UCStrategies Experts Discuss Google

Transcript for UCStrategies Experts Discuss Google

Jim Burton: Welcome to UCStrategies Industry Buzz. This is Jim Burton. I’m here with the UCStrategies expert team and today we’re going to be talking about Google. One of the things we’ve seen over the last 10 years is major changes in communication. We’ve seen IP telephony come into place. We’ve seen companies like Microsoft and IBM become major players in the market space with unified communications, and there is no question but what our market is really going through some significant changes. Siemens, and Nortel, and Avaya as contenders having all changed ownership—there are so many things affecting it, but one of those things that we see as incredibly disruptive are some of the efforts taken by Google. Dave Michels has been following it very closely, has been writing a lot about it, and I’ll ask Dave to get us started on today’s topic.

Dave Michels: Thank you, Jim. I have been watching the Google space very carefully and I’ve been assuming and waiting for them to be entering the enterprise UC space, which they haven’t done yet. What they did last week was enter the consumer space with a voice offering that is pretty interesting and I think probably a telltale sign of what to expect if they do enter the enterprise space. What they did last week was became more Skype-like. They’re enabling phone calls from the desktop into the PSTN network. And what’s really interesting about that is that Skype actually charges for that service—it’s called SkypeOut, and Google is providing that free of charge. You need to have a Google Voice account; you need to have a Gmail account to make that work. I’ve been reading a lot of articles about the new service and there seems to be a lot of confusion around it, but it’s a pretty interesting service in how they are integrating all their Google services together. This is bringing together their chat capabilities, their IM and presence, as well as their messaging platform. What Google is putting together is a pretty complete set of UC capabilities and tools, which I think, if they package it correctly for the enterprise, could create a pretty compelling story. They’ve got presence, calendaring, video capabilities, collaboration capabilities, of course voice which we’re talking about; they have an apps development environment for CEBP, unified messaging, transcription, recording. It’s all coming together powerfully, but it’s not yet packaged for the enterprise space. And the question is when will they do that or if they’ll do that.

Samantha Kane: It’s Samantha; I’d like to comment on that and as a new user of Google, in replacing Skype what we found for our international calls was it wasn’t as cumbersome to set up a Google account and launch that dialog as it was to do that with Skype. That was number one. Number two, there was a million hits when they introduced this last week, and number three what we found is when we’re trying to do business in countries that don’t have 800 service where we’re trying to put a conference call together where it’s very difficult, we have found already in less than a week that Google fits that bill terrifically. So although they haven’t gone down the enterprise road as has been discussed, I think that they’re going to move along at a pretty amazing clip and, as Dave says, you should watch them very carefully for that enterprise offering. So I’ll send it back to Jon, I think, who is going to comment, and go from there.

Jon Arnold: Thanks, Samantha. I echo and agree largely with everything that Dave has been saying. I’ve also been writing about it and our take is very similar. I think the idea here that Dave pointed out, and I think it’s your first point, is that yes, this is primarily a consumer play right now but our interest is definitely on those business applications. And to Dave’s point about being very Skype-like, and of course the timing here is very interesting considering Skype’s IPO news and what that all has to do with where this market place is going. So Google is making it pretty clear that they’re in this game too. And the difference though between Google and Skype, whether it is business or consumer, is that Skype needs every penny they can get, and I mean they are pennies. But they need every one they can get to make their business run, whereas Google does not need to make a penny off of any of their voice services. They talk about offering international rates at two cents a minute and that would subsidize the free U.S.- and Canada-based calls for the trial period, so that will get people up and using it and (there is) nothing wrong with that.

But there’s a bigger game here and Dave’s already touched on it—this whole idea of grooming this for an enterprise application. I wouldn’t mind getting thoughts from other people later on the call about where this departs from their attempt to go down this road with collaboration and Google Wave, which was not successful, and we all know they’ve had difficulties penetrating the business market. But really this news about Google Voice is a culmination of recent acquisitions they’ve been making to gradually put these pieces together, specifically Gizmo5, GIPS most recently for the codecs, and earlier of course Grand Central and the Dialpad guys who brought a lot of that voice capability in-house.

