2010 SMB Phone Systems Comparison Guide. Jon Arnold, Focus Adviser July 2010

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1 2010 SM Phone Systems Comparison Guide Jon rnold, Focus dviser July 2010 Focus Research 2010

2 ntroduction Until recently, options to move away from costly, inflexible and limited legacy telephony have been few, but no longer. VoP (Voice over nternet Protocol) has increasingly become an attractive alternative to older TDM (time-division multiplexing) telephone technologies for SMs. However, while P-based PX systems are less expensive than TDM-based PXes, P PXes are still too costly for most SMs. To address this gap, hosted VoP services have recently proliferated, and SMs now have a better range of choices from which to draw for P telephony. Making decisions around hosted services is different than premise-based systems, and you need the right tools. Our SM Phone Systems Comparison Guide has been developed with this objective in mind, and is here to help you survey the field and narrow down the best choices for the specific needs of your business. This document is a companion to the Focus Market Primer: Phone Systems and uyer s Guide: SM Phone Systems. Our Focus SM Phone Systems Comparison Guide is one of several research reports based on the Focus Research Methodology, which is designed to support your entire purchasing process. Phone Systems Market Primer Want to know what a business phone system is? SM Phone Systems uyer s Guide Want help defining your requirements? SM Phone Systems Comparison Guide Want help comparing? Table of Contents Comparison Methodology: Focus uyer Type descriptions, comparison factors and how solutions/vendors are selected...p. 3 The Focus Short List: Candidates that Focus believes every buyer of SM telephony services should consider...p. 6 The Focus Comparison Grids: Detailed comparisons of product, pricing and vendor considerations p. 7 Vendor Profiles: Thumbnail descriptions of included providers and others worth watching...p. 13 Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

3 Comparison Methodology uyer Types s explained in detail in the SM Phone Systems uyer s Guide, Focus has identified three basic uyer Types for such solutions. asic uyers ntermediate uyers dvanced uyers asic uyers are those in search of simple solutions that support the most widely used traditional and P telephony features, such as conferencing, fax support or voice mail. Such buyers typically have limited T resources and expertise, and for them, hosted VoP is a practical solution for moving on from TDM. asic uyers typically work at the lower end of the SM market, and support no more than 100 users, and often fewer than 50. ntermediate uyers are those in search of more complex solutions that support greater capacities and advanced features such as support for unified messaging, VPN support or soft phone integration. These buyers typically have some T resources and expertise, but still see the advantages of hosted VoP over premise-based systems. ntermediate uyers typically work at midsize companies supporting between 100 and 500 users. dvanced uyers are those in search of fairly complex solutions (including support for multiple distributed sites and advanced call/ contact center features) that enable increased availability, automation, optimization and integrated management. Hosted solutions that meet the needs of dvanced uyers can often require extensive integration of P telephony with business software, Web applications and video conferencing. Many dvanced uyers work at the top end of the SM market, and typically support 500 to 1,000 users. Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

4 Comparison Factors n addition, members of every uyer Type identified by Focus Research have three primary areas of concern when considering hosted VoP services: Product considerations: including basic and advanced features as well as performance and platform elements Cost considerations: including service pricing, bundles with other services, trade-in offers Vendor considerations: including direct or indirect selling, technical support, and resources to help make buying decisions Vendor Selection To be considered for inclusion in this Guide, solutions and their providers must meet the following minimum requirements: asic uyers Solutions must interoperate with incumbent voice communications systems and phones. Providers must offer integration and consulting services, directly or through partners. ntermediate uyers Solutions must support integrated or optional application integration, unified communications (UC) and unified messaging. Providers must support at least limited integration with incumbent third-party hardware, software, and legacy phones. dvanced uyers Solutions must support distributed/multisite deployments (and consolidated management). Solutions must support customer-driven customization via application programming interfaces (Ps) and/or included software development kit (SDK). Providers must have at least two years experience supporting advanced SM environments Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

