Australia UC Services

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Australia Unified

Communications Services

Report 2009

An Analysis of the Unified Communications Services Market Opportunity in

Australia


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Australia 2009 Unified Communications Research www.frost.com 2

Table of Contents

Chapter 1 .................................................................................................................................. 3

Executive Summary .................................................................................................................... 3

Overview ................................................................................................................................... 3

Chapter 2.6

Unified Communications Services Definition and Methodology .......................................................... 6

2.1 Unified Communications Services Definition and Framework .......................................................6

2.2 Unified Communications Framework ........................................................................................9

Chapter 3 .................................................................................................................................. 11

Unified Communications Services Market Opportunity Analysis ......................................................... 11

3.1 Market Dynamics .................................................................................................................. 12

3.2 Market Drivers and Market Restraints ...................................................................................... 13

3.3 Total Addressable Unified Communications Services Market Opportunity ......................................15

3.4 Analysis by Unified Communications services Segments .............................................................17

Chapter 4 .................................................................................................................................. 25

Unified Communications Competitive Analysis ................................................................................25

4.1 Competitive Framework of the Australia UC Services Market.......................................................32


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1

Executive Summary

OVERVIEW

The Australian UC (Unified Communications) Services market was worth $608.7million in 2008.

The market is forecasted to grow at a CAGR of 5.7 percent from 2008-2015. Revenues are

forecasted to reach $895.5 million by 2015.

The impact of mergers and acquisitions in the UC industry in the last 12 months has heightened

competition from a services play. The two most notable acquisitions in UC have been Avaya

acquiring Nortel and Cisco acquiring Tandberg. It means that the market is narrowing in terms

of market participants. From a systems integration standpoint, it means that some channels will

find it challenging to compete with some of the more established UC services players.

The global recession in the last 12 months has driven the demand for technologies such as

video and collaboration in the Australia market. Across government departments, education,

healthcare organisations, retail, and financial services organisations there was a need to cut

spending on travel and video emerged as one of the technologies that would help drive travel

costs down. Several large multinational organisations have also cut back on travel significantly

and are now encouraging the use of videoconferencing solutions. Managed services including

monitoring, managing and maintaining the network will be critical and only the global service

providers and telecom service providers are in a strong position to offer this solution.

Apart from video and collaboration, the other widely discussed offering is unified

communications in the cloud. The pay per use model has been widely talked about in the

downturn. UC as a Service is still in its early stages of growth in Australia. The market will see

more of a hybrid model deployed in the next few years. A hybrid model would mean that an

organisation would own its voice solutions and have its video or web conferencing solutions be


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managed by a solution provider. For many large organisations in Australia, voice and contact

centre related applications are mission critical and its still something the customer wants to

own. Organisations are still reluctant to allow a third party to manage these solutions. There is

still concern around security and, as such, the hybrid model will be common for most large and

medium sized organisations.

There are less than 10 players in Australia with a hosted UC offering encompassing the key

applications such as voice, video, e-mail, presence, IM, mobility and contact centre applications.

Telstra launched its T-suite offering earlier this year. Telstra has increased the offerings

available on T-Suite to allow customers access to Microsoft's online services such as Exchange

Online, SharePoint Online, Office Communications Online and Office Live Meeting. All four

services are available from $24.95 per user per month for businesses with up to 100 staff. T-

Suite was built to address the small and medium business market, and with Microsoft online

services, Telstra is able to expand its reach to enterprise customers. NEC also recently launched

its hosted UC solution called the Applications Net solution. The solution is something NEC is

targeting at smaller companies and start ups. Price per user per month starts from around $5 a

month. This is the base level offering and includes a blog, IM, its web 2.0 application and a

mailbox. A lot of innovation is taking place at this space with players such as IBM, Google and

Cisco also offering hosted solutions for their customers. Hosted UC Services accounted for 53%

of the total Australia UC Services market in 2008 with the majority of the revenues coming from

web conferencing services, hosted e-mail, voice and audio conferencing solutions.

