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Monday, November 21, 2005

IPTV - A case of sum of parts

IPTV is another area that I have been tracking for a while. I read recently that Cisco bought Scientific-Atlanta for close to $7 billion. I wasn't as exasperated as when I read that eBay bought Skype for a total of more than $4b, because I think I know the direction where this is headed, and it has more potential that what eBay might do with Skype ! Scientific-Atlanta is a well known hardware, STB, dish provider in the IPTV world, and amongst others ,has good in-roads in delivering equipment to SBC for their IPTV trial (if I recall correctly, having partnered with Alcatel).

First let's talk about IPTV in general and if I think it will ever see light of day in terms of earning profits. After all, most of us who have gone through the last downturn of all things IP have grown to be more cynical about anything that does not make money yesterday. In addition, it is much easier to say 'Gee, I don't think it really is going to work' vs. trying to lay out a vision saying 'Here is why it will work' and 'here is how to do it'. So I am going to go out on a limb to say I see good potential here, both for consumers and operators. I am going to reserve my comments on the 'Here is how to do it' part - you'd need to employ me to answer that for you ;-)

So, do I think IPTV is a revenue generating source for operators? I don't. Infact, I think IPTV will eat at operators margins and actually may result in losses for them for quite a while after deployment.

What ?!? And just a few lines above I said it is a promising business model !

Let me explain: Convergence is about "service bundling". It's about being able to offer a variety of services integrated together as a whole to consumers to enhance their user experience. Trying to dissect a convergence service into individual streams and questioning "Will voice make money" or "will IM make money" is naive at best. Think of IPTV as another delivery system for converged services. While IPTV on its own may be a loss making proposition, being able to tie in the eternally lucrative TV/content delivery system using an IP backbone and common service delivery architectures mean that a smart operator can bring in multiple service sources and stitch them together to offer a lucrative whole. And that is where the money lies. Not just in IPTV, but in effectively being able to use IPTV as one of the mediums to bundle services.

Cisco sees this for sure. Their strategy is that if any service is delivered over IP, they need to be in that business. After all, a majority of the world happens to use Cisco routers - it just makes sense for them to fortify their dominance in IP by also being able to provide delivery of IPTV, and more importantly converged services via their robust infrastructure. For a while now, Cisco has been upping its 'IP' play by talking about the importance of applications and intelligence in the Internet.

Anyway, I digress, back to IPTV. Some very valid concerns:

IPTV has been in the pipleline for a while, often called a utopian dream. Why will it work now ?

The most critical assumption IPTV makes is the availability of last mile broadband. This was the biggest challenge for any multimedia service based on IP. Parts of Asia, Europe and US have shown significant increase in rate of broadband adoption over the past 2-3 years. This is one of the main reasons why I am very gung-ho about broadband based services in the next couple of years.

Another reason is maturing of trials around the world. It typically takes an operator a trial of around 1-3 years to roll out services. Several trials are close to completion (PCCW, MaglineTV, FastWeb, SBC, BellSouth, China Telecom and more) and they expect GA rollout in Q2 2006.

Finally, at the same time, several other IP based networks are being rolled out and the commercial success of providers such as Vonage and Skype have proved to the general public as well as operators that IP works. These networks include 3GPP IMS for mobile services as well as a lot of new age content delivery services spearheaded by the likes of Google, Yahoo and Microsoft, such as programmable Maps, advertising mechanisms that actually work, new age applications and more. The important thing here is that during the short span of 2003-2005, several companies have put their money where everybody's mouth is and have individually proved them to increase customer stickiness and potential for revenue generation.

We are now in a situation of the sum of the parts. It will still take a lot of business savvy and finger on the customer's nerves to put individually excelling areas into a combined service of excellence, and we will still see more failures than successes.

What sort of converged services can this provide?
  • multimedia calling - your TV becomes your video screen for a video call over VoIP
  • Presence integrated interactive-TV - based on your current preferences ('At Work', 'Available' , 'Busy' etc) the content provider could enable/disable options such as multi-party interactive participation or remote invitations to a video-game
  • multi-device alerting - you have 'programmed' your interactive station (erstwhile called a TV) to register your participation for a distance learning interactive program, but you forgot. Half an hour before the program, you automatically get a message reminder on your cell phone. Oh and guess what ,since it is over IP, you could participate via your IP enabled Cell Phone.
  • Viewer specific advertisements - so you are a Star Trek fan. You watch all episodes of Star Trek - so why waste time showing you ads about 'Dental Care'. Maybe, 20% more time focussed on telling you about the newest Star Trek DVD collection and a 'click here' link to buy which you can purchase via your remote control will yeild better returns for you and your advertiser ?

You get the picture. The biggest advantage of a common service platform is that the play for innovation increases manifold.

Who wants IPTV ?