5 Solutions and providers found to meet these requirements were included in this Focus Comparison Guide based upon analysis and comparison of offering, cost and provider considerations. Those solutions and providers were also evaluated in terms of market prominence, after interviews and discussions with industry analysts, other experts and users. Some of these were conducted via the Focus Web site. These interviews and discussions were combined with Focus research and expertise to select Focus Short List members and to craft the comparison grids in this Guide. For more information, please contact the Focus research team. This Guide is focused only on hosted SM telephony offerings, all of which have a standard VoP offering. While this serves as a bona fide replacement for TDM service, these offerings have additional components that go beyond telephony. Hosted services for SMs have evolved beyond VoP, and there is now a wide range of add-ons, some of which are voice-centric, while others integrate voice with other communications modes. t should also be noted that hosted is not the only telephony option for SMs. Premise-based solutions are also widely available, and these were featured in our 2009 SM Comparison Guide. Focus research indicates that hosted services have emerged as a leading trend for SMs in 2010, and for that reason the current edition is only reviewing hosted offerings. n addition to our 2009 analysis, you can learn more about premise-based systems in the Focus Enterprise Comparison Guide. Even though these offerings are enterprise-focused, most of the featured vendors also have SM variations. s such, that Guide serves as a good proxy for the SM market, and we view it a helpful complement to the hosted focus in this Guide. Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

6 The Focus Short List The Short List and comparison grids that follow present information about leading hosted telephony solutions for SMs. These offerings have been carefully identified by Focus, and are organized by uyer Type along with the key considerations outlined above. The Short List offerings below are based on what our research indicates to be the best pricing, functionality and/or support features for each associated uyer Type. You should also understand that there is little differentiation among core feature sets from these hosted providers, and there is no value to cite them in the comparison grids. However, you should pay close attention to how those features are implemented and supported, and what other functions and features are available with the solutions and providers you consider. s you craft your own specific short list, insist on apples-to-apples comparisons of features and pricing to the best of your ability. This will not be possible for every item in the grids, but our research should make it much easier for you to choose from the vendors and solutions that make that list. KEY PONTS Type Of uyer est Product ets Product Cost Vendor Phone.com Virtual Office Web-based; easy to deploy; innovative calling features $10/month, plus $5 for each P extension; $100 - $230/phone, plus $5/month 24x7 phone support; online chat and forums asic uyers Vocalocity Small usiness VoP ntegrates with Microsoft Outlook; uses customers existing broadband connections $15/month/user; $100-$630/phone Phone and support services; online education center Cbeyond eyond Voice Office Edition ntegrates with incumbent PXes; uses dedicated network links $399/month; does not supply phones Established player; a profitable public company ntermediate uyers M5 Networks M5 PingTone Enterprise Service Comprehensive feature set; flexible platform for adding new features Hosted telephony solution based on Cisco VoP technologies $35/month/extension; $100-$800/phone $25-$45/month/extension; $150-$350/phone Highly experienced hosted VoP pioneer 24x7 help desk support lteva Collaboration & Voice Communication ntegrates with desktop, Web applications; includes mobile, soft phone support $25/month/extension; $200-$400/phone Perhaps the most advanced provider of cloud-based applications and UC integration with Microsoft dvanced uyers RingCentral RC Office Supports pple iphone; integrates with Microsoft Outlook $50/month/first user; $25/month/additional user; $99/phone, $360/four phones Solid track record of growth; a pioneer in cloud communications asic uyers ntermediate uyers dvanced uyers Source: Focus, February 2010 Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

7 The Focus Comparison Grids Product considerations: asic features Vendor: Product Solution uyer Types dministration asic E911 support Fax server management conferencing Security/password protection options 8x8 Virtual Office Optional add-on lteva Collaboration & Voice Communications andwidth.com Phonebooth OnDemand (beta) Cbeyond eyond Voice Office Edition M5 Networks m5 Optional add-on Nuvio npx, for the customer portal Phone.com Virtual Office Optional add-on PingTone Communications Enterprise Service Optional add-on RingCentral RC Office Limited to 3-way conferencing Vocalocity Small usiness VoP Optional add-on asic uyers ntermediate uyers dvanced uyers * Small = 1-100, midsize = , small enterprise = 501-2,500, enterprise = ,000+ Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

