Daiwa EuroTelcoblog No. 49 - Tuesday 22nd June, 2004: Living in the future

One frustrating thing about doing conventional brokers' research in the age of RSS is that a lot of it tends to be tied to traditional production methods and timescales, while much of what we are trying to cover moves on in the interim. One good case in point is our Global Telecom Monthly, where every month I contribute a leader piece which seeks to be interesting, timely and fresh (with admittedly mixed results). For the June edition, due out this Thursday, I wrote my piece last Friday, according to plan, but with the Supercomm show underway, the world is moving on and some of what I have written can now be updated in more detail - before the original piece is even published! (Personally, I think the broking research world could get a lot out of using RSS as a distribution tool, but we'll see who dares to be first with this idea on a large scale.)

In my note for the June monthly, I run through some of the emerging developments in the P2P IP telephony space, and as part of this I mention Peerio444, which was covered here initially on 10th June. I speculate that Peerio (which stipulates in its T&Cs that developers working on embedded systems would be subject to a commercial licensing fee) might be looking to strike agreements with IP hardware manufacturers to embed Peerio into IP phones. This week at Supercomm, Peerio's developers, Popular Telephony, have made a handful of annoucements which bear this out and give us more guidance on future direction. (All can be found here www.populartelephony.com/news1.html).

The first, which we expected, is a general announcement touting Peerio as an enterprise communication tool, and clarifies that Peerio aims to license its middleware as an embedded system to manufacturers of VoIP ICs, IP telephones, and audio/video conferencing systems. The release claims that Peerio can scale to above 4bn lines and also that "Peerio is protocol-agnostic, enabling switchless and serverless communications for VoIP systems and devices running on SIP, H.323 and all other standard or proprietary protocols" (our emphasis). The latter is a very sweeping statement, and we are curious to learn just how inclusive this definition of "all" is. What is clear is that Peerio is promoting itself as a serverless, plug-and-play replacement for the PBX, which is an audacious claim to make, but the company has also signed two agreements with partners which at least lend some support to the case.

The first deal is with Vontel (www.vontelecom.com/), a Swiss-based developer of IP telephony and video-over-DSL hardware, which will embed Peerio in its new generation of IP 110 terminals (www.vontelecom.com/ip110.html), with a range of features which it claims will effectively put the IP-PBX on a single terminal. The second agreement is with Luxembourg-based Atemis (www.atemisnet.com), which develops internet-based CRM applications. Atemis CRM system users will be able to use Peerio embedded in the Atemis e-business Management Portal to call any number from any location where an internet connection is available, enabling the creation of virtual call centers to eventually replace physical call centers.

With this flurry of press releases, we think we have a better idea of where Peerio is heading, and the gauntlet has now been firmly thrown down in the enterprise arena. In the press release relating to the Atemis deal, the Atemis chairman negatively name-checks Skype as a solution they investigated but passed over in favor of Peerio. This will probably not go unanswered for long, and a brief perusal of the jobs section of Skype's website (www.skype.com/jobs.html) gives some insight into what sort of development pipeline Skype has in the embedded products and integration/partnership areas. Skype also launched a Linux version yesterday, again illustrating its drive to broaden its user base, and the SkypeOut service is now in beta with a number of users (we have received a test voucher and are looking forward to trying it).

Peerio is making some pretty ambitious claims, and we have so far been frustrated in our efforts to set up a call with management. However, with these developments, we think the market perception of P2P IP telephony is probably set to turn a corner, moving from a view of P2P-as-extension-of-instant-messaging, i.e., as a behavior associated with teenagers and geeks, to a realization that some of these applications may genuinely cause some disruption in the traditional vendor/integrator space. So far, much of the coverage of IP voice, including our own, has focused on the implications for traditional operators the consumer space, but we will now be watching to see what sort of spin this story takes in the coverage of companies like Cisco, Avaya, Nortel, Siemens and others working in the enterprise vendor arena (a sector outside our normal coverage).