  • Internet Service Providers - they want a pie of the lucrative TV market
  • Mobile Operators and MVNOs - to create value differentiation
  • Consumers - they may not really know it till they get it. The convenience of integrated services is only felt when delivered, not when thought about.
  • Traditional TV providers (Cable/Satellite) - After all, they own the ppTV market and keep cutting at each others throats with value differentiation and price cuts. For their own good, they have to constantly be ahead of the game
Who/What will challenge IPTV

First and foremost, Cable and Satellite providers. Cable already provides a lot of high speed fiber and it is logical for them to capitalize on their high bandwidth network and make sure no other source can cut in. In addition, Cable and satellite providers will surely undercut their prices in a bid to keep their customers and lure in other 'Internet' users. They can afford it (especially cable, due to their low latency hi-speed networks)

In other words, deployment of IPTV will have different challenges in different areas. In places where pay-TV is predominant (such as Europe, US) the battle will be on bitter pricing and service differentiation, whereas in places where pay-TV is still not common and infrastructure investment is still less in comparison (India and others) it will mainly be a bitter pricing war and service differentiation may be a while away.

Thursday, November 17, 2005

UMA: Bridging the future - but does it have a future ?

Somewhere around 2004, a set of vendors came up with a specification called 'Unlicensed Mobile Access' (UMA) . The problem that was being solved was this:

There is currently no standard mechanism that bridges the unlicensed spectrum (Wifi and related) to the carrier mobile network. There was a need to bring 'mobile services' to the unlicensed spectrum, especially for phones that could do VoIP while on WLAN/ethernet and switch to the mobile operator network when out of range. In addition to being able to call both from unlicensed spectrum and licensed mobile spectrum, it was necessary that the same services tha were configured in the mobile operator network was also available when I was connected via a broadband access point so that people calling me would not know the difference (and even the caller would not feel the difference between the two different networks, from a service availability perspective.)

So UMA was born. It is important to understand that is is an access technology and all it does is that it provides a bridge between unlicensed spectrum and the licensed spectrum of the mobile operator.

It is pretty much a no-brainer - this was just the bridge that operators and OEMs needed to make the dual-mode handset dream a reality. Infact, when it was first introduced, 3GPP IMS was still quite a distance away and operators and OEMs did not have a choice but to incorporate this technology. Infact, 3GPP release 6 also added UMA as an access technology. Hurray, just incase you still had phones that did not speak IMS by the time release 6 hits the market !

However, things have changed. Over the past two years, IMS has made giant leaps in deployment and the network infrastructure needed to make IMS a reality has steadily come into shape. In fact, as we speak today ,IMS is actively being trialed by several operators including Sprint, SBC, Verizon, mm02, Vodafone, BT and several others. (so as you may have guessed, I have a different opinion from what my colleague ElusiveCheese posted here - which is good - what fun is technology if we all agree all the time !)

At the same time, several OEMs are also putting in IMS ready software in their phones to be able to receive the services that IMS delivers (I am actually working with some of them, though not sure if their plans are public - google around and you will find public ones too).

Unfortunately for the UMA proponents, IMS progressed much faster than what the UMA folks thought would be possible and the delta time frame between UMA ready infrastructure and IMS ready infrastructure is less than a year apart - which is not much at all.

This brings to the front several disadvantages of UMA that were previously swept under the carpet because there was no other choice. Some of those are:

  • UMA only works for GSM/GPRS networks. Bad luck, UMTS
  • Even though UMA does handover between GSM/GPRS and a Wifi network, it does not handle access point - access point handover. Which means if a user roams from hotspot to hotspot UMA cannot continue WLAN based voice calling - once you step out of the first hotspot, UMA switches the call to GSM/GPRS. In other words, UMA is a good solution inside your house not bigger. Why is this a big deal ? Well, with the advent of metro mesh networks (wifi hotspots mounted on top of lamposts by cool companies such as Tropos and others such as Cisco), it is critical that access point - acess point handover is handled.
  • UMA is a tunnel, or a bridge. The phone which connects to the UMA bridge is not an entity in the end-end network. The last entity the network sees is the UMA gateway. Why is this bad ? Well, this mean that important services like presence, which involve end-end availability will not work (at least transparently) with a phone behind a UNC.
  • One of the fundamental design principles of scalable architecture is this: eliminate as many inter-protocol gateways as you can. Gateways between multiple protocols are a single point of failure (just as SIP-PSTN gateways are too). They are a necessary evil when two network cannot talk directly to each other. The problem is that if the gateway fails, even if you have two perfectly operating network, they are not going to communicate.

On the other hand, if client OEM vendors directly incorporate SIP into their end points, several things are automatically addressed:

  • The phone itself becomes an addressable entity in the network (so services like presence work)
  • There are no limitations on access technology - IMS works on GSM/GPRS/UMTS and similar. So as you add/change transport infrastructure, you don't need heavy investments (in UMA you do)

This still leaves one issue: SIP/IMS to GSM/CDMA/GPRS handover. The requirements are still the same in terms of handover duration. There are companies actively working on this technology and from what I understand, good progress is being made. Do note that this does not still affect end -end IMS deployment in a big way. There is a heavy push from mobile operators to introduce high-speed bandwidth technologies such as HSDPA/HSUPA which they hope will make consumers use the mobile carrier network exclusively in favour of unlicensed spectrum (till they figure out how to make money off that network too ;-) )
So the big question we need to ask is:

Is there any motivation for Operators /OEMs to continue with UMA, especially since UMA too has just rolled out when IMS deployments is less than a year away ? Even if they do put both SIP/IMS and UMA, how long will UMA last ?

