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Rich Tehrani’s Executive Suite is a monthly feature in which leading executives in the VoIP and IP Communications industry discuss their company’s latest developments with TMC (News - Alert) president Rich Tehrani, as well as providing analysis on industry news and trends.

Last January, Toshiba announced the appointment of Brian Metherell as Toshiba America Information Systems’ vice president and general manager of its Telecommunications Systems Division. Now, one year later, Rich took time to speak with Brian about his first year and what the company has accomplished since he joined the firm and why Brian feels Toshiba is well positioned to take advantage of the continued emphasis on IP Communications.

Brian Metherell

Brian Metherell


Toshiba's Brian Metherell

RT: You’ve now reached your one-year anniversary with Toshiba. What do you feel you’ve accomplished in your first year?

BM: One of the most significant accomplishments in my first first year is that we’ve moved the entire product line over to VoIP. As of August, we launched the CIX40, and now the whole product line is VoIP-based.

We really got focused on scaling our systems down, including all the applications, so that they fit into the smallest customers, so even a 10 or 20 person enterprise can now get fully featured ACD mobility, remote worker capabilities, mobility and more. We packaged it down to really address the SMB market at an appropriate price point that delivers the productivity gains they need.

RT: What’s your vision going forward?

BM: We want to continue to deliver the features at the right price point, and focus more on interoperability and openness — that’s a market demand. The other thing that I continue to focus on is delivering training and education in an easy, easy format.

RT: Who do you see as your key competitors today, now that the market has changed so much?

BM: The industry has changed.  From the data side, the big primary competitor would be Cisco. From the legacy side, of course it’s Avaya (News - Alert) and Nortel.  In both cases, Toshiba’s current advantage is the fact that we’ve got this huge authorized dealer network, with over 800 locations, in fact, approaching 900 locations, here in the U.S.

We’ve also got the Toshiba quality reputation and migration advantage.  Being able to consistently provide a smoth migration path is something that’s helped us continue to get terrific traction, specifically in the SMB market, but also in the hybrid enterprise business. We really are getting a lot of multi-location enterprise customers who love that same investment protection.

RT: How do you see Toshiba competing with new competitors, like Digium (News - Alert) and Asterisk, and hosted solutions?

BM: The Digium/Asterisk open source model does show that there are a lot of people out there who want to develop applications in the IP space, and that’s great. It’s creating sort of a petri dish for applications to be cultivated and nurtured.

Frankly, right now, we don’t see real large numbers of end users going down the road of downloading open source software and building it themselves and ordering the line cards online and trying to piece it together. We don’t see a large trend like that yet. I think more competition will come from those vendors that use the software and roll it into a complete solution that they actually package along with installation and customer support.

Most businesses rely heavily on their telecommunications, and to have to build it themselves seems to be a challenge. On the very small end, I’m not sure there’s an economic justification for the resources you have to put in to keep your phone system going if you do total open source. On the enterprise side, they tend to want to deploy the same thing right across dozens or hundreds of locations, and with open source, there’s risk once you get all of that out there. That makes it a little tough.

RT: What about the hosted side?

BM: Certainly, we see the market for hosted solutions growing, but they typically are still aimed at the smaller business. If you look at businesses with between one and five phones, that’s a real sweet spot for hosted providers. But that’s less than 5 percent of the business employees in America.

There are tons of businesses, but, as a market segment, in terms of the number of end points, number of units, it’s about 4.7 or 5percent of the whole market. So, what we’re more concerned about it is if hosted providers start to go upscale and into the larger, bigger systems. There, we think that we’ll be able to deploy much better applications focused around call center solutions and mobility, and be able to have the competitive advantage.

The other thing that the hosted players haven’t seemed to be able to get their hands around is how to deliver service and how to wrap their service around the exact needs of the customer. We’ve got a significant dealer network, and they really know how to do that. Our dealers have custom built systems over the last 30 years to deploy services down to that 10, 15, even eight person office, and they can do it economically often with a truck roll and training. Hosted players just haven’t seemed to crack that equation yet… they don’t know how to deliver that service piece.

RT: Do you think resellers will embrace the hosted model, where they may receive service revenue over time instead of receiving the majority of the revenue up front?

BM: I think we’re seeing a trend like that, so yes, I do think that there’s an increasing risk from that area. Once again, I still see it as probably getting bigger than Centrex.  You can’t dismiss any competitor — you would be foolish to do that — but we still think there are challenges in that hosted market.

