seen detailed reviews of key vendor announcements, keynotes, presentations, and panel commentary that did justice to the event's busy agenda and excitement. I've delayed my event review as I sorted through scattered impressions to find the common thread in all the industry buzz. Two industry gurus I talked to at the event put additional pressure on me, urging me to go beyond the obvious and rationalize the deeper paradigm shifts that are emerging today and are likely to transform the industry in the future.
At first glance, there weren't any big surprises at the event -- with the exception of the Amazon Connect launch, perhaps. Most vendor announcements built on strategies and product roadmaps launched months or years earlier and served to affirm vendor commitment to evolve with market trends. Cloud was naturally a big theme. Cloud communications product launches and enhancements were even more pronounced compared to last year's event, as was the presence (booth space, panel participation, presentations) and sponsorship of UCaaS providers.
Change as the New Normal
Despite the overall sense of gradual evolution and continuity, however, certain undercurrents with potentially disruptive impact could be detected. In the rather extreme and dramatic opinion of an industry veteran I spoke with, the enterprise communications industry is "as good as dead." As dire as it sounds, I agree with his assessment, but feel immediately compelled to qualify that statement: It is likely to be a VERY slow death and, even more important, it is simply the death of the industry as we know it today.
Dire predictions are nothing new, as we've pronounced many technologies and industries dead since I became a telecom analyst 17 years ago. Fortunately for most of us concerned, those death certificates were issued prematurely.
Prediction: TDM systems and services were expected to quickly give way to IP communications. Many forecasts expected line license shipments to be 100% IP by the end of the first decade of this century and the installed base to be fully churned not long after.
✔ Fact check: Line license shipments are indeed almost 100% IP today, but many businesses are still using legacy PBXs and key systems and even renewing Centrex contracts.
Prediction: According to some pessimistic forecasts, desktop phones should have been decommissioned by now to be replaced by mobile devices and soft clients.
- ✔ Fact check: Many vendors continue to report growth in desktop phone shipments; most notable, independent SIP phone manufacturers report double-digit growth rates in SIP phone shipments.
Prediction: Premises-based systems were expected to quickly become extinct, replaced by cloud solutions.
- ✔ Fact check: Businesses started moving their communications to the cloud in the early 2000s, yet the vast majority of the customer base is still sweating its premises-based assets.
If history has taught us anything, it is that change takes time. Disruptive trends emerge all the time, but their full effect materializes over years or decades. It is worth noting, however, that accelerated technology development is shortening innovation cycles. Change is the new normal.
I hate to write yet another Chronicle of a Death Foretold, but I must agree with my more experienced associate mentioned above that we are finally seeing the first signs of a slowly dying industry -- that of standalone communications solutions. Whether point products or unified communications systems/services, within a few decades, the presence of siloed communications solutions within the broader IT environment will shrink considerably. This trend started years ago, but we are now seeing more pervasive evidence that enterprise communications are about to change in unprecedented ways.
The industry is undergoing profound transformation, gradually eroding the very foundation on which it built its value proposition for decades. Under pressure from both internal and external disruptive forces, the industry is reversing a long-lasting trend of making communications solutions ever-more sophisticated. New technologies and business models are now decomposing the communications experience and reducing communications capabilities to mere features that can be delivered in multiple different ways, including, and increasingly, embedded in other business software.
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