UMA proponents see this risk, and talk about how 'UMA accelerates IMS deployment' - in a way they are right, till OEM clients support IMS/SIP, UMA does connect the two. But I hope they (KinetoWireless and others) realize that as IMS deplyoment sets in, they had better change their business plan to move away from UMA too !

Monday, November 14, 2005

Ozzie Speak: "Discover, Learn, Try, Buy, Recommend"

A couple of weeks ago, ElusiveCheese (the co-poster in this site) pointed me to some interesting reading material which were internal microsoft memos by Bill Gates and Ray Ozzie (one of the 3 CTOs at microsoft) where they talked about 'a disruptive tidal change' in the way MS must do business to remain at the top of the technology curve. I seriously doubt if they were really internal or if it was just a well planned leak to show the world that microsoft is at top of the innovative chain. Anyway, that is besides the point.

I read Ray's memo with a lot of interest and one thing that really stuck with me was a particular para in the 'Key Tenets' section of his lengthy memo that said:

"Limited trial use, ad-monetized or free reduced-function use, subscription-based use, on-line activation, digital license management, automatic update, and other such concepts are now entering the vocabulary of any developer building products that wish to successfully utilize the web as a channel. Products must now embrace a “discover, learn, try, buy, recommend” cycle – sometimes with one of those phases being free, another ad-supported, and yet another being subscription-based. Grassroots adoption requires an end-to-end perspective related to product design. Products must be easily understood by the user upon trial, and useful out-of-the-box with little or no configuration or administrative intervention."

To me, these 5 words summarize to a great extent what the entire memo talks about. I would like to spend some time discussing my own thoughts here:

  • Discover - The key to product success is not only that it works well, but that people know about it. Traditionally, discovery is an expensive and time consuming process. It involves large marketing budgets, expensive trade shows and a lot of mind/marketshare activities to let people know about the product. To a large degree, the Internet has revolutionized the way we do marketing. Cutting edge companies like Yahoo, Google, Microsoft have embraced technologies such as blogging where key visionaries espouse their ideas and thoughts on how to shape the the next generation world. While they do that, they also talk about internal (and approved) company initiatives that people can read about and get excited. And all of this ties into effective search mechanisms that let consumers search for this information easily. (As an example, Google has integrated blogsearch into its main stream search so that readers can tap into the rich information that people provide in their personal blogs). The Internet penetration is of magnitudes more than other marketing mechanisms and organizations should embrace this new marketing tool, while at the same time continuing the more traditional methods for 'in-person' interaction and targetted marketing. One does not replace the other, but ignoring the Internet is like trying to mow your lawn with a pair of scissors while the lawn mover sits in your garage.
  • Learn - This one word has many connotations. To me, it says 'what ever you do must be easy to learn'. It should be intuitive in operation and in front end interfaces. I strongly recommend companies read human interace design guidelines from folks like apple and GNOME . Google and Microsoft's applications are key examples of good software interface design - how many of us actually have read the manual for Microsoft Powerpoint or word to get started ? Likely less than 1% - sure we refer to help when we need to do something advanced, but the key is that for any good software, the initial learning to get it up and running to perform a simple task should be intuitive. All my life, I have worked with 'telecom bellheads' who believe that complexity is key to what they do in their business. I find this thought ridiculous - simplicity and intuitiveness is a key tenet in whatever you do. It's a mindset. This one point encompasses good design and engineering principles both in the product front end and the back end. An easy to learn product should be self configuring, self correcting and most importantly, should a) never make a change permanent without asking confirmation, or , b) Let the users undo what they just did or, in the worst case, c) Offer a reset function to return to a self-configured stable state. The other dimension to Learn is to keep learning from competition. Never reach a state where you think you are safe and at the top - that is exactly when you will slip a few feet down and if you don't pick your self up in time, you will continue sliding down the greasy ladder to your own destruction. Ozzie refers continously to 'grassroot' (new) companies that are 'laser-focussed' on what they do. A key learning here (even though its common sense) - keep your ear to the ground, never lose focus. You need to constantly innovate and better your products to keep ahead.
  • Try, Buy - The world is a-changing. Consumers demand try before you buy. Don't shy away from it. Again, I have worked for companies that shun this model in the past - 'free internet trials' to them means that their sales organization will not have a job. Again, stunted vision as far as I am concerned. Hosting a software on the internet for controlled, time limited trials is key as far as I am concerned when it comes to effective internet marketing. A Lot of people believe that this model only works for B2C sales and not for B2B sales. I beg to differ. This is a model of convenience and elimiates a lot of effort from both sides for the initial trial. When the trial expires in 30 days, if the consumer wants to buy, he will contact you. If you are concerned about IPR leak and license hacking, trust me, it is no different for a person to sign an NDA manually with you, sign an eval license and then hack it anyway (all of this can be done in the online version of try and Buy too, if you so like)
  • Recommend - This one word to me is key as an indication of the post sales process. In my experience, business comes from repeat sales. Trying to find new customers all the time simply based on 1st hand marketing (that is the company that sells directly markets) get increasingly tougher as time passes. Referrals are key to increasing business. Referalls can happen within the organization (one division reccomends to the other) or outside. Either way, when something is strongly recommended by a close associate, the chances are that you would buy it even if it is at a small premium. Your custo
    mer will recommend your product only if he is comfortable with its functioning and the post-sales process he has experienced after investing in your product. Too many companies focus on pre-sales and ignore post-sales. Remember, a satisfied customer is a customer who will sell your product for free to others. And his conversion rate will be much higher than yours. Remember it, accept it, embrace it.

