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Vienna Systems - Nimble
Positioning in a Fast Market
from
the desk of Peter Fillmore
October 1998
When did
you first hear about 'Voice over the Internet?' What
sounded odd then is now hot stuff. It's called 'Voice over IP' (Internet
Protocol) or 'VOIP.' This new market sector has already achieved very
rapid growth - from $2 million to $48 million over the last two years - a
marketer's dream and potential nightmare all at once. For the inside
story, I spoke recently with Kent Elliott, President of Vienna
Systems, and Louise Labuda, Marketing Director,
who kindly offered some marketing ideas and lessons. Vienna
is an affiliate of Newbridge Networks.
Market Education - Marketers are often teachers, as Ms.
Labuda explained, 'A lot of what we did in the early days was "education."
We had our president out speaking to conferences 3-4 times per month. Long
distance voice calling is only the first of many applications that will be
adopted. We honed our vision of this emerging market, and developed an
appealing (but simple) view of the future. We talked to the telephone
carriers as well as major user corporations, tuning our message to each
type of audience.'
Marketing 'Gimmick' - Elliott commented that he got tired
of going to meetings with people fighting over whether VOIP would work.
'We needed to create a picture that anybody could understand. The solution
- a telephone calling card with a few dollars of free calling time via
voice-over-IP.' It proves that VOIP works, as well as vividly showing the
packaging and resale potential. Furthermore, 'Because it involved our ISP
partners they gained some visibility and this was a good relationship
builder. They got a lot of new revenue out of the campaign - we got the
call detail on card usage, so we could see the rate of acceptance, even
follow-on traffic generated by each trade show. We gave it to prospects,
of course. We even gave it to investors.' said Elliott.
Sales Channels - Vienna has had success selling through
service providers, such as 'Qwest' and 'VIP Calling' in the USA. In Sweden
they even have a customer selling voice over cable. Vienna also has a
distributor channel that now includes NEC, Siemens, and Newbridge. As
Elliott explains 'The PBX vendors see two benefits in VOIP - one is the
leverage it gives to PBX sales; another is the chance to sell into a
competitors' installed base, gaining an account presence before the next
major PBX purchasing decision.
Positioning - Vienna is now adapting their position to
suit the rapid growth, and communicating their views on market sector
trends. As Elliott says, 'Growth rates are astounding - an under $2
million VOIP market in 1995 went to $48 million in 1997, and Probe
Research expects the platform segment to grow to $714 million by 1999. To
explain our role, we have started a new PR campaign showing how
Call/Device Control is a naturally emerging sub-segment. Direct
competition from gateway vendors is growing, but they are less of an issue
than the moves of major telecomm suppliers. This includes Lucent, Nortel,
Cisco, 3Com and Ascend, all of whom are aware of the threats and
opportunity of VOIP. Our vision is to use the lessons learned with
Intelligent Networks and apply these to IP networks. This allows for rapid
network scalability, integration, and service deployment. To this end,
Vienna sees its role in the call control arena, and adjacent markets for
enabling applications and access devices. This will make us less dependent
on gateways, and still leave lots of room for us to react to moves of the
big players, as they start to enter our original market space.'
Chasm Dynamics - The market sector is starting to cross
the chasm, and this is not just driven by Vienna - the whole market is
accelerating. Competitors have arrived. Dozens of people are now selling
gateways. For Vienna, the ISPs are a key target niche now, and others are
waiting in the wings, such as the cable companies. Also, over time they
will attract buyers who are less tolerant of technical difficulties. One
solution will be the evolving standards - for example Vienna is already
involved with standards bodies like the ITU (International
Telecommunications Union) in defining standards for multimedia over IP.
Next Challenge - Elliott explains one of the challenges
of finding a tornado, 'When we sell gateway devices, they end up installed
all over the continent, and sometimes the world. We now need a partner who
has a strong global service organization.' Sounds like a situation to
watch.
Your comments, questions, and suggestions for future articles are welcome
fillmore@westpark.com
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