The Boston, Massachusetts-based company, which serves telecommunications companies that sell VoIP, is readying to launch its latest VoIP-usage survey of as many as 1,000 SMBs in the US and Europe, the results of which it expects to publish by the end of next month.
In its preliminary research, Savatar president John Macario said fixed mobile convergence stood out as the hot topic among vendors. How SMBs perceive it, what value they’ll place on it and whether it is a critical factor in their decision to switch from traditional phones to VoIP, he said.
However, Savatar’s research continues to consistently show, for the past three years, that SMB customers are actually not swayed by the promise of FMC. SMB customers make changes to their voice and data infrastructure for economic reasons, he said. They do not make these changes for new features.
While over time, Macario said he can see a business benefit of FMC for SMBs. But service providers are making the mistake today as trying to use it as a selling point of VoIP to smaller companies. Let’s recognize that’s not what I’m selling today, he said.
Instead, VoIP providers need to sell the economic benefit of VoIP to SMBs, plus just one or two key features – rather than a slew. Currently, providers are pushing too many features – often dozens – even though Savatar research has shown SMBs on average use fewer than three VoIP features.
SMBs have low expectations for their phone systems, so trying to go in and try to dazzle them with new features is pointless, Macario said. They don’t buy arguments from business providers saying, ‘If you use our system, your business will be more productive.’ Those kinds of arguments have great weight in enterprises but not with SMBs. They just want to know, will this save money.
The most popular VoIP features used by SMBs include simultaneous desktop and mobile ringing, so the call finds the recipient anywhere, as well as receiving voicemails as emails.
We have a case here of technology producers trying to lead the market before the market is really ready, according to Macario.
With the exception of a few smaller players, which most SMBs have never heard of, the large carriers haven’t effectively tailored their products to meet the needs of SMBs in the US, he said.
ATT, Verizon and Qwest have done a horrible job of selling VoIP to the SMB market; cable companies like Cox and Time Warner and Comcast have not even launched business-class VoIP products, Macario said.
Bandwidth.com, Covad Communications and Packet 8 are among the smaller companies adequately serving the SMB market, he said. But there is no national brand recognized as a service provider doing a good job, Macario said.
This may be part of the reason why VoIP adoption by SMBs in the US is lower in the UK, or 11% versus 17%. But even the UK’s rate isn’t that impressive, which means maybe British Telecom isn’t doing such a great job either, Macario said. France and Germany have about a 5% VoIP penetration rate for SMBs, versus nearly zero in the Netherlands.
In France, the same thing can be said about Orange as BT in the UK – it’s slow and painful process to get VoIP for SMBs … I think this is a systematic problem, Macario said, based on interviews with SMBs.
However, he said this isn’t worrying the large carriers because they are not yet facing a strong, competitive threat yet. And to offer cheaper VoIP service would cannibalize their existing PSTN business.
This likely will change once the cable companies get their act together and begin offering business-class voice services on top of their broadband business services, Macario said. And many of these cable companies in the US are actively exploring these types of offerings.
They will. The problem is that for three years now I’ve been saying within 18 to 24 months this is going to happen … but for them it’s a different kind of problem — they’re quite at selling to consumers but don’t have a legacy of selling to businesses, Macario said.
In the meantime, the smaller SMB VoIP players don’t have the capital to create a national brand. In time, they likely will be consolidated into the larger carrier or cable markets, Macario predicted. Vonage Holdings Corp is the country’s largest stand-alone VoIP provider and has built a national brand, but hasn’t shown much gumption in targeting the SMB market, he said. Moreover, Vonage is facing issues with its balance sheet, which likely would outweigh any efforts to push into new markets.
In Europe, the pressure to adequately serve the SMB market likely will come from mobile carriers, Macario said. He pointed to Vodafone laying the foundation to converge its wireline and mobile customers with business VoIP offerings. Already, the company is offering mobile and DSL on a single bill to the residential market.