UC Services will see good growth due to the complex nature of how various technologies are

interconnecting with one another. Technologies will no longer only span one single application

such as IP telephony. They will increasingly be integrated with other technologies such as video,

social networking and web 2.0 applications, mobility, contact centre and ultimately to the

business process applications. This integration will drive the need for consulting and design as

well as managed services capabilities. At this point, consulting services is what the larger

organisations are buying and this segment accounted for only 7.0% of UC Services revenues in

2008. Some of the offerings in this category include network and infrastructure assessment,

voice and wireless assessment which would help clients understand the potential risks involved

in a UC deployment. For most organisations with less than 150 seats in the Australia market,

they will likely not pay for this type of engagement. Consulting firms and large global SIs such

as Fujitsu, Accenture, IBM, and Unisys are some of the organisations that will look to grow this

part of their services offerings.

A managed service is an important growth area in the Australia UC services market. For large

and medium sized organisations, managing all applications 24/7 and ensuring that there is no


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downtime is critical. They also have a need for easy accessibility to technologies such as

Telepresence and videoconferencing. These factors will drive the demand for end to end

managed services offerings. This segment is expected to grow at a CAGR of 9.0% from 2008-

2015.

Telstra and Alphawest/Optus are the dominant players in the Australia UC Services space.

Complex deployments that involve managing video, Telepresence, collaboration, mobility and to

offer hosted services will be some of the key solutions that the telecom vendors have to offer.

Due to unique telecommunications related skill sets and offerings, they will be a threat to some

of the large system integrators in the Australia UC Services market. Other major players in the

Australia UC Services market include IBM and Dimension Data.


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2

Unified Communications

Services Definition and

Methodology

2.1 UNIFIED COMMUNICATIONS SERVICES DEFINITION AND FRAMEWORK

Exhibit 1 illustrates the Unified Communications Services Definition and Framework.

Exhibit 1 Unified Communications Services Definition and Framework

Source: Frost & Sullivan

Unified Communications (UC) Services

ProfessionalServices

Managed UCServices

Hosted UCServices

Consulting Services

Implementation Services

MaintenanceServices


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Unified Communications (UC) Services consists of services rendered for the UC applications i.e.

telephony, email, mobility, conferencing and collaboration, unified client, unified messaging as

well as presence and integrated UC applications. The continuum of UC Services includes:

1. Professional Services2. Managed Services3. Hosted Services4. Maintenance Services

1. Professional Services is the act of providing advice, skills and expertise in particulardomains to customers. It runs the full gamut of consulting and implementation services

and consists of the following:

Consulting Services include planning and design, capacity planning, performanceassessment and audit, migration consulting, project engineering, design review and

project management.

Implementation Services include system integration, migration services, configurationmanagement, project management, site survey, site preparation, staging, piloting,

installation, testing, monitoring, performance management and training.

2. Managed Services is defined as an on-going management and monitoring of customer-premise based communication systems/ applications by a third party service provider. It

includes a predefined level of accountability for the operation of a customers

communications system.

3. Hosted Services is defined as on-going management and monitoring of unifiedcommunications applications residing at service providers premises.

In both managed and hosted UC services environments, the service provider iscompletely responsible for the delivery of services including design, building, operating

as well as managing, and monitoring the communication systems and infrastructure.


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4. Maintenance Services refers to the act of maintaining and optimizing communicationsystems and infrastructure by service providers on a contractual or on-demand basis.

The services include:

Basic Maintenance services: Onsite monitoring and maintenance as well as break-fix maintenance services.

Advanced Maintenance services: Remote/Online monitoring, fault monitoring,online support, troubleshooting, analysis and reporting.

Maintenance services which are bundled with other types of services in a managed or hosted UC

service contract are not included in the maintenance services category. Revenues for these

services are accounted under managed or hosted UC services.


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2.2 UNIFIED COMMUNICATIONS FRAMEWORK

Exhibit 2 illustrates the major applications in the Unified Communications Stack.

Exhibit 2 Unified Communications Application Stack

Unified Communications (UC) is the amalgamation of disparate communications systems. UC

applications improve user productivity and enhance collaboration by integrating and converging

multiple enterprise communication channels.


Presence

Presence

Presence

Presence

Enterprise Telephony

Email

Contact CenterUnified Client

Conferencing & Collaboration

Within

the

Enterprise

Outside

the

Enterprise


Mobility

Unified Messaging


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Key Notes and Assumptions about the Unified Communications Services research:

This study looks at the Australian market only.

The study period for this research service is from 2008 to 2015, with 2008 being thebase year. Revenues for the forecast period reflect the potential services revenues from

UC based applications.

Revenues in this research service represent UC services sales from enterprise equipmentmanufacturers/vendors, telecommunication service providers and system integrators

who are part of the value chain for the provision of enterprise communication solutions.