Saturday, November 12, 2005

Being a Good Manager

Being a good manager is not only about getting your job done, but more importantly, earning the respect of your team. Some thoughts, based on personal experience:
  • Stop thinking of youself as a 'Boss' - whether you are the manager or not, you are first and foremost a part of the team. Don't alienate yourself by sitting in a high chair. Nobody likes a windbag.
  • Lead by example - I always think that to be a good manager, you need to understand what your team is doing. Even if you are not 'hands-on', you need to earn the respect of the team and make them believe that you have an overall guiding vision of what the team is working on. If not, you will end up, at best, being a resource manager.
  • Learn to Delegate - one of the hardest things for new managers is to delegate to and trust other team members. Typically, when a good engineer steps into the shoes of a manager, he still wants to do everything on his own - don't fall into this trap. If you do not delegate responsibility to your team, your team members will feel stifled and will not be able to grow. And guess what, delegation is one of the hardest things a good manager needs to learn to do well. It involves trust and the ability to succeed without micro managing
  • As a corollary to the above, never micromanage. No one likes being micro-managed. One of the things you will learn, as a new manager, is that when people are given a responsibility, most of them rise to the challenge. Give them a chance. Step back, keep a track of the overall goal but don't walk up to your team members every half hour asking what is going on
  • Be careful of overprotection - As a manager, it is critical for you to 'take care' of your team, which includes shielding them from harsh criticisms from others in the organization. However, be very careful of over protection. A good manager will always balance protection with positive criticism to ensure that while his team is motivated and happy, they also know their shortcomings so that they can improve. It is your responsibility to make sure that your team is on the path to constant personal improvement. The worst thing you can do is keep them under the impression that they are the 'best' and have them ignore areas of improvement.
  • Plan milestones for your team members well in advance (typically a year at least) - so that you can track their progress concretely through the year. Your team deserves to know how they performed objectively
  • Take performance reviews seriously - In a typical corporation, the rise of your team largely depends on the reviews that you propagate to the upper management. A review should be timely and as objective as possible. If you have a problem with a teammember, step back and think if its a problem with the team member or with you. If it is the former, before you put it in the review, consider if it is one-off, due to special circumstances or a repeatable problem that needs to be corrected.
  • Give an opportunity for your team to give you input on what they think of you. Most importantly, act on their feedback. Being a manage does not always make your right. Don't let your ego get into the way - learning is a 2 way process, from you to the team and from the team to you. Self improvement is key for you to improve as a manager and into a leader.
  • All work and no play... - Don't get too tied in with 'deliverables' and 'schedule'. Make some time to take your team out for a lunch or a party.
  • Challenge your team - once in a while push your team to achieve more than they think they are comfortable doing. Sometimes, team members need an extra nudge to innovative beyond their perceived limitations.
  • Recognize individuals and teamwork - I personally believe both are critical. Team recognition bolsters the team morale and person recognition provides a lot of individual motivation as well as urges others to rise to the challenge
  • Be ready to objectively explain individual recognition (or the lack of it) - As I mentioned above, I am of the personal opinion that individual recognition is key in addition to collective recognition. However, remember that it is the right of other team members to challenge/question you on why they were not recognized. As a good manager, you should be able to give concrete responses on lacking milestones due to which they were not recognized while others were. If your responses are objective and non-confrontational, it would usually be accepted and taken as an input for self-improvement.
  • 'Before declaring a bad apple, consider if its another fruit' - Remember that not everyone excels at every job. If you have assigned a person to be responsible in a particular area and for some reason, that person is failing in his work, don't just declare he is not "worthy" to be in your team. Often, a simple re-assignment to a different responsibility can change things drastically
  • Be there in times of need. There will be a time for everyone when they face personal/family problems. Those who genuinely help during these times of need are those who form long lasting friendships. Do as much as possible to help your team get over hard times, should they seek your assistance. Remember this - jobs come and go, teams form and break but friendships last for ever. When you genuinely help a person in time of need, this is never forgotten and this is how loyalty builds.

Is IMS for Real?

IMS is collection of carrier network functions that promises a future where their networks will be able to offer an dizzying array of services and applications. IMS, at the same time offers these carriers the same level of access control that they are used to today.

While the architecture is evolving, there are already solutions from various vendors (who also happen to sell a lot of gear to carriers) that offers a taste of the IMS vision: POTS.

IMS vendors make a big deal that they chose SIP as the signaling protocol, but all their focus is on POTS.