8 Vendor: Product Solution uyer Types Product considerations: DVNCED features ntegration ntegration QoS Contact center Mobile Soft phone with desktop with Web appls monitoring/ support/module support support business software or services management Unified communications (UC) support 8x8 Virtual Office dditional service, Complete Contact Center Microsoft Outlook Salesforce.com Optional iphone/ ipad integration Optional add-on ; can be monitored by customer and provider lteva Collaboration & Voice Communications Optional add-on Microsoft Communications Services and desktop URLs Salesforce.com and GoogleTalk, by the provider or the customer andwidth.com Phonebooth OnDemand (beta) Cbeyond eyond Voice Office Edition, by the provider Optional add-on M5 Networks m5 Optional add-on MS Outlook, Evo, cto, and other TP-compliant desktop apps nternet Explorer and Firefox; integrations with Salesforce.com, NetSuite and others coming in Q3 Nuvio npx, by the provider Phone.com Virtual Office ; VoP speed test PingTone Communications Enterprise Service dditional service, P Call Ceter Microsoft Outlook, TP integration Salesforce.com, CRM Lite (SQL interface) Optional iphone/ ipad integration (for Cisco P Communicator or P lue) RingCentral RC Office Microsoft Outlook ; open P available for thirdparty integrations Limited to iphone; RC Mobile service available separately Vocalocity Small usiness VoP Microsoft Outlook Microsoft Outlook Optional free add-on asic uyers ntermediate uyers dvanced uyers * Small = 1-100, midsize = , small enterprise = 501-2,500, enterprise = ,000+ Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

9 Product considerations: PLTFORM Vendor: Product Solution uyer Types Uses customer's existing Routes traffic on a ntegrates with broadband or provider's dedicated network or existing PX systems broadband service via the nternet Offers premise-based option 8x8 Virtual Office, via SP trunking Customer's existing broadband Either lteva Collaboration & Voice Communications Either Either andwidth.com Phonebooth OnDemand (beta). vailable via separate SP trunking service. Either Either Cbeyond eyond Voice Office Edition Provider's broadband Dedicated network M5 Networks m5 Provider's broadband Dedicated network Nuvio npx Customer's existing broadband nternet Phone.com Virtual Office Customer's existing broadband nternet PingTone Communications Enterprise Service, via SP trunking Either Either RingCentral RC Office Customer's existing broadband nternet Vocalocity Small usiness VoP Customer's existing broadband nternet asic uyers ntermediate uyers dvanced uyers * Small = 1-100, midsize = , small enterprise = 501-2,500, enterprise = ,000+ Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

10 Vendor: Product Solution uyer Types Cost Considerations Monthly pricing Metered, Price range of Purchase or or fixed-term bundled and/or asic cost P phones rent phones contract unlimited minutes 3 4 Upgrade 7 options for services Overall clarity of pricing/features information continue 8x8 Virtual Office Monthly pricing plus activation fee Unlimited and metered $25/month per extension $150 - $350/phone Either Very clear; service plan breakdowns and costs for optional features are easy to find. ncludes online quote request form. lteva Collaboration & Voice Communications Monthly pricing Metered or bundled $25/month per extension $200 - $400/phone Either Somewhat clear; basic monthly cost statement is easy to find, but the feature list is limited. andwidth.com Phonebooth OnDemand (beta) Monthly pricing Unlimited local and long distance; international minutes available via separate SP trunking service $20/month per extension $175 - $700/phone Purchase Very clear; pricing info is up front, and the quote configuration tool is based on customer's needs. Cbeyond eyond Voice Office Edition Monthly plus activation fee Set number of included minutes, then goes to metered minutes; long distance bundles available $399/month N/ Provider does not offer P phones À la carte services available Unclear; no pricing information is given online. M5 Networks m5 Monthly Unlimited U.S. minutes; international rates available $35/month/ extension $100 - $800/phone Either Unclear; no pricing information available online. asic uyers ntermediate uyers dvanced uyers * Small = 1-100, midsize = , small enterprise = 501-2,500, enterprise = ,000+ Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

11 Vendor: Product Solution uyer Types Cost Considerations (continued) Monthly pricing Metered, Price range of Purchase or or fixed-term bundled and/or asic cost P phones rent phones contract unlimited minutes Upgrade 14 options for services Overall clarity of pricing/features information Nuvio npx Monthly plus activation fee Unlimited local, unmetered local, and metered international minutes $45/month per extension $55 - $300/phone Purchase Somewhat clear; monthly prices for each plan are online, but it is unclear if there are additional fees. Phone.com Virtual Office Monthly or annually, plus activation fee Set number of free monthly minutes, then goes to metered minutes; all-minutes options available $10/month, plus $5 for each P extension $100 - $230/phone +$5/month Either Somewhat clear; pricing for different plans is online. PingTone Communications Enterprise Service "Monthly pricing plus configuration/ installation fee" undled and metered pproximately $25-$45 per phone/month; onetime install charge + private dedicated access circuit $150 - $350/phone Either Unclear; no pricing information is available online, but site includes online quote request form. RingCentral RC Office Monthly Unlimited local and long distance minutes; international minute plans available $50/month for one user; $25/month for each additional user $99 per phone; $360 for four P phones Purchase Somewhat clear; pricing per system is online and easy to find, but device costs aren t as straightforward. Vocalocity Small usiness VoP Monthly Metered and unlimited plans for the U.S.; international plans available $15/month per user $100 - $630/phone Purchase Very clear; the costs for each plan and for additional features and fees are online and easy to find. Online cost estimator is thorough and based on customer's needs. asic uyers ntermediate uyers dvanced uyers * Small = 1-100, midsize = , small enterprise = 501-2,500, enterprise = ,000+ Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