Revenues are based on end-user prices, i.e., actual price paid by end-users for theservices. All revenues are reflected in Australian Dollars.

All revenues in this report are expressed in Australia dollars. In the case of historicalrevenues, US dollars have been converted at a standard rate of 1.17 (USD1=AUD1.17).


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3


Services Market

Opportunity AnalysisSummary of Market Opportunity Analysis:

The Australia UC Services Market was worth $608.7 million in 2008 and revenues areexpected to reach $650.2 by 2010.

The CAGR (Compound Annual Growth Rate) for the period 2008-2015 is at 5.7%.

Hosted Services accounted for 53.0% of services revenues in 2008. The majority of thiscan be attributed to the revenues from hosted conferencing, e-mail and telephony

revenues.

Integration, which includes implementation, was the second biggest revenue contributorand this segment accounted for 16.0% of UC services revenues in 2008. This was

followed closely by the Maintenance segment which accounted for 14% of revenues in

2008. The overall revenue contribution from maintenance is expected to decline over the

forecast period.


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3.1 MARKET DYNAMICS

Exhibit 3 illustrates the market engineering measurement analysis in the 2008 Australia Unified

Communications Services Market.

Exhibit 3 - Market Engineering Measurement Analysis in the 2008 Australia Unified

Communications Services Market

Measurement Name Measurement Trend

Market age Growth stage ---

Revenues (2008) $608.7 million Increasing

Potential revenues (2015) $895.5 million Increasing

Base year market growth rate (2008) Nil Increasing

Forecast period market growth rate (CAGR) 5.7% Increasing

% of revenues by types of service

Consultation

Integration

Maintenance

Managed Services

Hosted Services

7.0%

16.0%

14.0%

10.0%

53.0%

Increasing

Increasing

Decreasing

Increasing

Decreasing

Degree of Competition High Increasing

Active Unified Communications SIs in Australia Less than 30 Increasing

Companies entering the market (2008) Less than 15 Increasing



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3.2 MARKET DRIVERS AND MARKET RESTRAINTS

Exhibit 4 illustrates the Unified Communications Services Market Drivers.

Exhibit 4 - Unified Communications Services Market Drivers (Australia), 2008

Rank Driver 1-2

Years

3-4

Years

5-7

Years

1 IP Telephony adoption spurs the adoption of

UC applications thereby driving UC services

revenues

High High High

2 The need to have some of the more complex

solutions and applications such as video

managed by a service provider will drive the

need for Managed services

Medium Medium High

3 The need to understand how unified

communications will fit into the organisations

overall business processes which include its

ERP, CRM and Supply Chain segments will

drive uptake for consulting services

Low Low Medium

4 Growing interest around mobility applications

in UC will drive the need for the management,

deployment and integration of these

technologies. This will drive revenues for UC

services revenues for the service providers or

carriers in the UC domain

Low Medium High

5 UC offerings for the SMB market will increase

revenues for hosted UC services

Low Medium High



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Exhibit 5 illustrates the Unified Communications Services Market Restraints.

Exhibit 5 - Unified Communications Services Market Restraints (Australia), 2008

Rank Restraints 1-2

Years

3-4

Years

5-7

Years

1 Lack of a convincing ROI model impedes the

adoption of UC technology thereby inhibiting

the adoption of UC services

High High Medium

2 High costs associated with some of the

services which include consulting and

managed services

High High Medium

3 Declining margins and price points from

services such as maintenance will curtail the

growth of overall UC services revenues

High High Medium

4 Increasing technical complexity and

integration of various UC technologies deters

companies from embarking on a UC

deployment

High Medium Low

5 Inability to have the right skill set of solution

specialists that understand integration across

voice, desktop and network components will

inhibit the uptake UC services revenues

Medium Low Low



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3.3 TOTAL ADDRESSABLE UNIFIED COMMUNICATIONS SERVICES MARKET

OPPORTUNITY

Exhibit 6 illustrates the Unified Communications Services Market Opportunity in Australia.