I poked around a few IMS call flows. They basically take a 600 odd bytes signaling message that travels between a SIP user agent and a proxy (offering a service) and turn it into 4000 odd bytes of Record-Route headers, P-Charging-Vectors, and mystical GUIDs added to it. No new functions except that there are two more boxes inspecting and serving the "user". Kiss 3261's Bob and Alice flows goodbye!

Thankfully, all this is very complex and unrealistic and will take a long time to bake. I am fairly certain IMS will be a distraction since it will fail to create any new applications that will appeal to consumers.

The carriers and their vendors will burn away billions of shareholder equity while the real innovation will continue outside such standards bodies.

In the meantime, if you get the IMS itch, scratch a bit, but always remember Little Red Riding Hood.

Thursday, November 10, 2005

Hooplah about the Sony DRM EULA

UPDATE (Nov/17/05): It seems Sony is in a bigger mess than I thought - I recently read that they actually ripped code for their DRM software from Jon 'DVD' Johansen's Fair Play code which I understand is under LGPL. Obviously, this is a copyright violation. Oh well, they seem to be getting into a deeper mess with each day.

Original Article:
It is human nature - controversies are what we thrive on. As much as we like to hear about heroes, it is villians who make our day. This time, Sony-BMG faces the wrath of the righteous.

The story so far:

1. Sony has been shipping DRM protected CDs for a while now

2. Mark Russovich discovers, almost by accident, that Sony installs a program in your computer that actually installs some hidden files and also ensures that those files are cloaked (in other words, a normal user will never be able to see these files, unless he knows exactly how). In short, Sony installs a driver that hides any files that begin with the special letters '$sys$'

3. To Make it worse, Sony does not provide a clean uninstaller - to uninstall, one has to go through cumbersome filling up of forms and periods of non-response.
Mark discovers that when he tries to uninstall the software manually, it 'trashes' his CD player. Basically, what Sony does is that it attaches itself as a filter to the CD device driver - if you forcibly remove Sony's secret drivers, the device driver filter chain gets corrupted and boom - your CD player is no longer visible.

4. Mark gets mad, hacks his way through the DRM process and finally manages to
return his computer to stability (Mark is an established and highly respected Windows hacker)

5. Mark checks the EULA for the DRM software and rightfully finds it to be purposely vague about the intent of the 'installed software'

6. In the mean time, mainstream media picks up on this and overnight, Sony becomes the new Satan everyone is talking about. Consumer rights have been violated, and so on.....
Class action lawsuits are filed (what would the world be without class action lawsuits... *sigh* )
In the meatime, consumers go haywire in forums around the world, promising never to use anything Sony, including digital cameras. (Don't worry, the moment Sony releases their next Camera to the market all these promises will be dutifully pushed under the carpet - but till then, it makes great media news)

7. To make things worse, some virus writers exploit the new discover that Sony DRM software cloaks files that begin with "$sys$" and write a virus that begins with those letters. Guess what, Sony happily hides those files too from checkers.

8. In the meantime, Sony does a lame press notice and releases an uninstaller which is partially tested.

Fine. My 2 cents:

a) Sony did mention in the EULA about the 'proprietary software'. They also mention that it does not transmit private information of clients - this is actually true.

b) Sony's EULA is worded, as usually, heavily in favour of Sony. The liability is severely limited and the grounds of winning any law suit against them is low to none.

c) The fact that Sony's cloaking resulted in exploits like the virus writer did is true. However, this is not an something that can be held in court against them. It is similar, to, say, installing sendmail in your computer and someone designing an exploit of sendmail. Sure that exploit never would have existed if sendmail was not vulnerable. Same holds true for Windows vulnerabilities. Software bugs happen. Sony's DRM code did many wrongs, but this part is bogus. This is why the EULA protects software with the 'AS IS' para. Most software vendors do this to protect themselves.

d) Sony did a horrible job as a followup. Instead of trying to please their customer base with a good patch , their uninstaller release was directed only to the press, and to top it off, badly tested. This seems to me, to be an act of defiance by Sony which seems to say 'Yes, we did. So what. Simmer down, have a cookie'.

e) However, the software does not directly violate anything expressed in the EULA. For example, Sony does not say it will provide an uninstaller. It words it as 'until removed or deleted' - whether manual or automatic, is not explictly stated. Yes, this is wordsmithing a contract, but that is what lawyers do.

Does this mean I will stop using Sony ? Hell No ! Not me. But that is just me. Welcome to the world of DRM. If you choose to buy DRM software or hardware, accept the fact the vendors will do everything possible to enforce DRM. If you have problems, fight DRM as a concept (and best of luck with it).

In other words, please don't change the focus to 'Sony is Evil' - fight the larger concept of DRM if you must.

Who makes money when consumers demand 'Free! Free!' (as in beer, not freedom) ?

VoIP is one kid who just does not give up. For those of us in the VoIP industry, you would have experience the 'irrational exuberance' between 1999-2001 and the huge bubble burst right after.

Well, with the market up again, VoIP is back with vengeance. I read the other day that Microsoft acquired media-streams to strengthen its foray into VoIP. Google started late with google talk and Yahoo with its yahoo! messenger with VoIP support. And ofcourse there is Skype and many others.