And so for a relatively small amount of money, buying up these companies, they’ve pieced together, as Dave’s been saying, the foundation for bringing voice into that web environment, integrating it to Gmail which is becoming a very, very popular platform, and now adding all those other tools on top of it. And course they have battles to fight too, they have to compete with Facebook, with Buzz, and all the other things they have to do. So this is not just a business story for them, but for us, the UC angle is really interesting, because all of the pieces are there, as Dave said and the market is getting increasingly ready for these types of Web 2.0-based solutions—which, hard to see how they can monetize it and I know we’re going to talk later about channel issues and how to sell it.

But one more point and this is a view I haven’t seen in too many other places. I also think there’s another agenda here at play for Google to get into this voice business, and it’s primarily to harvest our voice samples, so they can build up their search capabilities for mobility. Every time we use that Google Voice service and record anything or transcribe a message, Google is capturing that information and they’re going to use it to build up basically an archive of voice bits and voice recognition features that will enable them to do mobile search, voice-based search, real time search, because that’s where they make their money. So the voice is really just a Trojan horse for them to get into that game, tie it to Android and build up much bigger things. And I think we’re going to see in our space with UC, is that search is going to start to become a more interesting part of the UC value proposition, and I think again, Google being an outsider to this market is going to set the pace here with their innovation and disruptive technologies. But they know what they’re doing.

Dave Michels: Let me comment a little bit about the advertising piece on that. Google is inherently an advertising company and they’ve proven that model very successfully. What they’re doing with Google Apps is so far, they’re not doing advertising on the business version of Google Apps. They charge enterprises $50 a user per year, for the service; there are no ads on the Gmail interface for Google Apps or no ads in that service. Now Google Voice is clearly a consumer service right now, and it isn’t clear how they might monetize that in the consumer space or in the enterprise space if they were to bring it over there. In the consumer space as Jon pointed out, there’s a lot of search capability there that people haven’t really thought about before with telecommunication. If you’re calling car dealers all day, then you’re an interesting prospect for a car company. Who you’re calling, what your voice messages have, when they do the transcription services, what keywords are in there, really reveal quite a bit about who you are, where you’re doing business, what cities you’re talking to the most. They can tell whether you’re booking travel. There is all kinds of information that could open a whole new world of search and advertising. I suspect on the enterprise space that it will be more not advertising based, but of course we’ve yet to see on that.

And another thing Jon mentioned about the client, Skype actually requires you to install a client to do this and Google is doing this web-based, but of course you need a codec to make VoIP work. So they’ve done it through a browser plug-in. What I find interesting about that is that the browser plug-in they require is combined with voice and video. So they’re really very quickly increasing the number of people who have the video client, because the video client has been available for quite some time, and the number of downloads of people installing the video client have skyrocketed. Keep in mind, they bought GIPS not too long ago. GIPS had some really interesting technology which Google has not released that GIPS has demonstrated that is very much like FaceTime where you can have two-way video sessions on a mobile phone. So I think we’re going to see Android come into play here. And it is interesting that Google is getting all these video codecs installed on these desktops very quickly.

Michael Finneran: I was playing with that codec this morning and my test call—I always call my wife—I called her cell phone, because she was at work and the first thing she said to me was, “what’s this number?” (which is the Google caller ID that popped up). And I told her, and she said “well, why are you calling me on this—if you just called me from your cell phone to my cell phone that call is free?” So I hung up in a hurry. But one other big capability we haven’t touched on yet is location, which Google has been doing a bang-up job with in conjunction with their mobile application Google Maps, and certainly now tying that to a lot more interesting capabilities that we’ve seen from the traditional UC suppliers. On a positive side, I think location is one of the biggest things that they are really applying and pushing way farther and way better than anyone else. Of course to counter balance them, my big concern, and one we’ve sort of skirted around here is distribution. Any time we’re dealing with a UC capability in an enterprise environment, that’s a complicated product and a complicated sale. First, how we migrate the customer from their existing environment into putting everything on Google and of course maintaining the synchronization. I manually have to update my Google directory periodically to keep it in sync with everything else. But Dave, I know you have been looking at the distribution problem here, what do you see in terms of Google really becoming a real enterprise supplier?