Exhibit 6-Total Addressable Unified Communications Services Market Opportunity: Revenue

Forecasts (Australia), 2008-2015

Note: All figures are rounded; the base year is 2008. Source: Frost & Sullivan

608.7 626.4 650.2680.7 719.7

767.4825.4 895.5

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

1000.0

2008 2009 2010 2011 2012 2013 2014 2015

Revenue$(millions)


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Analysis of Total Unified Communications Services Revenue Opportunity:

The Australia Unified Communications Services Market was worth $608.7 million in 2008.Revenues are expected to reach $895.5 million by 2015. Frost & Sullivan is expecting

modest growth due to the decreasing price points in some areas of services such as

maintenance and as such that will have an overall impact on UC services revenues in

Australia.

Revenues are expected to grow at a CAGR (compound annual growth rate) of 5.7% from2008-2015.

Revenue for UC Services for the 2008 timeframe was driven by the financial services,education, government, professional services, retail and multinational organisations.

Most of the UC spending for the 2009-2010 timeframe will be driven by government andeducation. Financial services, which are one of the key revenue contributors in the UC

space, will increase its spending towards the end of 2009. Financial services saw a

decline in spending towards late 2008 right through to mid 2009 due to the global

financial crisis.


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3.4 ANALYSIS BY UNIFIED COMMUNICATIONS SERVICES SEGMENTS

Exhibit 7 illustrates the Unified Communications Services Segments.

Exhibit 7-Total Market Opportunity by Services Segments: Revenue Forecasts (Australia),

2008-2015


0

100

200

300

400

500

600

700

800

900

1000

2008 2009 2010 2011 2012 2013 2014 2015

Revenue$(million

s)

Consulting HostedServices Implementation Maintenance ManagedServices


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Exhibit 8 illustrates the Total Unified Communications Services Market Opportunity by Segments

in percentage terms.

Exhibit 8-Total Unified Communications Market Opportunity by Segments: Revenue

Forecasts in % (Australia), 2008-2015


%RevenueSplitbyServices 2008 2009 2010 2011 2012 2013 2014 2015Consulting 7.0% 7.3% 7.6% 7.9% 8.2% 8.5% 8.9% 9.3%

Hosted Services 53.0% 52.5% 52.1% 51.8% 51.4% 51.1% 50.9% 50.6%

Implementation 16.0% 16.0% 16.0% 16.1% 16.1% 16.2% 16.3% 16.3%

Maintenance 14.0% 13.9% 13.6% 13.3% 12.9% 12.5% 12.0% 11.4%

Managed Services 10.0% 10.3% 10.6% 11.0% 11.3% 11.6% 12.0% 12.4%


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Analysis of Total Unified Communications Services Segments:

Hosted Services accounted for 53.0% of services revenues in 2008. The majority of thiscan be attributed to the revenues from hosted conferencing, e-mail and telephony.

Hosted Services is forecasted to see good growth with the various offerings from service

providers such as Telstra for its T-Suite offering and NEC for its Application Net offering.

Many other system integrators are also developing hosted or cloud based UC offerings

which are expected to be released in the calendar year 2010. Alphawest/Optus also

plans to announce its hosted offering in early 2010. Hosted web conferencing services

continues to see good growth in the Australia market. With the drive towards saving

costs and deploying solutions as an operational expenditure, more organisations will

deploy technologies on a hosted platform. Several organisations still fear about security

issues and also want to own all technologies that are mission critical such as voice

applications.

Implementation was the second largest revenue contributor and this segment accountedfor 16.0% of total UC services revenues in 2007. Revenues from implementation are

expected to account for 16.3% of UC revenues by 2015. Implementation services include

system integration, migration services, configuration management, project

management, testing, monitoring, performance management and training.

Maintenance accounted for the 14.0% of total revenues in 2008. However over theforecast period, the overall revenue contribution from this segment is expected to

decline. Maintenance will account for 11.4% of total UC services revenues by 2015.

Whilst maintenance revenues will be an important part of UC deployments, it will be

viewed as a basic service in the contract and over time pricing from this segment is

forecasted to decline by greater than 10%. As such UC system integrators in Australia

will be forced to grow revenues in other services segments and will be forced to innovate

UC services portfolios to remain competitive. There is a growing demand for advanced

maintenance services which includes remote monitoring, fault monitoring, online

support, troubleshooting, analysis and reporting. To remain competitive many service

providers for UC services are adding more value add services to the maintenance

offering so that price erosion is limited. For large deals sold in the market that include a

large component of managed services and integration revenues, maintenance will

typically be bundled as part of the total contract.

