Google+ may commoditize unified communications

On Tuesday the tech blogosphere had leak after leak about Google+ (“Google Plus” not “Google Add”), Big G’s offense against Facebook’s social media domination. Google has no qualms picking fights against other giants and has already entrenched in several fronts: enterprise apps (vs. Microsoft), mobile OS (vs. Apple), and communications (vs. mobile carriers).

Now it’s ready to take on Facebook. Although Google+ is not yet generally available to the masses, the lucky few (e.g. prominent journalists, bloggers, techies, etc.) that’s had the chance to take a sneak peek seemed to like it. Google, of course, is well aware of its past Wave launch blunder, and the company is definitely taking a more cautious path with Plus.

I think Google realizes that Plus will be a “now or never” project to compete with Facebook. If Plus fails to gain traction, Google might as well wave the white flag in the Great Social Media War.

But Google has some advantages: 1) It learned from the Wave lesson; 2) It has had time to learn from its competition, namely Facebook; 3) It has complete control over the user experience; and 4) It already has several enterprise customers.

Google+’s cool factor may or may not wow the typical user, but what about rolling it into the enterprise along with other Google services, specifically applied in unified communications?

Contact management, enhanced? Check (Google+ Circles feature).

Email management? Check (Gmail).

Document management? Check (Google Docs).

Voice (over IP) communications? Check (Google Voice).

Instant messenging? Check (Gtalk).

Videoconferencing, even with a group? Check (Google+ Hangouts feature).

Mobile chat? Check (Google+ Huddle feature).

Better yet, all of these products from Google are free or cost significantly less than getting your own servers.

Facebook may feel threatened by Google Plus, but what about all these UC vendors, especially those that are going after the burgeoning SMB market?

Would you like some CTI with that beef noodle soup?

I’ll let you in on a secret: the best way to gauge the authenticity of the food at a Chinese restaurant is to simply order the beef noodle soup. That is, if it’s even on the menu. Beef noodle soup is a very popular Chinese dish served in restaurants and in households. Each restaurant chef has his (or her) recipe, just as each family has their own way of making it. Whether it’s made in spicy Szechuan style filled with swimming peppercorns and chilis; or Chinese halal style with clear broth and no soy sauce; or sometimes made with tastier beef tendons that melt in your mouth… this noodle dish can satisfy even the pickiest palates and hardiest of appetites.

In the outskirts of Research Triangle Park, North Carolina, in the lesser known city of Cary, people have been flocking to Taipei 101 for a taste of traditional Chinese and Taiwanese foods. The restaurant opened in February 2011 by Wen-Kai Ho and has received several good reviews, such as this one from Triangle.com:

The list of authentic Chinese appetizers leans to Szechuan fare, with options such as bamboo shoots with chile sauce and steamed pork with Szechuan garlic sauce. Spicy sliced beef, tendon and tripe is served cold, but delivers plenty of heat in the form of chiles and Szechuan peppercorns.

A less daring, but nonetheless bracing option is oyster soup with pickled mustard, one of half a dozen authentic Chinese soups served for two. Serving up a bounty of plump bivalves in a translucent, briny broth that sparkles with slivers of ginger and finely chopped pickled mustard, it’s refreshing even on a sweltering summer night.

When it comes to entrees, the Taiwanese-style pork cutlet with veggies over rice is a must. The cutlet is in fact a succulent, lightly battered bone-in chop, with emerald-green Shanghai bok choy heading up an exotic supporting cast.

(Oh yes, the pork cutlet rice should rival the beef noodle soup on the Taiwanese Food Authenticity Meter. Pardon me while I wipe the drool off my shiny Apple Wireless Keyboard.)

Restauranteur Wen-Kai Ho didn’t graduate from a culinary school, but he does have a Ph.D. in Electrical and Computer Engineering. Long before the debut of Taipei 101, Mr. Ho founded SimpliCTI Software Solutions 15 years ago in the basement of his home. He still serves as CEO of the CTI software company.

A Chinese CTI entrepreneur with a talent for cooking? That’s like a niche within a niche.