Dave Michels: Google takes on every challenge slightly uniquely and they’ve been quietly building up a channel, mostly around their Google Apps. The way it is traditionally done is a vendor says it’s looking for a channel and companies apply and they have to meet certain criteria to become a channel partner. What Google says is, "go out there and sell it and do––I think it’s 20 or 50 I don’t remember––number of installations that you can claim credit for, and then we’ll make you a partner." The exact opposite approach—go out and do it first. Which kind of makes sense, because you don’t necessarily need a channel partner to install—people can install Google Apps on their own without a channel partner. They want to see a channel partner get involved and get credit for the installation. They’ve been building that up pretty stealthily, building up their Google environment and their development environment and there’s not a lot of money to be made in reselling Google services. It’s actually pretty thin. But what Google is trying to teach their channels––you go through their channel presentations––is that the money is not in reselling Google services, the money is in creating custom environments and integrations and applications. And they’re building up a fairly large app store within the Google Apps environment that people have developed applications very similar to the App Store environment for the iPhone, where people are integrating, in fact there’s a number of voice solutions in there already that do things like TRM pop-ups with your Gmail and other kinds of services.

Now Michael, you mentioned the location types of services—looking at the App Store stuff with the iPhone, and the App Store concept with the Android phones and tying together some additional capabilities with the APIs of Google Voice and Gmail, you have got some pretty interesting capabilities. And for example, one of the things you can do with Google Voice is it will ring all of your phones when you have an incoming call, your home phone, your office phone, your cell phone, etc. One thing you really can train it to do is tell it to ring the phones where you are at. If you happen to be at home, ring the phone at home. You can do other things like…they’ve got some services or applications on there now that silence your phone when you’re in a church or synagogue, or perhaps at your children’s school when you tend to only be there for conference meetings or plays. And so you can start routing calls and creating call behaviors based on your location which is something that the enterprise space isn’t quite there yet—well, either is Google—but the tools are coming in place to make this happen very nicely.

Michael Finneran: That’s what I find most interesting, because one of the areas I’ve been looking at for some years now is location-based presence. And the PBX guys don’t seem to have gotten a hold of it yet. Google seems to be leaping way in front of them and those are the sort of things when people don’t have to do anything to have their presence adjusted, that is when I think presence is really going take on a lot more power.

Art Rosenberg: I’d like to add onto that as the difference between accessibility and location and availability. Availability almost has nothing to do with location—no matter where I am I may or may not be available.

Dave Michels: Absolutely, Art. But that’s why I think it’s important that this rich type of routing has to take into account location as well as your calendar, which Google also has access to. A lot of the enterprise solutions are doing that now based on your calendar. I know I’ve seen plug-ins for Outlook, for example, that when you set up a meeting you can state whether you’re available or not for calls. That kind of functionality can come into play very nicely with this as well.

Art Rosenberg: Yes—“what’s your status? I’m talking to somebody now...”

Michael Finneran: Well, on-hook, off-hook also...the status of the ringer on your cell phone also says a lot about your availability.

Dave Michels: Yes, and that’s an example of something Google has not integrated with this product right now. I’m actually quite surprised at how many things are missing in the current version of the Google service and the status change is one of them. When you’re on a phone on a Google Voice call, it does not change the status in Gmail that you’re on the phone. I’ve noticed when I want to make a call on the Gmail service, I typed in someone’s name and it gives me all their phone numbers that I have, but it doesn’t tell me which ones are which...which one’s mobile, which one’s home, which one’s work. Just a lot of really low hanging fruit that I’m surprised Google hasn’t addressed.