Managed services are an important growth area for system integrators in the UC servicesmarket. This segment accounted for 10% of total UC Services revenues in 2008. The


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recent 12 months has seen good growth for this service in the contact centre segment

and also in verticals such as education, government and financial services in the move to

deploy more sophisticated wireless applications, voice, video and collaboration solutions

which also require a substantial element of monitoring how these applications perform

on the network. Over the forecast period, the service providers such as Telstra and

Alphawest/Optus have the ability to bundle in more value based services for this

segment due to its ability to offer other UC related telco services.

Consulting revenues accounted for 7.0% of total UC services revenues in 2008. The pre-sales engagement process of building a UC strategy to fit into the organisations overall

business processes is something that is affordable by larger organisations. Most of the

revenues were from the financial services segments and government departments. Due

to the high costs associated with this service, consulting is still viewed as a nice to

have service and will still account for less than 10% of UC Services revenues over the

forecast period.


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Exhibit 9 illustrates the CAGR (Compound Annual Growth Rate) of the UC Services Segments in

Australia.

Exhibit 9-CAGR of the UC Services Segments: (Australia), 2008-2015


10.0%

5.0%6.0%

2.6%

9.0%

5.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Consultation HostedServices Implementation Maintenance Managed

Services

TotalUC

Services

%CAGR(2008

2015)


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Key Messages:

The overall Australia UC Services market is expected to grow at a CAGR of 5.7% from2008-2015. This can largely be explained by the comparatively slow growth in the

maintenance sector over the forecast period. However, note that all other segments

grow at a higher rate.

Consulting is still at its early growth stages and will see uptake from some of the largeorganisations in Australia. This segment is expected to grow at a CAGR of 10.0 % in the

Australia UC Services market.

Managed Services will see good growth from the large system integrators and serviceproviders. Some of the recent large wins in the Australia market come with a managed

services component that involves managing all applications and the infrastructure.

Typically, service providers such as Telstra and Alphawest/Optus and global system

integrators such as IBM and Dimension Data will be at the forefront of securing such

large managed services deals.


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Exhibit 10 illustrates the Year on Year Growth Rates of UC Services by Segment in Australia,

2009-2015.

Exhibit 10-Year on Year Growth Rates: UC Services by Segment (Australia), 2009-2015


0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

2009 2010 2011 2012 2013 2014 2015

YearonYe

arGrowth(%)

Consultation HostedServices ImplementationMaintenance ManagedServices


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Key Messages:

Although maintenance will see increased revenues over the forecast period, year on yeargrowth will be marginal from 2009-2015 from this segment.

Hosted services accounts for the majority of UC revenues in the Australia market and willstill be the largest revenue contributor by 2015. However, as it has a large base of

revenues, the growth from this segment over the forecast period will be between 2%-

8%.

Managed services and consulting services is forecasted to see good growth ofapproximately 6%-13% over the forecast period.


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4


Competitive Analysis

Analysis of Major Australian UC Services Market Participants

Dimension Data is one of the leading UC system integrators in Australia. Its partnershipswith Microsoft and Cisco, both key vendors in the Australia UC market, have helped it to

secure some large contracts in the UC space.The economic downturn has caused them

to focus on opportunities in government where most of the large spending on UC

applications was in 2008-2009. One of their biggest wins on the video front has been

with the DET(Department of Education and Training) where they deployed over 2000

video endpoints on the Tandberg solution. Dimension Data and Tandberg won a

multimillion-dollar contract to provide upgraded core video conferencing infrastructure

for access by every school and TAFE in NSW as part of the states $158M Connected

Classroom Project. DiData and Tandberg will deliver a solution that will provide the

bridging technology to allow the DET to connect 2,200 locations via multi-site high-

definition video and audio conferencing. This is the largest-ever global order for

videoconferencing bridging technology. Other major wins for DiData Australia included

Xsastra, University of Wollongong, RMIT and Theiss.

3D Networks were Nortels leading channel partner in Australia in the 2007-2008timeframe. As a result of the Avaya pending acquisition of Nortel, 3D is focusing on

increasing its footprint in UC with Cisco and Microsoft. In recent months, it signed a deal

to be Mitels channel partner in the Australian market. Mitel has been one of the players

in the SMB space that has been witnessing good year on year growth in the Australian

market. Other major relationships it has are with Juniper for security solutions. The

company is witnessing good opportunities with several large and medium sized


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government agencies for Microsoft OCS integration. Close to 50% of its revenues come

from its maintenance business. 3D is trying to increase its revenues in managed and

consulting services. Major areas of focus in Australia include the education, hospitality

and healthcare segments.