12 Vendor Considerations Vendor: Product Solution uyer Types 1 usiness 2 Disaster 3 Option to migrate 4 Online resources 5 continuity recovery to SP-based for making buying support support multimedia communications decisions Technical support options/services 8x8 Virtual Office ; hosted service can be accessed from any location Data sheets, interactive tools, and demos Phone and chat services, documentation and downloads lteva Collaboration & Voice Communications 24x7 phone service, online trouble tickets, and customer training andwidth.com Phonebooth OnDemand (beta) Phone and services, and online FQs and forums Cbeyond eyond Voice Office Edition Phone, , and chat support services, online forums, FQs, and knowledge base M5 Networks m5 24x7 phone support service, support services, and real-time network status updates online Nuvio npx Service plan comparison chart 24x7 phone support, support, online support request form, knowledge base, FQs and guides Phone.com Virtual Office 24x7 phone support, online chat support, user guides, FQS and online forums PingTone Communications Enterprise Service ; hosted service can be accessed from any location Online demo, user guides available 24x7 help desk support RingCentral RC Office SP-based voice services only nteractive screen shots, quick start guide, and Webinars 24x7 phone support service, support service, FQs and online forums Vocalocity Small usiness VoP White papers and Webinars Phone and support services, FQs, guides and training resources asic uyers ntermediate uyers dvanced uyers * Small = 1-100, midsize = , small enterprise = 501-2,500, enterprise = ,000+ Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

13 Vendor Profiles 8x8 lteva andwidth.com Cbeyond M5 Networks lso offers home office, enterprise, managed hosting and hosted call center solutions Founded in 1987 as a chip-maker; went public in 1997; offering VoP services since One of the largest hosted VoP providers Focused on delivering true UC solutions; partnered with Microsoft, roadsoft in pril 2010 to deliver UC to SMs lso offers Phonebooth Free, with one number, up to 50 users or groups and easy upgrades to Phonebooth On Demand lso offers business nternet services, separately or bundled with VoP lso offers data backup and security (in partnership with Mozy), collaboration and messaging and marketing services Delivers services via a 100-percent private P network Focused on combining hosted VoP with reporting and application integration to deliver actionable business information Dedicated account managers provide enterprise-class customer support and smooth transitions from other phone systems. Nuvio Phone.com PingTone Communications RingCentral Vocalocity lso offers nconnect, a SP trunking solution for VoP enablement of legacy phone systems lso offers nuvioflex bulk packages of phones and services at fixed prices lower than many competing offerings lso offers virtual number (one number for multiple phone lines) and home telephony services mplemented a channel sales program in May 2010 aimed at SM Virtual Office customers Focused exclusively on business VoP solutions that promise consistently enterprise-class call quality and service availability nfrastructure based solely on elements from so-called Tier 1 technology and service providers, such as roadsoft and Cisco Selected a 2010 Technology Pioneer by the World Economic Forum Partnered in May 2010 with China s libaba.com to enable Chinese companies to set up and link to toll-free US phone and fax numbers Focused exclusively on small businesses, typically 50 employees or fewer VoP services also include 2G of online storage and backup at no extra cost. Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

