Column: Ask Steve - IPTV for SMBs

What Do SMBs Want?

Ask Yankee Group analyst Steve Hilton. Send your questions to [email protected]. Please include your name, city, state and a phone number. Only first names and locations will be published.

I used to think that businesses had absolutely no reason to have TV in the office. Outside the bar, restaurant or waiting room, why should employees be watching the latest episode of Entourage? Im now a convert. There are very good reasons why businesses have TV services on premises and those are our topics this month in Ask Steve.

Q: How will carriers use the channel to deliver IPTV to the market? What are the implications of IPTV for SMBs?

Ronald, Atlanta

A: Contrary to my earlier beliefs, TV has a very valuable place in the SMB work environment. SMB owners either seek to grow their businesses or provide themselves a work/life balance that is unique. Either way, SMB employees work long hours and often need the opportunity to recharge their batteries while at the office. TV provides this recharging mechanism. Who knew 30-minute Different Strokes reruns could revive sagging productivity and boost morale?

Looking at Yankee Group SMB data, irrespective of industry segment, U.S. SMBs love their television: between 23 percent and 41 percent of SMBs have cable TV on premises.

Telecommunications carriers like AT&T Inc. that offer IPTV today are aiming solely at consumer markets; however, if an SMB is in the footprint, they wont turn down the sale. That being said, today, the selling model is direct with telesales, retail Cingular stores, and some feet-on-the-street. No indirect agent channels are pushing the U-verse solution today.

We believe AT&T will use the indirect agent channel to sell the solution to SMBs in the next 18 to 24 months. Carriers like AT&T will use IPTV as part of their unified communications strategies for SMBs. IPTV provides entertainment value to SMB employees, but it can also provide business-grade solutions such as over-the-air training programs, distance learning and video conferencing. AT&Ts SMB unified communications strategy is in its nascence, so its going to take time before channel partners have the full breadth of video-based solutions to sell.

What might impede a carriers success with IPTV to SMBs? The No. 1 impediment would come from the MSOs as they continue to bolster their data-centric business solutions with voice-based services. As we all know, the MSOs have fairly primitive indirect agent channels something they must improve as they begin providing solutions to larger SMBs. However, MSOs have the lions share of video-subscribing SMBs, and they dont plan to lose those connections just to gain local and long-distance voice revenues.

The No. 2 impediment is the first-mover advantage of premisesbased IP telephony from vendors such as Cisco Systems Inc. One of the applications offered with IP telephony is room-based and desktop-based video conferencing. SMB adoption of these solutions is slow according to Yankee Group SMB data, but not as slow as IPTV deployment to SMBs, which is almost nonexistent. IP telephony has a first-mover advantage in SMB markets, and since SMBs realize the productivityboosting and cost-saving potential of video-based conferencing, IP telephony has an opportunity to capture the preponderance of market share long before IPTV becomes a reality for SMBs.

Whether they like watching The Sopranos or documentaries on Mayan ruins, video-based services provide many SMB employees with a needed break from growing their businesses. Just imagine what they can accomplish with Tivo at the office!

Steve Hilton is the vice president of Yankee Groups Enterprise Research Group with an expertise in converged solutions for SMBs. Hilton manages a team of analysts delivering consulting, research and programs to help vendors and service providers better serve SMBs, midmarket enterprises and large enterprises globally. Visit Yankee Group online at www.yankeegroup.com.