1. 1 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Danny Windham, CEO Digium, Inc. The 2000’s The Telephony Decade from Hell (or was it?)

2. 2 Creative Innovation – Customer Satisfaction – Continual Quality Improvement The telephony industry today holds little resemblance to the one in place at the beginning of the decade !

3. 3 Creative Innovation – Customer Satisfaction – Continual Quality Improvement The beginning of the decade …

4. 4 Creative Innovation – Customer Satisfaction – Continual Quality Improvement The Year 2000  Life was good!  Economy was strong, industry was wealthy  Y2K –Drove infrastructure upgrades  Nortel’s market cap was > $300B  Lucent’s market cap > $250B –Avaya spun out in Fall 2000  Cisco Call Manager introduced –Based upon the 1998 acquisition of Selsius  Asterisk was an infant – born in 1999

5. 5 Creative Innovation – Customer Satisfaction – Continual Quality Improvement The end of the decade …

6. 6 Creative Innovation – Customer Satisfaction – Continual Quality Improvement The Year 2009  Life is scary! Industry in turmoil  World economy melts down  Significant changes in the vendor community –Avaya, Siemens Enterprise, Mitel have all become private companies –And now Nortel is private  Nortel acquired by Avaya for $900M  PBX market down 31% over prior year (Infonetics) –IP PBX down only 13%  Asterisk turns 10 years old

7. 7 Creative Innovation – Customer Satisfaction – Continual Quality Improvement What’s different today?

8. 8 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Significant Changes  Big Iron PBXs are a dying breed –Voice becomes an application running on standard hardware  Separate Telephony departments are headed toward extinction –Voice becomes a type of data on the data network  Long distance charges no longer dominate the IT budget –Voice rides on public and/or private IP circuits

9. 9 Creative Innovation – Customer Satisfaction – Continual Quality Improvement PBX Market Share - 2000 Source: Eastern Management

10. 10 Creative Innovation – Customer Satisfaction – Continual Quality Improvement PBX Market Share - 2009 Source: Eastern Management

11. 11 Creative Innovation – Customer Satisfaction – Continual Quality Improvement PBX Per User Pricing

12. 12 Creative Innovation – Customer Satisfaction – Continual Quality Improvement What happened?

13. 13 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend: Data networks became reliable enough to support voice

14. 14 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend: IP became the preferred transport for all data types

15. 15 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend: Voice over IP displacing traditional TDM telephony

16. 16 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend: Bandwidth costs plummeted

17. 17 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend: Communication systems becoming software products

18. 18 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend: Open source software disrupting proprietary alternatives

19. 19 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Why did this happen?

20. 20 Creative Innovation – Customer Satisfaction – Continual Quality Improvement It’s all about the money!  Running a single department costs less than running two –Driving the extinction of the voice department  Installing a single infrastructure costs less than installing two –Driving the adoption of VoIP  Bandwidth falls victim to supply and demand –Cost To stream a movie - Today: $.05 : In 1998, $270  Dan Rayburn, Wired Magazine  Standards-based, high-volume, computers cost less than proprietary big iron –Driving voice solutions to a software model  Open Source costs less than proprietary alternatives –Driving the acceptance of open source voice solutions

21. 21 Creative Innovation – Customer Satisfaction – Continual Quality Improvement What happened? Users seeking to lower costs drove these industry trends

22. 22 Creative Innovation – Customer Satisfaction – Continual Quality Improvement What can we learn that can be applied to this decade?

23. 23 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Users seeking to lower costs will drive a number of new industry trends !