The startup journey of Mr. Ho mirrors closely with other self-funded entrepreneurs. He was employed by a big corporation (Nortel) early in his career and worked on many large complex projects. Then one day, realizing no end in sight of corporate politics and red tape, he decided that he could do better working for himself. As an immigrant, he decided to grab the American dream by its slippery horns and set up shop in the basement.

He didn’t expect to sit in the basement for four months staring at a idle phone, though. Eventually he landed an important first project with a major international company, and since then SimpliCTI has grown into a multi-million dollar private company with nearly 40 employees (and just only a handful in sales). And no longer a basement operation.

Mr. Ho determined early on that in order for SimpliCTI to succeed it must enter into multiple partnerships and offer valuable products that fill the gap between the plethora of CTI, CRM, and middleware systems in the market. This vision has bode well for the company — SimpliCTI boasts a product portfolio in the ecosystems of Avaya/Nortel, Cisco, Genesys, SAP, Salesforce.com, Onyx, Remedy, RightNow, and Tellme (Microsoft). In recent years the company has seen tremendous interest and growth in its “connector” products.

Another secret to SimpliCTI’s success, according to Mr. Ho, is the location. Situated near The Triangle and the campus of UNC-Chapel Hill, many of SimpliCTI’s workforce come from graduates of the university. The company has no problem attracting engineering talent locally.

But most importantly, Mr. Ho revealed the real secret to his success: family. And not to mean just his wife and daughters. He sees all his SimpliCTI employees as part of his family. The same goes for his restaurant workers and even customers. Mr. Ho said that he has had to reject buyout offers because the new investors would’ve laid off employees. Even now he frequently receives calls and meeting requests from investors and VCs interested in owning SimpliCTI.

He hasn’t found the right suitor yet, but I imagine many of the conversations may take place around a small table full of delightful Chinese dishes. Beef noodle soup is a must, of course.

Siemens Enterprise backer Alec Gores in Hollywood lawsuit

News broke Wednesday that Alec Gores, founder/CEO/chairman of The Gores Group, is tangled up in a Hollywood lawsuit over illegal poker games. We’re all familiar with The Gores Group, of course, being a major backer of Siemens Enterprise Communications. The Los Angeles-based private equity firm also owns (or partly owns) other communications companies like Enterasys Networks and Sagemcom.

Some of the others named in the suit: Toby Maguire (Spider-Man), Nick Cassavetes (The Notebook director), Cody Leibel (record label owner), and Andrew Sasson (Las Vegas real estate developer). Supposedly Matt Damon (Bourne Identity franchise), Leonardo DiCaprio (Titanic), and Ben Affleck (Good Will Hunting) were also participants in these high stakes poker games, but they’re not part of the lawsuit.

Read the court documents courtesy of RadarOnline here.

Siemens Enterprise Communications gains cloud, inContact gains EMEA

Siemens Enterprise announced OpenScape Cloud earlier this year at Enterprise Connect 2011, but just recently picked inContact to be its cloud partner for EMEA. The deal entitles Siemens to distribute inContact’s cloud contact center software in the EMEA markets as “OpenScape Cloud Contact Center” and to resell inContact products in the U.S., Latin America, and APAC markets. In return inContact receives a minimum cash infusion: $5 million in 2012 and $10 million in 2013.

Great for inContact customers, great for inContact partners. Stock price jumps a little. High-fives all around.

Something seems off to me, though. First, we all know how buzzworthy cloud services are these days. It appears that every vendor needs a cloud offering in order to compete in today’s market. In February Siemens OpenScape Cloud was unveiled when most of its competitors have already signed up cloud customers. Then it took four months to find a partner to provide the product in its primary market region, EMEA. Well, according to the press release inContact still has to “establish the cloud infrastructure in Europe required to support this new agreement.” My interpretation: As of June 15, the cloud isn’t ready yet in Europe.

