Market Update, New Opportunities
The recent VoiceXMLPlanet Conference was a great opportunity to hear from vendors and potential customers to get a better picture of the state of the market. It also gave me a glimpse into potential new markets that may emerge as a result of the technology. In this article, I will provide a list of the top insights that I took away from the conference.
Customers will buy VoiceXML solutions
First, the good news is that customers are taking VoiceXML seriously and will be either replacing older IVR technology or developing new systems based on voice technologies. Most companies were evaluating vendors or in an early pilot stage of an initial project rollout. However, customers are moving cautiously and are taking more time to evaluate the products and companies.
Vendors are supporting voice
One trend that I've been watching very closely is the rate at which IVR vendors integrate VoiceXML into their products. Edify and IntervoiceBrite, two well-recognized vendors both talked with me about how they were integrating VoiceXML functionality. Edify will be adding VoiceXML to their existing platform. IntervoiceBrite will actually be offering a separate product line based entirely on VoiceXML, which will provide customers with a nice migration path. Sun has partnered with BeVocal and Nuance to offer carrier solutions that will compete with other high-end offerings such as the Lucent Speech Server. Now that existing vendors are moving hard to support VoiceXML, it's possible that other VoiceXML gateway companies that are not already partnered with a larger vendor will do so. The good news is that the large vendor movement into this space validates the technology and will provide the momentum that some customers have been waiting for before making a move.
The Voice ASP Market is shifting
Most new voice portal startups initially moved to the ASP model after the consumer voice portal market failed to materialize. Since then, these voice ASPs have refined their focus or decided to get out the general voice ASP business. Telera sold the hosting part of its business to Qwest. Tellme is focusing on large enterprise customers. BeVocal is shifting their focus to carrier hosting solutions. Voxeo has picked up some of the slack and will likely serve a large portion of the small to medium sized business market. I predict that existing call center service bureaus and IVR hosting providers will begin offering voice-enabled services within the next 2-3 years and with the large telecommunications carriers, will take a majority of the voice ASP market.
Focus on carrier customers
A large percentage of vendors and service providers I talked to are focusing on serving the large landline and wireless carriers. This isn't a surprise because the carrier business spends more money on telephone solutions proportionally when compared other industries. The problem with that strategy as I see it is that the carrier business is not doing so well these days. When you consider bloated capacity with large-scale layoffs at companies like Verizon and the elimination of many CLECs, it's hard to believe that there will be enough revenue to prop up the entire marketplace in over a long period of time. Add to that the long sales cycle of up to a year or more for each carrier customer, along with the limited number of stable carriers in the business. Given these clues, I have to question whether this focus will be detrimental to a few of the companies that rely almost entirely on the industry for their revenue.
It would be wrong to say that everyone is carrier focused though. For example, General Magic, which offers an enterprise Java-based voice platform, is focused on selling integrated voice solutions to the enterprise. This approach seems to make more sense in the long run, however, the rate of adoption of VoiceXML in the enterprise is not happening as fast as some would like.
I think everyone realizes this situation and is making plans to enter the enterprise marketplace and eventually the medium-sized business market in the long run. It will just be a matter of timing. Given that, the market has still progressed faster than I expected.