24. 24 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend Economic weakness driving new cost pressures

25. 25 Creative Innovation – Customer Satisfaction – Continual Quality Improvement General Economic Impacts  Downturn in the economy has taught companies to do more with less  Discretionary spending has been reduced  Market conditions favor cost-effective solutions over premium branded ones  Economic pressures raising awareness and interest in lower cost alternatives – such as open source

26. 26 Creative Innovation – Customer Satisfaction – Continual Quality Improvement  IT spending declined 3.9% in 2009 – will we see a recovery in 2010? –Gartner doesn’t see spending returning to 2008 levels until 2012  26% of CIOs see VoIP as a way to save money on recurring service fees  70% of CIOs expect to make near-term VoIP investments –VoIP is the fourth highest rated investment area  21% of VARs named VoIP the technology that will generate the most near-term growth Economic Impacts on VoIP Source: ChannelWeb 2009

27. 27 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend: Unified Communications adoption will rise

28. 28 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Unified Communications Impact  UC = complete communications solution supporting: –Voice –Fax –Presence –Conferencing –Chat –Video  Market for UC Products –$2.8B in 2009 –Predicted to be $18B by 2012  41% of VARs predicted Unified Communications to be the area of most innovation/creativity over the next 12-18 months Forrester Group InStat 2009 ChannelWeb 2009

29. 29 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend: Mobility plays a bigger role in corporate communications

30. 30 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Mobility Impacts  Mobile VoIP grows –3G, WiFI, WiMax, and LTE network options –50% of all mobile traffic will be VoIP by 2019 Gartner Group - 2009  2009 – 15% of mobile phones are smart phones 2013 – Predicted to be 38%  Informa Telecom and Media - 2009  4B estimated mobile subscribers in 2013 –1.5B smart phones  Fixed mobile convergence gains acceptance –6.3M FMC handset connections in 2009 –Predicted to be 27M connections in 2014  ABI Research - 2009

31. 31 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend: Voice services join the cloud computing party – albeit a late arrival

32. 32 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Cloud Computing Impacts  IDC predicts three-fold increase in cloud computing spending over the next 5 years –Capturing 25% of IT spending in the process  PBX as an application benefits little from the elasticity of cloud computing  PBX as an application can benefit from virtualization –Lowers hardware costs  Hosted voice service adoption will come initially from small businesses

33. 33 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend: Open source software continues to disrupt proprietary alternatives

34. 34 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Open Source Adoption Trends Source: Forrester Research 2/2009

35. 35 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Industry Trend: Asterisk remains the de facto choice for open source telephony

36. 36 Creative Innovation – Customer Satisfaction – Continual Quality Improvement 36 What is Asterisk? 36 Open source software project that is a flexible communications engine from which many communications applications can be constructed

37. 37 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Asterisk – The Project –10 years in the making –More than 65,000 community members –Deployed in more than 170 countries –Over 2 million downloads in 2009 –Over 800 active & current contributors –Extensive hardware interoperability matrix –Over 150 apps available  Voicemail, IM integration (XMPP), speech recognition  Speech synthesis, Native Skype connectivity, etc.

38. 38 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Asterisk Ecosystem An entire industry has formed around open source telephony … –Hundreds of Ecosystem members –Digium Asterisk World  20 Asterisk ecosystem partners represented –New Asterisk Marketplace launched today  www.asteriskexchange.com www.asteriskexchange.com  Over 100 products there today

39. 39 Creative Innovation – Customer Satisfaction – Continual Quality Improvement So, were the ‘naughts’ really the telephony decade from hell?

40. 40 Creative Innovation – Customer Satisfaction – Continual Quality Improvement If you were a traditional big-iron PBX vendor or employee, then … YES!

41. 41 Creative Innovation – Customer Satisfaction – Continual Quality Improvement But, if you were an end-user of communications products and services – then …

42. 42 Creative Innovation – Customer Satisfaction – Continual Quality Improvement You saw your … Equipment costs fall by more than 33% Infrastructure management costs fall by 50% + Bandwidth costs reduced by 1000% and…

43. 43 Creative Innovation – Customer Satisfaction – Continual Quality Improvement The power shift… From proprietary suppliers to End Users

44. 44 Creative Innovation – Customer Satisfaction – Continual Quality Improvement It was one hell of a decade!

45. 45 Creative Innovation – Customer Satisfaction – Continual Quality Improvement Danny Windham, CEO Digium, Inc. The 2000’s The Telephony Decade from Hell (or was it?)