Second, with so much money being poured into cloud services by eager companies in recent years, inContact’s sales performance is lackluster at best. Revenues have been stagnant quarter after quarter, year after year. With about $10 million in cash (as of 1Q2011), the $5 million Siemens investment next year represents a 50% boost in liquidity. No doubt that the money will be used to expand operations, but something has to be done about the persistent negative cash flow, especially in this economic climate.

Third, with a market cap of just upwards of $150 million, why didn’t Siemens Enterprise make an outright acquisition? Backed by conglomerate Siemens AG and private equity firm The Gores Group, Siemens Enterprise sure has the funds to do so. In an interview by Sheila McGee-Smith:

Asked why an equity investment instead of an outright purchase of inContact, [Siemens N.A. CMO and President Chris Hummel] says Siemens is walking before they run. The equity investment ensures that inContact has the cash they need for what hopefully will be a rapid acceleration of their business, especially in EMEA. Siemens Enteprise CEO Hamid Akhavan’s seat on the inContact board helps ensure that Siemens has the appropriate governance and control.

Is Siemens really serious and committed to the cloud? It is definitely not “running” in this case, but I’d much prefer it at least “power walking.” It’s more like “crawling” compared with others in this space. And throwing inContact $15 million over two years seems somewhat conservative considering how innovative and competitive cloud services are. It’s as if the company doesn’t have full faith in inContact — maybe just 90% faith.

Both Siemens Enterprise and inContact are winners in this deal because they can now boast a complete cloud portfolio anywhere across the globe. However, what’s troubling to me are inContact’s financial situation and, in my opinion, Siemens’ reservation at the negotiation table, which could have a detrimental effect on the execution of this partnership vision. In this instance the future does appear a bit cloudy.

The press release:

SALT LAKE CITY (June 15, 2011) – inContact (NASDAQ: SAAS), the leading provider of on-demand call center software and call center agent optimization tools, today announced that it has entered into a worldwide distribution agreement with global unified communications leader, Siemens Enterprise Communications. In addition, an affiliate of Siemens Enterprise Communications has made a strategic investment in the company.

Under the new commercial agreement, Siemens Enterprise Communications will be the exclusive master distributor for the inContact cloud contact center software portfolio in Europe, the Middle East, and Africa and will deliver the solutions under the Siemens Enterprise Communications “OpenScape Cloud Contact Center” brand name.  Siemens Enterprise Communications will also resell the inContact portfolio in the U.S., Asia Pacific and Latin America.  inContact will establish the cloud infrastructure in Europe required to support this new agreement and will enable and train the Siemens Enterprise Communications team to independently sell, implement and support its global cloud contact center customers. According to the agreement, Siemens Enterprise Communications is committed to pay a minimum of $15 million of net software revenue to inContact over a 2-year timeframe, with $5 million committed in 2012 and $10 million committed in 2013.

Said Mariann McDonagh, Chief Marketing Officer for inContact, “We are pleased to be selected by Siemens Enterprise Communications to power its global cloud contact center offering, as it underscores inContact’s leadership in the growing cloud contact market. With more than 3,000 sales and support personnel as well as 3,000 channel partners around the world, the Siemens Enterprise Communications team is uniquely positioned to help inContact drive significant growth in the next several years. We look forward to working with Siemens Enterprise Communications over the next several months to train their front and back office personnel for their market launch later this year.”

Siemens Enterprise Communications, a joint venture of Siemens AG and the Gores Group, is a premier provider of end-to-end enterprise unified communications, including voice, network infrastructure and security solutions and supporting services. With a presence in more than 100 countries, Siemens Enterprise Communications provides comprehensive communication and collaboration solutions for organizations of all sizes. Siemens Enterprise Communications currently holds number one market positions in Europe, Latin America and India, and the company’s telecommunication solutions are used by 75% of the Global 500.  Siemens Enterprise Communications has more than a million enterprise customers in virtually every industry sector.

“After a lengthy due diligence process, we were pleased to select inContact to power our cloud contact center offering,” said Chris Hummel, Chief Marketing Officer and President of North American operations for Siemens Enterprise Communications.  “We believe that our recently announced OpenScape Cloud Solutions, combined with the inContact cloud contact center platform, will provide a market-leading and powerful unified communications and contact center for our joint customers and partners around the world.”