NSC is the leading channel partner for Avaya in Australia. Having established itself as astrong player in the IP Telephony and contact centre domain, NSC is now building its

expertise in its UC practice. Its key partners are Microsoft, Avaya, Genesys, Verint and

Sun Micrososystems. Some of its major wins include Macquarie University, ANZ Bank

and News Limited. Key areas of focus in the 2010 timeframe include Utilities, Retail and

Education. NSC has a strong pipeline in the contact centre space and mainly in areas

such as speech, workforce optimisation, CTI and self service. They have a managed

services and a hosted offering that is witnessing good traction in the Australia market.

NSC has over 30 clients deploying solutions on the managed and hosted model and offer

hosted solutions such as voice, messaging, speech, recording, video and data networking

out of their data centres. One of NSCs main priorities in the next 12 months will be to

hire more technical specialists that have an understanding of not just contact centre and

voice but also integration across all major technologies in unified communications.

IBM Global Technology Services is one of the major UC Services players in the Australiamarket. The ability for IBM to offer a more holistic solution for the customer and the

ability to have a strong services focus globally allows it to be at the forefront of large UC

projects in Australia. It continues to work with Cisco as part of its Global Services

strategy in the Australia UC Services market but in recent months has increased its

relationship with vendors such as Avaya. Additionally, it has a strong relationship with

vendors such as Juniper for security and Rivermine for TEM (Telecom Expense

Management). The TEM solution is a total Managed offering from IBM and IBMs aim is to

help its customers reduce their telecom expenses by 10-15% across fixed, wireless and

data segments. For an organisation, this would mean that IBM would help them manage

new telecom contracts, handle billing and inventory management and also the purchase

of IP PBXs and wireless devices. Key verticals for IBM Services in Australia include

Education, Financial Services and Retail. IBM also offers services through its channels for

its IBM Lotus UC solution.IBM attained a market share of 6.6% in the 2008 Australia UC

Market. It was the second biggest vendor in the Australia e-mail market with a market

share of 32.6% in 2008. Given the large installed base IBM has and the strong

integration capabilities of its IBM services in Australia, IBM will be a key vendor in the

local UC Services market.


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Global Connect has been well known for its services play in the contact centre space.Although most of its work is predominantly in the contact centre space on the Avaya

offering, in recent months it has deepened its relationship with vendors such as Juniper

and Aruba to offer a broader range of services. Growth markets for Global Connect

include Western Australia, South Australia and Tasmania. The company has witnessed

demand for voice portal coupled with speech applications, predictive dialling and

analytical tools in the last 12 months. Demand has also been growing for managed

services although this still forms a small part of its overall revenues.

Alphwaest/Optus has witnessed major success in Financial Services, Government andEducation verticals. It has managed to successfully grow its play in the UC Managed

Services space and has garnered very large wins that involve integration in technologies

such as video, telephony and the contact centre. Some of its major wins include the ANZ

Bank, St George Bank, Department of Immigration and Citizenship and ATO. They have

witnessed good year on year growth from implementation and managed services

revenues. It continues to work very closely with Cisco, Microsoft, Nortel and Genesys in

the Enterprise space.

Telstra is one of the leading players in the Australia UC Services market and is extremelyfocused on innovating its offerings in the UC space. Telstra and Microsoft recently

unveiled Australia's first hosted IP telephony service integrated with Microsoft Office

Communications Server (OCS). This will enable Australian organisations to place Telstra

IP Telephony calls directly from applications such as Microsoft Outlook, Microsoft Office

Communicator and Microsoft SharePoint. Microsoft and Telstra have also announced the

availability of Microsoft Online Services on the Telstra T-Suite platform. Telstra has

witnessed good growth in the IP telephony space. Most of the successes in the last 12

months have been from the Education, Financial Services, Government and Retail

segments. From a video standpoint, Telstra has an alliance with Cisco and Polycom. The

recent pending Tandberg acquisition by Cisco would mean that decisions would have to

be made around integrating the Tandberg product line to its solution offering. Telstra has

also witnessed increased demand for audio services in the last 12 months. One of the

solutions to be launched will be Telstras audio conferencing solution integrated into the

WebEx offering. That solution is expected to be launched in November this year. This

would drive more audio conferencing revenues and drive the opportunity for it to be sold

as an integrated UC solution. Telstra continues to align its UC strategy with the key UC

product vendors in the market such as Cisco and Micrososft. Apart from working with

vendors such as Cisco and Microsoft, Telstra is also a leading channel partner for other

UC vendors such as Alcatel Lucent, NEC and Mitel.