14 Others Worth Watching Digium Google Skype Open source has been an important trend in telephony for some time, and sterisk is the dominant platform using this model. The basic sterisk software platform is free, although specialized training is extra. There are also enhanced features that come at a modest cost, such as fax, echo cancellation, VR prompts and Skype integration. Open source is attractive, mainly for the cost savings, but also the flexible nature of the platform. Digium and sterisk can be purchased as turnkey solutions either from their website or via a large network of resellers. For those who want a more customized solution, these components can be bought separately and integrated into other systems that support open source. Digium is the parent company, and it makes money on the hardware; for Focus.com clients, this comes in the form of their Switchvox P PX. This offering comes in three editions, and can meet the needs across the full SM spectrum. The Switchvox 65 supports up to 30 users, the 305 supports up to 150 users, and the 355 supports up to 400 users. Focus believes that Digium is well-suited to SMs that are highly cost-conscious and prepared to take on most of the burden for deploying and supporting their own telephony solution. However, this Comparison Guide is focused on hosted VoP offerings, and most Digium solutions are premise-based. Fonality, one of the providers featured in this Guide, does offer a hosted version of its open source solution trixbox but that is the exception rather than the rule. side from its ubiquitous market reach, Google is probably the biggest moving target in telecom, and these are both good reasons to keep a close watch on it. Google will never compare easily against traditional telephony or VoP offerings, but it continues to tack on pieces that add up to a comprehensive communications platform. y definition, Google is a hosted provider, and for that reason alone, it should be included in this Guide. t is not focused on SMs per se, but in time, our view is that Google will create a distinct offering for this market. However, telephony is not yet its strong suit, and Focus does not believe it will be a direct competitor to the providers profiled herein, at least in the near term. Further out, however, it will be a viable option for businesses that are comfortable with the cloud and prepared to break away from the PSTN and entrust telephony to the Web. Most businesses are not ready for this yet, but when you consider the path Google has been on recently, it is not difficult to see how it could appeal to SM decisionmakers looking to be more strategic in how they invest in communications solutions. Just looking at voice, consider the capabilities Google has via the acquisitions of GrandCentral, Gizmo 5 and, most recently, codec pioneer Global P Solutions. dd to that its various applications platforms (which are essentially free) such as Google pps, Google Docs, Gmail and Google Wave. Google has proven to be a major disruptor in every market it tackles, and Focus believes SM communications is no exception. Like Google, Skype is a major disruptor, and it has quietly gained broad adoption among SMs. However, its path has been the exact opposite of Google s. Whereas Google s success comes from advertising and every mode of communication other than voice, Skype s foundation is built primarily on voice and being commercial-free. oth are Web-based, and given Skype s phenomenal global reach, it is simply too large to ignore in a discussion about hosted VoP. lthough its Skype For usiness offering does provide hosted VoP, the comparisons largely end there when considering the offerings profiled in this Guide. Skype is very tough to beat in terms of being a free and/or low-cost voice service, but at this time it does not offer the range of other services and features outlined herein. n our view, Skype is a very attractive complement to these offerings, but for a variety of reasons is not really an ideal option to replace TDM service. However, for SMs looking to lower telecom costs and simplify their communications tools, Skype For usiness has quite a lot to offer. side from PC-based telephony and M, it now provides multiparty video calling, mobile integration, PX integration and, with peer-to-peer technology, large file sharing. With all these capabilities, Focus expects that Skype For usiness will evolve into a more clearly defined SM solution that could very possibly be integrated or even bundled with the hosted offerings reviewed in this Guide. That time has not yet come, but the business market is integral to Skype s growth plans, and it brings too much to the table to not be considered an emerging force, especially for SMs. Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

15 bout Focus Research Each year U.S. businesses spend more than $75 trillion* on goods and services. nd yet there has not been a definitive source of trustworthy and easily accessible information to support business buyers and decisions makers especially those in small and midsize businesses. Filling this gap is the mission of Focus Research. Through its Research Guides, Focus Research empowers buyers to make considered purchases and decisions. Focus does this by providing freely available, actionable advice based on the expertise of other buyers, recognized experts and Focus analysts. Guiding Principles Our goal is not only to provide independent and high-quality research but also to deliver a new research model that serves all businesses. Open: We believe information must be set free. The data, advice and research on Focus are widely distributed and available to everyone Peer-powered: We believe in the power of many. Thousands of buyers and experts contribute their expertise to Focus every day. Our job is to take their insights and integrate them into our research. Relevant: We believe there is no one-size-fits-all answer to a business purchasing decision. Focus Research is, therefore, designed to address specific concerns of multiple buyer types across multiple industries. s such, users are encouraged to combine our different research deliverables into tailor-made packages that effectively address their unique needs and goals. Practical: We believe in addressing everyday issues facing businesses. Focus Research does not pontificate on high-level trends or promote broad-based research agendas. Rather, Focus Research endeavors to provide specific, actionable recommendations that help businesses make the right decision every time. * Source: Visa, nc. Commercial Consumption Expenditure ndex fact sheet. Focus / Comparison Guide / 2010 SM Phone Systems Focus Research

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