An affiliate of Siemens Enterprise Communications made an investment of nearly $24 million in restricted common stock of inContact at a price of $3.32 per share.

“This equity investment will provide inContact with the strong balance sheet and financial capability required to continue to grow our cloud business and further strengthen our market leading position,” said Paul Jarman, inContact CEO. “Furthermore, this renewed financial strength will enable us to extend our network and platform capability to effectively support enterprise customers and partners around the world.”

Siemens Enterprise Communications CEO, Hamid Akhavan, software and telecommunications veteran and the former COO at Deutsche Telekom Group, will join the inContact Board of Directors.

Concludes Jarman, “This highly strategic relationship with Siemens Enterprise Communications marks the beginning of a new era of accelerated global growth and visibility for inContact. We have never been in a better position, both financially and technologically, to capitalize on the massive opportunity before us and we continue to actively develop additional potential partnerships that will expand our presence across the globe.”

Conference Call Information
inContact will host a conference call to discuss these developments later today at 4:30 p.m. Eastern time (1:30 p.m. Pacific).

Dial-in Number: 1-800-894-5910
International Dial-in Number: +1-785-424-1052
Conference ID#: 7INCONTACT

About inContact
inContact (NASDAQ: SAAS) helps call centers around the globe create profitable customer experiences through its powerful portfolio of cloud-based call center software solutions. The company’s services and solutions enable call centers to operate more efficiently, optimize the cost and quality of every customer interaction, create new pathways to profit and ensure ongoing customer-centric business improvement and growth. To learn more, visit http://www.inContact.com.

Safe Harbor Statement: The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking information made on the Company’s behalf. All statements, other than statements of historical facts which address the Company’s expectations of sources of capital or which express the Company’s expectation for the future with respect to financial performance or operating strategies, can be identified as forward-looking statements. Such statements made by the Company are based on knowledge of the environment in which it operates, but because of the factors previously listed, as well as other factors beyond the control of the Company, actual results may differ materially from the expectations expressed in the forward-looking statements. (For the complete statement, please click here.)

inContact® is the registered trademark of inContact, Inc. All other marks are the property of their respective owners.

1The common stock of inContact sold in the transaction has not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.  This is not an offer to sell or the solicitation of any offer to purchase any securities of inContact.

 

InfoComm: Vidyo interview

John Stepp, president of Free Tech Consultants, continues his coverage of InfoComm 2011 Orlando. Check here for Day 1 coverage.

I had a chance to sit down and chat with Mark Noble, Director of Product Marketing at Vidyo, about the impact of VidyoPanorama and the HP-Polycom announcement. There has been thorough coverage from last week’s announcement of the VidyoPanorama product from CNBC and many tech blogs such as this one. The real breakthrough for Vidyo is not only about the product itself, but the fact that it rounds out the product line so well. The VidyoPanorama joins the VidyoRoom, VidyoDesktop and the soon to be released VidyoMobile to span the entire range of video conferencing experiences. VidyoMobile is nearing general release on the Apple App Store and an Android release will follow soon after. This means that Vidyo will be particularly difficult to compete with given their intrinsic price advantage. No longer will competitors be able to sell against Vidyo on scalability.

I asked Mark about the HP-Polycom alliance impact on Vidyo. He mentioned that HP was only one partner of many and the VidyoPanorama announcement takes the sting out of the eventual severing of ties with HP. I believe the sale of HP’s video assets to Polycom will be one of many consolidations in the market. Larger players will need to cut costs to be more price competitive, while smaller players will become either niche video marketers or fade into the sunset since their price advantage from being small nimble companies simply no longer exists. It will be interesting to see the changes in the market over the next year as video conference companies adjust to the changing competitive landscape. It is entirely possible that lower prices will bring about a surge in revenues that will benefit everyone in the enterprise video space in the short term.

InfoComm: Day 1 on the show floor

Coverage of InfoComm 2011 Orlando is brought to you by John Stepp, president of Free Tech Consultants.