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Fujitsu continues to have a deep relationship on the UC Services front with Cisco andMicrosoft. In March this year, Fujitsu acquired Kaz for $200 million.The acquisition was

in line with Fujitsus long-term objectives to grow its Australian business and provide

broader consulting, application and infrastructure services. Fujitsus current focus is to

build a UC roadmap in terms of its offering and growing its revenues beyond IP

telephony integration. It will focus heavily on Microsoft OCS and Exchange integration

and also building its capabilities around Ciscos UC applications. The main focus will be to

build its revenues in managed services due to some large deals it has secured in recent

months. It plans to have a Hosted UC solution by hosting UC applications in its own data

centres.

UXC announced wins for its Business Solutions Group, totalling more than $40 millionearlier this year. The wins by UXC subsidiaries range from Government and education to

commercial deals. Getronics Australia secured a contract with Linfox to support its 2000

strong ICT user base with support and a range of ongoing infrastructure projects.

Integ Communications won a four-year contract with the Attorney Generals office. UXC

and its subsidiaries have also signed contracts with Toll Holdings, Fosters, and LOreal.

Integ is one of Alcatel Lucents key channel partners in Australia and has been focused

on selling IP telephony, traditional telephony and contact centre solutions. Other major

partners include Genesys , F5, Juniper, Higher Ground and MRV Strategic Partner. Integ

launched a new hosted conference centre to target medium and large enterprise

customers. The Conference Centre, deployed on Alcatel-Lucent technology, is an

extension of its Integ telephony-as-a-service (iTaaS) market offering, which has been

available since September 2007.

HP is now working closely with Microsoft globally as part of the global alliance to developsolutions and a joint go to market strategy in the unified communications space. The

recent HP and Microsoft alliance will be an interesting one to observe, since Microsoft will

now be able to market to its clients a larger portfolio of solutions including

videoconferencing. This includes Telepresence by integrating its Office Communicator

client to HPs Halo solution. Additionally, as part of this alliance, HP will develop IP

phones. HP also announced an alliance with Alcatel Lucent to create a joint go-to-market

initiative to provide communications solutions to medium and large size enterprises and

public sector organisations. Alcatel-Lucent products in areas such as IP telephony,

unified communications, mobility, security and contact centres will be integrated with HP

IT solutions. These joint solutions will be offered to enterprises through HP resellers or

as managed services. For HP, the alliance will also mean that it will gain access to carrier


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markets for optical networking, MPLS and carrier Ethernet . Additionally, this alliance

allows HP to work on large contact centre accounts through Alcatels Genesys subsidiary.

HP has indicated that it is working with Cisco but to a lesser degree in the Australia

market.

Other smaller channels in the market are the second tier and third tier channels forAlcatel, Cisco, Mitel, Interactive Intelligence, Shoretel, etc. Typically, these channels sell

to SMB organisations for 50 seats and below and most deals sold are around basic

telephony, contact centre and conferencing solutions. The services element from this is

typically comparatively small and accounts for a very small portion of the UC services

revenues.


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Exhibit 11 illustrates the revenue split by types of UC Services players, 2008.

Exhibit 11-UC Services Revenue Split by Types of UC Services Players, (Australia), 2008


Vendors

3.9%

SystemIntegrators

31.2%

ServiceProviders

64.9%


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Key Messages:

Service Providers accounted for almost 65% of UC services revenues in 2008. Serviceproviders such as Telstra and Alphawest/Optus accounted for the bulk of revenues from

this segment. These vendors have demonstrated an ability to grow revenues in areas

such as managed and hosted UC services apart from the other services segments. This

trend is expected to continue and service providers will account for the majority of UC

revenues in the Australia market due to their ability to offer end to end management of

UC technologies. Global operators such as Verizon, British Telecom, AT&T, Orange

Business Services and T-Systems have been expanding their businesses into the Asia

Pacific region and some are currently offering UC services in the Australia market. Most

of the projects secured tend to be large global projects secured out of head office. Other

solutions sold apart from managed services include IP multimedia communication

services and WAN services.