RT: What advantages do you think Toshiba has over its competition?

BM: There are advantages in two specific areas. First, on the product side, we really have this solid reputation, and it’s hard earned.   It’s a reality of our high quality and our reliability. We also have a track record of product evolution and cost protection.

The other piece of it is the dealer network, and that may even be the more valuable piece, which includes more than 800 locations for us. We’ve got a dealer in every territory in the U.S. and every major city, so we really do have tremendous coverage.

When you’re looking to deploy a system that you want to have serviced, have some service level agreement with contracts and payment terms and so forth, we can manage all of that for you through the national accounts, because we have that tremendous dealer network.

RT:Toshiba has been recognized by the Yankee Group (News - Alert) as having the best dealer channel in the industry, and dealers are notoriously difficult to train on new technologies. What’s your strategy to get these dealers up and running on VoIP?

BM: That is a significant challenge. It’s a challenge for everybody in the industry to get their distribution channels — whether they are internal or external channels — and we looked at it that way from the beginning. So, for more than five years, Toshiba has been offering training and certification on IP technology, and VoIP specifically.

Our systems have offered VoIP as part of the converged platform for the last several years, and now we’re 100 percent VoIP, so it’s critical for us to be successful in this area. We’ve made an investment in the WebEx Webinar technology, so that we can literally pull technicians onto Webinars and walk them through training sessions so they don’t have to uproot themselves and fly somewhere for the training. We can give them training essentially on the fly or on demand. We’ve also invested in a Web site where training is available, and there’s a full Toshiba University where techs can do self-paced training with tests. We even have monitors in every region to monitor the tests, and we have custom developed certain VoIP certification training, where we make it real life — that’s what our dealers are telling us they want.

We’re setting up training systems locally, and that works and, as we have dealer techs who go through training, trying to fix problems or set up systems, our trainers go around “breaking” things, tweaking them or putting something else on the LAN that wasn’t previously there. So this is real life stuff that really trains them. Our training is not designed to help them pass the test; it’s designed to help them be better technicians and be better prepared to deal with problems in the field. We’re also letting them have this training in synch with the whole IP philosophy: where you want it, when you want to do it, in a mobile fashion.

RT: So, the goal is to get them comfortable with the technology as they learn about the same technology?

BM: Right, and the other goal is make it easy to do business with us, and make it easy to learn by providing multiple environments — a classroom environment, a classroom that comes to them, Webinars, Web-based online training, all of these things. We also, by the way, have application support groups, so if they’re in trouble with respect to how to develop the solution, they can call us on that.

Of course, we also have tech support and, most recently, have provided LAN assessment product and tech support. We also offer our own Feature Flex adaptability tool, which allows our customers to even design their own programs and build their own additional IP-type applications.

RT: What is Toshiba seeing, in terms of VoIP adoption among its SMB, enterprise, and national accounts customers?

BM: Well, it’s table stakes. Nobody wants to buy a system without VoIP, so we’re seeing the adoption level go up. We get a lot of accolades in the real end customer world, but sometimes we get kicked in our own intra-industry, let’s say, but it’s the fact that we’ve got to converge solutions. Customers want to make sure they’re IP enabled but they can do it their way.

Specifically, customers want to make sure they can get involved in the mobility solutions, or do a number of the things, especially around mobility, that IP enables. We also have fairly cost-conscious customers, specifically in the SMB market, but frankly, everywhere. So, to have a choice of where they can use a digital phone and do the VoIP installation in stages tends to make them very happy.

Some customers have looked at a pure IP solution and realized, because of the impact on their LAN, that they would have to incur the cost of a complete LAN upgrade, and they can’t do that. But, they have a phone system that’s reached its end of life, so, to come in with a converged system is a great solution for them.

We think our specific converged solutions actually are an advantage, because since when is giving a choice to the customer viewed as a weakness?

RT: What do you think the compelling applications are going to be in a world of IP communications?

BM: We did a survey with our customers where we asked them what they thought was the most compelling application and what was really driving them to look at and buy IP.  They told us it was mobility: office anywhere, softphone.  Hands down, mobility and remote offices are the number one drivers. That’s what our customers said going into the sale and post-sale, and even more of them said it was the most valuable thing they got out of it in their ROI.

So that’s going to continue to drive it, but the next big wave we’re seeing now is business process integration. We think that’s key to driving a real ubiquitous deployment of IP and real value to the end customer.  Customers being able to integrate your ACD with their remote agents and then putting it into their back office systems or inventory systems makes it all one integrated business process.