Art Rosenberg: Are they waiting for Federation stuff, or what?

Dave Michels: Well, Google already supports Federation. They already support XMPP Federation which is pretty much the international standard for Federation.

Art Rosenberg: But maybe not everybody does it yet.

Dave Michels:  One thing that I think Google might be positioning for in the enterprise space, and I think would have a big impact in our space is the concept of this really dumb, dumb phone system. The phone vendors really make their bread and butter in the high end applications and capabilities from presence, unified messaging, video, etc. and the dial tone is almost a loss leader...give that away. An organization could take a fairly dumb PBX, a fairly limited PBX with nothing but dial tone and maybe some SIP trunking, and VoIP capability, and combine that with something like the Google umbrella of services and have fairly rich capabilities in a full-blown solution. The PBX would provide the intercom and 911 types of services, and then the Google type of services could provide everything from call recording to voicemail transcription, unified messaging presence, ring all…all the features that we would expect in an enterprise-class UC solution as well as a development environment. And basically if that comes to fruition that would be what Google has done to ISP, for example, where they used to have a lot of value and run their email services, but they’ve turned them into more or less dumb pipes. Could they turn enterprise telephony into dumb handsets?

Michael Finneran: An asterisk extension is going to be the next piece of Google Voice?

Dave Michels: You know, it’s interesting—Google seems to have a philosophy about not getting on premise. They have a few appliances to break that, but even the codec that we’re talking about had to be a browser plug-in. They didn’t go with softphones or SIP capability; there’s a very strong bias at Google not to install desktop software and not to put premise equipment. And so whether you have a hard phone or softphone or mobile phone—I don’t think the care. But I think that the end-user value proposition could be, “we don’t need a new phone system , we have that 30-year-old one that’s still working just fine,” and build up all those services that the leading UC vendors are offering.

Art Rosenberg: One of the things that you might want to classify what they’re doing is, moving towards not just the phone service, but multimodel communications, which is all kinds of communications, and that’s what UC is all about anyway.

Dave Michels: Well, that’s another piece that Google has that a lot of the enterprise vendors don’t have, is native SMS capabilities. And so for example, your cell phone, someone leaves you a message on your cell phone, you get a little voicemail indicator on your cell phone, but as soon as you have a unified messaging platform from an enterprise vendor and you want to use a single mailbox and not have a cell phone voicemail, it’s hard to get that indication now. What Google does, is they can send an SMS to your cell phone saying you have a voicemail waiting. They’ve got a lot of pieces coming together, they just haven’t really integrated them all together as an enterprise solution yet.

Art Rosenberg: But it looks like they’re heading in the right direction.

Jon Arnold: Yeah, well, especially they have the two big trends going in their favor. It’s the desktop and it’s the mobile device, and with Android they can tie those pieces together like nobody else in this space can do. Skype can’t do it, Microsoft can’t do it, and I find it interesting that Microsoft hasn’t even come up in this conversation. They have a lot to lose from this.

Michael Finneran: Micro who?

Jim Burton: I find it fascinating the approach that Google is taking. If you look at some of the vendors they acquired, someone who was in the space or they continued to evolve some technology. Cisco acquiring Celsius—even some of the foundation of the work that Microsoft has been doing, came from media streams, an acquisition for some of their call control. So everyone seems to have done a lot of those things in growing...Google’s taking a bit of a different approach. The other thing that I’ve observed over the years is that it’s more difficult than people think to get into enterprise communications. The demands from the enterprise are so high that it takes a while for someone to figure it out and to get it right. That doesn’t mean that they won’t get it right, it certainly doesn’t mean Google won’t get it right and quite frankly I think the approach that they are taking—this disruptive approach—is the right one to be taking at this time, because our industry is in such a state of disruption that taking a traditional approach would have really been the wrong way. And time will tell how this turns out, but my belief is that we’re going to see them being extremely successful in this space. But it’s just going to take a lot longer than we probably would predict today, because of the things that they already have to offer. Don we haven’t heard from you.