System integrators accounted for 31.2% of revenues. The players that form the bulk ofsystem integrator revenue include Dimension Data, IBM Services, NSC, Getronics,

Fujitsu, Integ, 3D Networks, Data3, Commander, iVision and smaller system integrators

that represent some of the SMB vendors such as Shoretel and Interactive Intelligence.

This segment is a highly fragmented segment due to the various large and small

channels representing vendors such as Alcatel Lucent, Cisco, Avaya, Siemens and Mitel

to mention a few. Several of the smaller integrators sell more product solutions and have

low services revenues. In most instances, the services revenues are revenues from

professional services which involve integrating basic telephony applications.

Vendors, although still heavily reliant on channels for the sales and delivery of theirofferings, are starting to offer value added services to some of their large and top end

customers such as those in government and financial services. This segment accounted

for almost 4.0% of revenues in 2008 and is expected to witness a marginal increase in

its overall revenue contribution to UC services. Vendors themselves are faced with

challenges in growing product revenues and have in the last 18 months introduced high

end UC services as part of their direct offerings to customers. This, however, has caused

some level of discomfort with the channel community as they see the vendors competing

directly with them. Therefore, the revenue contribution from the vendor segment will be

low over the forecast period with the bulk of the services revenues coming from service

providers and system integrators.


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4.1 Competitive Framework of the Australia UC Services Market

Exhibit 12 illustrates the competitive framework of the Australia UC services market.

The market in Australia is split into 3 main clusters in terms of UC Services expertise.

At the top tier are the UC market participants that have been involved in some of thelarge scale deployments. Most of these market participants have established alliances

with Microsoft, Cisco and IBM and have garnered deals in Financial Services, Healthcare,

Government and Education. Dimension Data, IBM Global Technology Services, Telstra,

HP and Alphawest/Optus fall in this segment given that most of the large UC contracts

are in the hands of these participants. This tier of participants accounts for more than

50% of the Australia UC Services Market.

DimensionData

Telstra

IBMGlobalTechnology Services

Alphawest/Optus

Tier1UCServicesMarketParticipants

Integ

3D Networks

Getronics

HP

Touchbase

Geni

GlobalConnect

Data3

NSC

Fujitsu

iVision

Tier2UCServicesMarket

Participants

Smallandmediumsizedchannels focusing onsellingtelephony andcontactcentresolutions

Solution providersinsegmentssuchasvideoconferencing andcollaboration

Globaltelecomserviceprovidersthathaveafocusonmultinationalaccountsandhavetheabilitytooffernicheservicesinareas suchasvideoandtelepresence

Channelsthathaveafocusondesktopintegration

Tier 3UCServicesMarketParticipants


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Tier 2 looks at SIs in Australia that have been focusing on selling solutions such astelephony, contact centre, videoconferencing and have been able to increase revenues in

managed services, implementation and consulting in the last 12 months. The market

participants from this category also are major system integrators of key UC vendors in

Australia such as Alcatel Lucent, Cisco, Nortel, Avaya, IBM and Microsoft. Players such as

iVision have been focusing on videoconferencing but in recent months have established a

strong relationship with vendors such as Cisco to sell unified communications solutions.

HP although a large global systems integrator, has not been able to secure large wins in

the last 12 months and is still considered to be medium sized UC services player in the

Australia market. HP also previously worked closely with Cisco but in recent months has

shifted its focus to work closely with Microsoft.

Tier 3 UC Services market participants have been focusing on selling more productsolutions in areas such as telephony or contact centres and have not been able to secure

much revenue in UC services. Some of the system integrators in this segment have only

focused on selling desktop solutions from Microsoft or IBM but are now starting to offer

more UC applications and services as part of an overall solution. Several global service

providers such as Orange Services, Verizon and BT provide services for large global

contracts that have an Australia focus and also offer services in areas such as managed

services for voice, video and collaboration. However, these players have still not been

able to garner the deals that some of the tier 1 participants have secured in government,

education, financial services and healthcare. Several other system integrators in this

category have still not embarked on a full UC offering for its customer base and plan to

do so in the 2010 timeframe.

Other new system integrators will focus on selling software from vendors such as Googleand Skype. The market is still in its early stages for both these players and full UC

offerings for the large enterprise and SMB market has not been released in the market.

There will also be new channels focusing on selling software as a service solutions for

players such as NEC, Alcatel Lucent, Telstra, Alphawest/Optus.

Australia UC Services

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