VoIP to customers imply 2 main things:
  • Better Services
  • Cheaper than traditional telephones
It is important to understand which part is more important to which target segment. If you are selling to corporations, 'Better Services' may be key because corporates don't mind a penny here and there for core communication cost. Therefore, for enterprise sales, VoIP is attractive even if it is just slightly cheaper or the same cost as traditional PSTN lines.

When it comes to end consumer scale, whether you like it or not, 'cheaper' is a great motivation, unless your 'Better Service' brings in something so revolutionary that people are willing to spend more (for example, mobility - cell phones did that). Incidentally, even if you did bring in a 'Better Service', by the time your consumer market really picks up on it, the cost for the 'Better Service' will need to drive down to within 10%-15% of the cost consumers are already paying before the service kicked in (cell phones charges today are comparable to PSTN line charges and is a reason why many consumers are disconnecting PSTN lines for Wireless, since it adds mobility at a nominal markup price)

So let's focus on Cheap for a while. Skype came out with a great VoIP client and boasts of several million customers. Their soft-phone and PC-PC based calling is free but if you need to call outside (PSTN, wireless) or receive calls from outside the Skype network, there are services called 'SkypeIn' and 'SkypeOut' that cost you money.

So the question to ask, is, out of the several million Skype customers, who are actually paying for SkypeIn and SkypeOut ? And how much revenue is Skype really earning out of this charging ? (I guess it doesn't matter now, since Skype sold to E-Bay for a whopping $4b). The people who would pay for this service would likely be those who:

  • are on the move travel professional who like the concept of 'carrying their skype phone' whereever they are and the rates are attractive, compared to say, calling from a hotel
  • Home users who never used calling cards in the first place and compare Skype's rates to their phone provider rates
A concrete example: To call India from US, Reliance charges $0.13c per minute while Skype charges $0.14c t0 $0.15c. What then, is the incentive for a home user to use Skype (and go through the inconvenience of calling via a PC or buying skype enabled hardware) for international calls ? The same holds true for long distance calls. Skype is cheaper for folks who never explored calling cards too well. Again, I get it that Skype offers better services, there is mobility and all-things-nice. My point is, that the importance differs when you move between different segments (business vs. home use)

But I understand that they need to make money. That is the basic tenet of good business. At the end of the day, you need to make money to survive.

Then the other day, I read a new article that Microsoft plans to go one step forward and make PC-Phone calling free ! Not a single cent. That got me thinking:
  • Before VoIP, we had the monopoly of RBOCs and their phone rates
  • After VoIP came in, we had services like Vonage and CallVantage that offer you a flat rate for inbound/outbound calling (no per minute rates, but flat rates)
Now, if companies like Microsoft make worldwide calling free, how on earth will people make money offering this service ? One way (actually two0 -value added services & advertising.

To Microsoft, VoIP is just a tool that helps them be the 'one-stop-shop' for us. Google wants that too. The difference is that Google is working from 'outside-in' (best search engine in the world, great web based apps, trying to convince you that your desktop is less important - embrace the web), while Microsoft is working from 'inside-out' (stranglehold on desktop applications, sees the threat of google, migrating some apps to what they call 'Microsoft Live' - an ASP hosted application model and convincing you that since almost everyone uses MS for desktop, it makes sense to hold their hand as they expand 'out' into harnessing the power of the Internet for you)

But back to making money. If Microsoft manages to make PC-phone calling free they will effectively manage to run several pure VoIP business out of money, who solely depend on some charging mechanism to remain in the market. To google and microsoft, making money out of VoIP is less important. They make money from different channels.

As an example, microsoft can incorprate a free voip client into their office software. People are paying to buy microsoft office and hey, guess what they get free calling as a 'productivity enhancement'. If VoIP helps them sell more licenses, great !

But back to the pure VoIP providers. What will become of Vonage and similar services (assuming they too do not get acquired). How do they make money ?

There are a few ways:
  • Target corporations and provide value added services that they will be willing to pay for. As an example, we just installed a VoIP Mitel CX-200 PBX here - all IP - they have a solution called 'TeleWorks' - I can plug off my phone from office, take it home, and plug it in to my home DSL- and it automatically connects to my office - so I can work from home if need be and my customers would not know the difference.
  • If they are targetting end-consumers, bring down rates to match and/or beat the good calling card services in the market. Work with OEMs to bundle your software in cheap $20 phones people can buy off Wal-Mart. If your solution needs a PC or consumers need to buy $70 phones, you will not make enough revenue in this market segment.
  • Advertising - more on this below
Advertising - to make money, give money away

A friend of mine recently said 'It is not that Google is the first with great innovation. They are the first in doing innovative things the right way'. How true.

Google first came out with a program called 'AdWords'. The logic was simple
and well tried before. Advertisers would buy 'words' and have their ads displayed when 'potential customers' did a google search with words similar to those bought.

However, they soon hit a roadblock that many others faced before
'Was it worth the Advertiser's money to pay for the words ? Did they get enough of people clicking on their ads ?'