Don Van Doren: Nothing much to add on this, Jim. I’m really interested in what everyone’s been saying on this call. I think to your point I think the business about integrating it all together is going to be a key issue. One of the comments for instance was that, “Google supports XMPP Federation.” Well, supporting Federation and then hooking it up to, for example, another company’s network, is yet a different step and I think that we’re going to have to wait a little while longer for Google to get all of its ducks lined up before we see some of those kinds of dominoes falling, so to speak.

Dave Michels: I wanted to throw out one other thing about the size of the opportunity here. We’ve talked a little bit about Skype, but I don’t think a lot of people realize how big Skype has really become and I was just looking at their S1, because they filed for their IPO. They are reporting that their registered users are now 560,000,000 users. Up 41% in the last 12 months and the number of paying users, they define as monthly paying users or recurring paying users, has increased 23% in the last quarter of the year that they reported, I mean June 2010. So this is a fairly large space and a lot of capability. I mean these are huge numbers. We’re talking companies like Vonage which been at this for years has something like 2,000,000 subscribers or something like that. Five hundred and sixty million subscribers…I can see why they’d (Google) be interested in this space and I could see how that user installed base could be very interesting to enterprise customers.

Jon Arnold: Listen. Nothing beats free, right? That’s why they do it. They can afford to give it away and that’s how they’re going to work their way in.

Steve Leaden: Jim, this is Steve. Just a couple of tail-end comments, too, and that is we’re seeing especially one our customers in particular, has gone full blown within the last six months with Google Gmail and the idea of integrating unified communications in the entire sense the way we define at UCStrategies is of keen interest to this particular customer. So everything from IM, chat, document sharing, and web collab and all of those good features—this customer’s totally integrating with one of the manufacturers. There’s also some third party--one of them in particular that we’re also talking to, EsnaTech, they happen to be a third party provider. They’re also an Avaya DevConnect connect partner and they also do their own integration, but we’re seeing third party integrators also marry into this whole kind of UC kind of platform. So there’s a lot of uptick,  a lot of excitement. I’ve seen probably more about Google Gmail and integration with unified communications now in the last four months than I’ve ever seen and there seems to be a lot of interest in that whole area.

Dave Michels: Steve, did that customer implement this on their own or did they go to a channel partner?

Steve Leaden: This is actually directly with the manufacturer which happens to be manufacturer/channel partner. And it hasn’t been deployed yet; we’re just starting the project.

Art Rosenberg: I have a question. Sounds like what they’re doing is getting everything together in terms of person-to-person contacts. Are they also getting into CEBT in any way, shape, or form?

Steve Leaden: That’s a good question. I haven’t seen it just yet so I couldn’t speak to that, but that wasn’t the focus.

Dave Michels: I think the answer to that is very indirectly, because…and the reason why that is so slow is because Google Voice, which is the voice capability, is not available or open to Google Apps customers yet. And so there’s not really an opportunity to develop customized applications around voice.

Art Rosenberg: That will be the big opening for a lot of activity, a lot of services.

Steve Leaden: We even got to a point where this was probably more of a fun thing, but although we can definitely see it as an integration. The customer is also buying Google Latitude integrated into this UC server, so when we’re doing any kind of web conferencing or audio conferencing––and this is a worldwide customer––when the chairman is over in China we can actually see the chairman where their location based call-in if you will, or tie in on the conference make you feel that worldwide kind of feel. So they’re definitely leveraging their unique product lines also into this strategy, so it’s very interesting.

Jim Burton: Well, great. I think we’ve run out of time today, but I appreciate everyone's time. Have a great holiday weekend and we will talk to you on the 13th. Thanks, everybody.