Wednesday, October 25, 2006

Enterprise Networks Conference Highlights

Yesterday and today I attended the Enterprise Networks 2006 Conference here in Toronto. It's always nice to not have to travel to attend a show, so this was an easy one for me. The event is put together by Henry Dortmans and Phil Ritchie of AngusDortmans Associates.

Their firm has a lot of expertise in the enterprise telephony space, and they know how to reach this market pretty well. So, it was primarily an enterprise event, which is a half-step to the left of the shows I typically speak at, and I really enjoy the intimacy and friendliness of the community.

I just wanted to note some highlights here, along with some photos from trusty Nokia N90 (I still haven't had a chance to try out the N93 - next week)

There were some very engaging sessions about what's ready for prime time, and some practical roadmaps for migrating and implementing IP technologies. The content was more to do with the current realities of the market rather than visions for tomorrow. One of the things I really liked was the balance of speakers on the sessions. There was a pretty even mix of vendors and carriers, with most of the usual suspects present.

Most of the presenters were of the view that IP is indeed ready for prime time, but a lot of work needs to be done - especially by the vendors - to properly educate the market. There were several enterprise buyers in the audience, and based on the questions they raised, it's clear that they don't like making big changes of any kind. They really need to see how all the pieces fit together, and that IP will deliver as promised. The last thing they want to see is for costs to increase once IP is deployed, especially when they were sold on the opposite. It was also apparent from the audience that catering to the needs of vertical markets will be very important. Aside from having varying levels of technology adoption, each vertical will have specific communications needs that define the value proposition.

Canada has a rather large public sector, and this means a lot of Centrex. There was a lively session today that ended up talking about why hosted IP has had limited adoption in Canada so far. Centrex users would seem to be an ideal market, but hosted IP just hasn't happened as fast as most would expect. The lack of a killer app came up a few times as a reason, but on the whole there wasn't much resolution on this topic from either the vendors or the carriers. I thought this would have gotten parsed out a bit more, but it didn't happen, and that left me wanting.

For my money, I found the financial analyst presentation the most engaging, and I think it provided many takeaways for most of us there. National Bank Financial provided two speakers, both of whom are highly ranked in the equity analyst world - Deepak Chopra and Greg MacDonald.

Greg provided a Bay St. (Wall St. equivalent in Canada) perspective, and his basic story was that cable has the edge over the telcos for having success with IP. I have long felt that it's easier for cablecos to add voice to their product lineup than it is for telcos to add video to theirs. Greg presented some pretty cogent financial analysis to show how Canada's cablecos stand to earn a better return on their Capex than the telcos. They've already done most of their network upgrading, and that spend is reflected in their current valuations. Telcos, on the other hand, need to invest heavily in building out fiber.

Greg estimates the telcos need to spend $1,200 - $2,000 per subscriber to provide the bandwidth needed to keep up with cable. That's a pretty large handicap, and explains why they'll have a hard time earning decent returns once the Triple Play becomes the norm. For his money, Rogers stands to do well, not just for cable, but also for wireless, which he feels will be the best growth story in 2007.

Deepak continued this thread, and provided some great data to illustrate one of my favorite themes - how concentrated our markets are in Canada. He listed out Canada's top public tech companies (primarily hardware), and only 4 have a market cap of $1 billion or more - RIM, Nortel, ATI and Celestica. That's it! And pretty incredible to think that RIM is #1 - by far. At roughly $24 billion, it's more than double Nortel, and is more than the combined market caps of those ranked #2 through #15. How's that for market dominance? No wonder why Jim Balsillie just bought the Pittsburgh Penguins!

The other thing I really liked about Deepak's presentation was his emphasis on the primacy of applications and wireless as market drivers - and ulimately the two of them combined. Anyone reading my posts on companies like Iotum know that I'm very much in the camp that applications are where the best money stands to be made in IP.

Finally, I'll leave you with one of Deepak's market calls - RIM, with a target price of $148 US. This is based on their ability to continue getting a premium price for their service, which in turn is based on their ability to continue adding value to their data network. This will come from a combination of more powerful, user-friendly devices (such as Pearl), and new services/capabilities to enrich the user experience. Plus, of course, the ever-expanding, and rapidly unfolding global scale market opportunity, especially in places like China.

Those are my key highlights, folks, and I'll share any media coverage of the event that comes my way. And now I'll leave you with a few photos highlights....


Tools of the trade - morning tea and my Blackberry..... Stefan Dubowski of Telemanagement Magazine logging his copy plugged into the nearest outlet. I'll post his article about the event once it's published.


Henry's first panel on the state of enterprise communications, featuring Bell, Avaya, Shaw Business and Nortel


Financial analyst session, featuring Deepak Chopra (not the writer!) and Greg MacDonald, both of National Bank Financial


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