It was a question of visibility. To beat, this Google came up with an innovative idea of 'AdSense'
This complementary program was targetted towards normal users, like you and me, who host internet sites. The message to them was simple, should you choose to display google ads in your own site, and people clicked the advertiser's site via your site, you get money !

What did this do ?
  • Increased the visibility of the advertisers manifold - millons of websites now hosted advertisements for them
  • Gave the impetus to millions not involved in advertising buying/selling to make money from their website with ZERO marketing. (Remember, google takes care of the internet marking in a way that the more people read your site, the more indexed it becomes, and the more people discover it with searches)
Ofcourse, you as an 'ad hoster' made just a few fractions of a cent with each click-thru, while Google charged magnitudes more from the advertisers. If enough people clicked on the adds, and a fraction bought, it makes sense for the advertiser too.

An efficient eco-system. I've tried google adsense, and it works well. I get a nice paycheck each month. But is it enough to be enough for mainstream revenue for a company ? I don't know. Time will tell.

So Anyway, how does advertising tie into VoIP and free Calling for the consumer market ?

  • VoIP providers can considering replacing standard dial-tones with advertisements, carefully balancing irritation factor for users (don't have someone screaming an ad, maybe some soft music, with some key words such as 'visit' for the greatest book selections)
  • Provide value added services at a nominal cost or free with advertising. For example, even if basic calling were made free, provide a hosted voicemail solution with the caveat that there is 5 seconds of advertisement before you can access your VM, or , pay $3 a month to take it off for ever. Or for example, free conferencing with a '5 second jingle each time you conference or pay to remove it'
  • Tie up with popular Content providers to list your service (harness the power of the Internet - it is the cheapest and most powerful marketing tool). Offer special deals (for value added services) to both the content-provider and the consumer

Wednesday, November 9, 2005

Managing Your Peers

Managing Your Peers

There will come a moment in your career when you will face the stark reality that you have to manage some of your closest colleagues.

Further, if you are a top engineer, it is highly likely that the guys/gals you will manage are superstars too.

Things change when this event happens.

It happened to me. I went from being a prolific programmer to becoming an Engineering Director at a fast paced VoIP software company.

Here are a few tips that will help you through this transition:

  1. Don't compete: Resist the urge to code with your engineers. You might have all the technical answers but always remind yourself that you need to transition your engineering role to someone more competent. Use every opportunity to showcase your team.

  2. Face your shortcomings: Being a good engineer does not automatically make you a good manager. You have to work at it. Understand your personality. Have an honest discussion with your spouse or close friend about how you react in a variety of situations.

  3. Be positive: Be very optimistic about the things your team is working on. Don't drain people by complaining or gossiping. Yes, it is hard not to share all the things you know with your "closest" friends, but don't! Please!

  4. Trust your boss: The one person who can help you manage the transition is your boss. He can set you up in such a way that your team begins to see your value as their manager: Trust me, they won't see it initally. I had my top engineer ask me in a 1-n-1: What do you do for a living now?! It was a definite Dilbert moment :-)

  5. Find a mentor: Find a senior executive who would be willing to mentor you. I picked my VP of Sales and it is working great! He meets with me regularly and we spend time discussing a variety of topics except work.

  6. Sweat the little things: Compliment your engineers for their wins. Encourage them during difficult times. Socialize with your team. Take them out to a movie! Celebrate their birthdays and significant life events. Spend a lot of time writing performance reviews.

  7. Take it easy: Expect your team to tease you. Expect them to have a clique that does not include you. Give them space and don't overreact if you are not in the know! There will be at least one in your team who will have decided that he could be better at your job. If you think the same, GREAT! Get ready for a promotion, you have just hired your replacement :-)

  8. Deal with it: As a manager, you are now replacable. Just face the reality and be prepared to work much harder to justify your "value" to the company. If you miss the challenge of hands-on work, take up something else that excites you. I rekindled a long lost affair with photography. And I enjoy every moment of it.

This is one time in your career where it pays to be a fat fingered programmer!

Tuesday, November 8, 2005

Customer Etiquette in the US - Onsite Meetings

In the past, I worked for a company where we would supplement US customers with highly skilled domain experts in Telecom Software, based in Asia (thereby reducing costs and retaining high quality). This was not a case of 'low skilled outsourcing'. Rather, each 'domain expert' was an established expert in their own technology space and demanded a lot of respect. However, I noticed that there were cultural and behavioural differences (expected) between the two countries and many engineers, however excellent technically, often missed these soft differences. So I wrote up a 'Customer Etiquette' guide that is based on my experience with customers (people say I do it well, what do I know !):