The huge AV spectacular InfoComm 2011 in Orlando opened its trade show floor Wednesday to tens of thousands of visitors catching the latest in digital signage, projection technology, video conferencing and all things AV. Everywhere you look there is some eye popping visual technology. Cisco, HP, LifeSize, and Polycom have great showcases of their enterprise video collaboration technologies and the videoconferencing section is just a fraction of the trade show floor.

Randy Lemke, executive director and CEO of InfoComm International must be very proud of the growth of the shows that span the globe now. But today at his press conference he was proud of the green initiative announcement with InfoComm’s involvement in the Sustainable Technology Environments Program. The STEP program has been created by manufacturers, designers, integrators, programmers and the users of technology to guide project and building owners to implement practices that will produce economic benefits to their organizations while preserving the planet. In other words, green with an ROI. More information about the program can be found at thestepfoundation.org.

The most unusual, visually stimulating thing I saw today was at the projection design booth. Put together by projection design and software house 7thSense was a six-projector 3D image on a concave quarter globe. The image was perfectly reproduced using warping and blending technology. Outside the quarter globe, it looked concave, but when you walked in it looked flat. As you can see from the video, it is capable of very realistic 3D without glasses. But it is not just for entertainment purposes. They are using this identical technology at Brooks Army Medical center to help returning soldiers with inner ear injuries to retrain themselves to regain mobility. They hang the soldiers from a harness to a treadmill facing the quarter globe. The images show trails with obstacles that are 3D and realistic. Javier Delgado, Visual Simulation Specialist, said they have found many ways to use this technology. This is a powerful example of how something that looks to be an entertaining innovative “showcase” of video technology can provide so much more. Helping our wounded veterans to walk again provides an infinite ROI and makes you feel good about being involved in the evolution of communicative and collaborative technologies.

My next report from InfoComm 2011 will include interviews and thoughts on the changes in the video space at HP and Vidyo. I will also be going in depth with Cisco on their Callway offering, their big push to video in the cloud.

Nuance, nuisance to some competitors

Speech tech leader Nuance is basking in some positively stellar publicity lately, mostly riding on the buzz about Apple’s upcoming iOS 5, Mac OS X “Lion” and the mega data center situated in a remote North Carolina town. The latest Apple mobile and desktop operating systems are said to have some deep integration to speech services from Nuance.

After years of mergers, acquisitions, and lawsuits, Nuance has finally struck gold with the Apple partnership. Forget telecom and IVRs — mobile consumer technology is where the bling is. Smartphone and tablet sales will no doubt exceed that of IVRs and speech servers.

Nuance and the speech industry in general have an intriguing history.

Things really took shape when four major players emerged in the 1990s: Lernout & Hauspie, Nuance, ScanSoft, and SpeechWorks. Back then the Internet was just blossoming, CPU, RAM, and storage were still expensive, and nobody’s heard of cloud computing yet. Speech innovation was highly dependent on the Ph.D. talents and R&D money. So naturally, companies with the thicker cash stash gained an advantage.

ScanSoft picked up some notable deals: Lernout & Hauspie (December 2001, filed for bankruptcy; Dragon Systems was acquired previously by L&H), SpeechWorks (August 2003), and LocusDialog (January 2004). In the span of three years the industry consolidated to just two big players: Nuance and ScanSoft.

Then in September 2005 a merger was announced between them, and the new entity to be called Nuance Communications.

Now came an acquisition binge, thanks to CEO Paul Ricci. Since 2000 there were 43 acquisitions. Some of the better-known buys included: Dictaphone (March 2006), Tegic Communications (August 2007), Jott Networks (July 2009), Spinvox (December 2009), and MacSpeech (February 2010).

Growth through M&A was just part of the story. Nuance was also busy in the courts fighting its up-and-coming, lesser-known competitors. One such unlucky competitor was Vlingo. According to a BusinessWeek article in May by author Peter Burrows:

“Competing with Nuance is like having a venereal disease that’s in remission,” says Dave Grannan, CEO of Vlingo, a speech-recognition startup that’s involved in five Ricci-related lawsuits. (Nuance has four suits against Vlingo; Vlingo has one against Nuance.) “We crush them whenever we go head-to-head with them. But just when you’re thinking life is great—boom, there’s a sore on your lip.”