RT: Do your other divisions come into play in this particular area?

BM: Yes, they do. The division we are part of at Toshiba is the PC and Server division, so we share technology and leverage off each other’s innovations. Our PC group actually was the original designer, and still shares design responsibility with us, for our softphone. They wanted a Softphone for the laptops, and it’s a great application.  That was a joint development, and it accelerated the development because,  they had done a fair bit of work already.

So there’s leverage there, and we see more leverage down the road. We’re a huge cell phone manufacturer, and are very innovative with our cell phone and WiFi (News - Alert) technology. We have tremendous market share in cell phones — not so much in the U.S. — but still, this technology exists, as we’re a global business and we can take advantage of it.

RT: How do you view the VoIP/wireless connection?

BM: Let me put it this way: I work with it every day. Toshiba’s campus here in Irvine is 100 percent wireless equipped, so we can go anywhere on-site and use our laptops with our softphone plugged in and communicate, take calls, have conferences, have joint meetings, and we can do it sitting outside or in the cafeteria or in anyone’s office. Your phone can reach you on your laptop via your softphone wirelessly. We’re completely engaged in this VoIP/wireless connectivity. It’s part of the core culture at Toshiba, and we think the trend is going to grow.

Overall, there are issues around bandwidth, quality of service, security, and we need to do more before we get wireless networks fully deployed and gain some huge traction. Not every cellular company is in a huge hurry to deploy high-speed wireless so that you can run your voice through it on the WiFi network for free. They want those minutes for which they’re charging.  I think that’s perhaps one of the areas that are slowing down real broad deployment of WiFi. There’s a negative incentive for the main carriers who can deploy it. It’s going to pull paying traffic off of their minutes plans.

RT: What is the future of VoIP, SIP, and WiFi?

BM: The future looks bright for all of those things. VoIP is here to stay, clearly as the dominant player. TDM is going away, or is considered gone for the most part, certainly in terms of any new business opportunity. The industry has seemed to kind of ratify SIP as the standard to go after, which is good, because we’ve got direction now. But, there’s still a lot of difficulty around SIP because of all the different flavors and different vendors.

I’m concerned that it’s going to be another ISDN situation, where everybody has their own flavor. What we’d like to see, what would be great, is a really good certification body, a SIP certification body, like there is for WiFi, so that the industry could actually have a standard and vendors could work quality improvements around that standard and get the reliability to go way up.

RT: Where do you see IMS going, and do you have a strategy in that area?

BM: It looks like there’s a battle brewing with IMS, between the IMS architecture and the unified communications platform. Microsoft (News - Alert) really put its stake in the unified communications ground, and the carriers are clearly trying to deploy IMS. They are using it as a way to help enable or grow hosted services to the customer who wants to get an application that’s customized and fits for their business.

What I think is going to happen is a lot of great products are going to be developed around both of these areas.  To the degree that there’s good interoperability and quality, it’s going to benefit everybody. We’re watching that process, and we intend to play in it. Certainly, from our perspective, unified communications is going to come first to our enterprise-type business. I think that’s where we’re going to be in the beginning.

RT: Where do you see enterprise communications going over the next five years?

BM: We see enterprise communications going over IP. I think you’ll see a drop-off in the inflation of PRI’s, and it’s going to be replaced with SIP trunking over broadband. I don’t think you’re going to see a wholesale shift from CPE to hosted equipment, but you are going to see some more growth in hosted — probably at the lower end, because a hosted environment at the very small end will allow them to afford some of the applications, certainly like IMS. You couldn’t set that up in your own CPE environment, especially if you’re an SMB company.

We also see, and I think this is a critical one, much higher quality VoIP, because I think it’s still a hindrance to installations. There’s still work to be done to have ubiquitously deployed high quality VoIP, because we’re still running primarily over a data network that was not designed, built, or optimized for carrying voice. So there’s a lot of work to be done on quality.

I think that’s really going to help deployment and that’s where we’re quite focused, as well tools to ensure quality, building chips, and technology — any technology that helps us deliver ever-greater voice quality, because voice is still the number one application on Voice over IP.

RT: Will we be seeing more announcements from Toshiba?

BM: Yes, you will. I can’t say a lot more about that, but Toshiba is an innovative company.

Rich Tehrani is President and Editor in Chief at TMC.

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