Etiquette for Onsite Meetings
  • Dress Smart - irrespective of whether you are an engineer or a salesman. Jeans are the prerogative of the customer, not yours, as a vendor. A tie is not needed - semi-formal clothing is the norm in the US - though the choice is yours
  • Dress according to what makes the audience comfortable. If you are presenting to a C level executive team, a tie cannot harm. On the other hand, if it's an engineering discussion with architects, lose the tie, engineers prefer a more relaxed environment
  • Carry a set of business cards. Many engineers believe they do not need one. Do remember that when a customer first meets you, it is impossible for them to remember your name (Americans are used to monosyllabic names such as Joe, Bob, Dick etc., so if your name is a long Asian name, forget it). In addition, when you visit with a large delegation, most customers will forget who is who in the first five minutes. It takes time and cards help to associate
  • While exchanging cards, it is acceptable to exchange them across the table in the US (unlike in Asia-Pacific where the process is far more detailed and respectful). However it is best to play safe here - walk across the table and hand your card to the customer even if he chooses to toss his own across the table. The thumbrule: Better to be respectful than be sorry about it later. As an example, I remember travelling to Japan once (my first time) and before the customer gave me his card, I tossed mine across the table. The Japanese interpreter looked at me and said "Ah... the american way !". I immediately knew I bungled up. There is no absolute right or wrong. When in Rome do as the Romans do
  • Please remember to pick up customer visiting cards after you wrap up. Don't leave it on the table and don't bend it or scribble on it. Again, a sign of respect.
  • Use "We" and "I" in a balanced manner when you talk. "We" portrays teamwork and "I" portrays individual responsibility (and sometimes alienates a team behind you) - use your discretion - both are useful in parts
  • Please switch off/put in vibration mode your cell phones while attending a meeting - it is simply rude for your cellphone to disrupt the flow of a meeting. Oh and if it does ring, please step outside - I have actually seen people crawl under the table and whisper - it doesn't really help and it makes you look very very silly
  • Do not stretch your arms and hold it behind your head while talking to a customer (think body odor !)
  • Please do not start a side conversation in a non-english language while the customer looks on. If you must have a private conversation, it is better to excuse yourselves from the room or speak in soft-toned english. Using a different language in front of a customer can also imply that you are making fun of the customer (how would he know !)
  • Give a chance to the customer to speak - do not keep cutting him off mid-sentence or second-guessing what he has to say
  • It is wonderful if you are a conversationalist. It eases the room and makes you more 'approachable'. If you look like a person who is only interested in talking 'business' all the time (called the 'wolf look') you will be treated at arms length. Personal/Informal relationships go a long way here
  • If you smoke/drink/eat before a meeting, it's a good idea if you carry a breath spray or some mints on you. Trust me, it's not fun for the person next to you in the conference room (also very applicable if you need to start a conversation in a flight with your co-passenger :-) )

All my excitement about AJAX

An excerpt from a mail I sent out to some colleagues:

"Fuelled by revolutionary apps like google gmail, suggest etc.
Microsoft is investing their own millions in AJAX enabling their web
apps (including Hotmail)
(stands for Async. Javascript + XML)

I personally think this is exactly what we need as a step fwd in
making internet based apps as powerful as desktop apps.

simple summary: AJAX allows the pages rendered by a webbrowser to 'asynchronously' interact with the user - makes a world of difference. You can get real time updates for any server side event, just like a desktop app does.

Now imagine this: (okay, many people have imagined this before, just that before AJAX came around, I was not convinced)

Assume that the Internet is all-pervasive and that broadband speeds are not an issue. How important then, is what is located on your desktop ? Besides private files, assuming that speed is not an issue, do you really care, if security is addressed appropriately ?

Once you assume that the Internet becomes the host for your 'Operating' System - the entire concept becomes virtual. You don't need XP, you don't need Linux. You only need a 'UI' that looks like something you know (as an example, no one really bothers if a back end webserver is an IIS or an Apache)."

ollowing that, here is an argument I was having with a Microsoft Product Manager who though the MS desktop model was a stranglehold no one can ever break ('ever' is such a long time)

He said: (About the microsoft desktop model)

"I think it'll be hard to find another model that offers such phenomenal returns. If you come across a company with a more profitable model, lemme

I responded:

"That is assuming the current thinking that desktops are the only solution.I'd like to think about why zero-footprint machines, based on the internet failed in the past (Sun did it, so did Oracle, if I recall correctly) --> it was all about the lack of last mile broadband. Then there were remote solutions like Go2MyPC etc. which were half baked, but all limited by accessibility.

Assume now that the Internet is all-pervasive and that broadband speeds are not an issue. How important then, is what is located on your desktop ? Besides private files, assuming that speed is not an issue, do you really care, if security is addressed appropriately ?

Once you assume that the Internet becomes the host for your 'Operating' System - the entire concept becomes virtual. You don't need XP, you don't need Linux. You only need a 'UI' that looks like something you know (as an example, no one really bothers if a back end
webserver is an IIS or an Apache).

So while working out-in (from the internet-to your desktop) may look far fetched now, till (and if) it becomes a success, MS obviously has a great model. They lock in OSes with computers (only recently has Dell announced an Open PC - but that is more expensive than an XP loaded image - imagine the distribution channel power MS has).

My take, therefore, is that I agree with your premise that it is hard to beat MSs model, assuming the desktop model (MS' other businesses pale in comparison to their XP/productivity suite revenues). But if you take that premise away, its a different world. If you are now taking 'local software away' and assuming that every PC/tablet/PDA/phone in the world can be serviced by a 'virtual operating system' and 'virtual applications', your addressable market increased manifold. Of course, your competition increases manifold -
and that is where smart business will kick in."