Vlingo’s adventures with Ricci began in 2008, soon after Yahoo! (YHOO) chose Vlingo software over Nuance. Three months later, Grannan learned from a Boston Globe reporter that Nuance had filed a patent suit—without contacting the company to discuss royalties. “It was clearly an effort to hurt our business,” says Grannan, who expects to spend $15 million on legal fees. Nuance spokesperson Rebecca Paquette said neither Ricci nor the company would comment on specific lawsuits against Vlingo or others. “In these highly technical fields, many companies attempt to gain advantage by simply using Nuance’s inventions rather than developing their own,” she wrote in an e-mail. “We have a duty to our stockholders to preserve the value of the company and its assets.”

By summer 2009, with Vlingo running out of cash, according to Grannan, Ricci approached him about an acquisition. On Sept. 21, they met in San Francisco for a 14-hour negotiation. No agreement. Two days later, Ricci surprised Grannan and Vlingo co-founder Mike Phillips by calling to offer two more alternatives. First, Ricci promised to pay them and co-founder John Nguyen $5 million each if they could persuade their board to sell at his price. If that failed, and the three execs agreed to jump ship to Nuance, he’d pay them the amount they would have received in an acquisition—plus another $5 million if they stayed with the company for two years. As Ricci talked over speakerphone, Grannan says he looked at Phillips, mouthed “What the f—?”, and asked Ricci to repeat. Ricci, who speaks in the measured tones of an academic, obliged. After notifying Vlingo’s board of the offer, Grannan called Ricci back to express the board’s displeasure. “I was flabbergasted,” says Vlingo board member Bob Davoli. “I’ve been on 55 boards in my career and been a CEO twice—but I’ve never heard of anything like this.”

Vlingo’s board later accepted a $15 million investment in the company, after Ricci suggested that such a deal would align their interests and lead to a cessation of hostilities, says Davoli. “That was wishful thinking,” he says. Rather than drop the lawsuits, Ricci stopped taking Grannan’s phone calls. When Vlingo’s board stopped admitting a Nuance-appointed director to its board meetings, Nuance sued for the right to attend.

And guess what? Nuance is still knocking at Vlingo’s door: TechCrunch recently reported a new patent infringement lawsuit.

Tellme Networks also found itself enduring the wrath of Ricci in 2006:

In late 2006, Ricci took a run at a customer—Tellme Networks, which made an automated telephone-response system. Ricci had just purchased a company that made speech software used by Tellme. Mike McCue, Tellme’s then-CEO, says he was contacted by Ricci, who declared he’d sue Tellme, introduce a competing product, and refuse to sell it more software unless Tellme’s board agreed to sell to Nuance at Ricci’s price. “It was an all-out attack on every front,” says McCue, who now runs Flipboard, maker of a popular news app. McCue did sell the company in 2007—to Microsoft (MSFT), for a far higher price. (Press reports had it at around $800 million.) A court later dismissed Nuance’s patent claims as invalid. “We were able to outlast Nuance,” says McCue. “But a lot of companies can’t handle the pressure and give in. It’s happened time and again.” Ricci declined to comment on dealings with Tellme or Vlingo.

Nuance’s aggressive tactics aren’t just reserved for U.S. companies, either. The founder of an Indian speech company told me a story about his ordeal with Nuance. After being contracted to develop an application for Nuance, it poached the co-founder to work as an employee. (He left for Nuance within two months after being his business partner for nine years.) To add insult to injury, Nuance pre-emptively served legal notice in fear of a lawsuit going after this co-founder and his new employer. Efforts failed to negotiate a more reasonable, smoother transition for the co-founder to jump ship.

David vs. Goliath in the speech industry. David usually loses. From bleeding money and resources.

Indeed, from the BusinessWeek article:

Nuance’s Paul Ricci built the dominant speech-recognition company with engineering, acquisitions—and a lot of lawsuits.