Analyst Angle: Is FMC dead or just resting?

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
It’s official — fixed-mobile convergence (FMC) has proved to be a failure in the enterprise. The technology works beautifully and the capabilities are compelling. Ask an IT executive if the functionality enabled by FMC is compelling and the answer is undoubtedly “Yes.” However, FMC does not exist in a vacuum and it must compete for precious IT budget dollars. The resounding chorus from IT decision makers is that FMC would be nice to have, but it is not critical in the grand scheme of IT priorities. Voice works well enough for now without the enhancements that FMC offers.
Earlier this week came news from an FMC innovator Divitas that it abandoned its original mission of delivering fixed and mobile voice convergence. In fairness to Divitas, they will continue to support existing products for now, but the sole emphasis of future products will be Web-based mobile UC. This is the latest sign that voice, even wireless voice, isn’t where IT dollars are flowing. Divitas’s rationale for the departure is that leading smartphone manufacturers simply aren’t capable of delivering a high-quality VoIP call. In addition, the company claims that it’s simply too hard / expensive to get seamless campus-wide Wi-Fi and cellular coverage. They claim there are always dead spots and as a consequence performance and user satisfactions will be compromised. However, these are Divitas problems and not emblematic of the industry. Quality and coverage haven’t been a problem for the FMC end users with whom I’ve spoken. In my estimation, the biggest challenge facing Divitas was that its service wasn’t compatible with RIM devices – the dominant U.S. smartphone platform. Agito, a Divitas competitor, worked through RIMs App World to make its service available on BlackBerries. Divitas relied primarily on Nokia devices to deliver its service. Developing a smartphone service for Nokia in the U.S. is the equivalent of writing a desktop application for Linux – what’s the point.
That said, Divitas is ultimately doing the right thing by deemphasizing the voice components of its service in favor of UC capabilities. The hype cycle around voice centric FMC waxed and waned over the past 10 years with little to show in the way of enterprise adoption. Wireless and wireline carriers and vendors are keen to resurface FMC solutions in a desperate attempt to squeeze additional revenue from an otherwise withering voice market. Industry heavy hitter Microsoft claims PBXs are superfluous in a world where the desktop, not the phone, is the center of the worker universe. All-you-can-eat wireless buckets that were first introduced by Sprint and quickly offered by other carriers further depress the effective cost per minute of wireless phone calls. The solution for voice vendors and carriers alike is to mash-up desk phone functionality with wireless handsets in order to win back lost revenue.
The important thing to notice about the logic above is that it is entirely a supply-side phenomenon. Enterprises aren’t clamoring for FMC solutions. In the Yankee Group’s 2008 U.S. Fixed-Mobile Convergence Survey, only 1% of respondents reported that their company has adopted FMC. Nearly three-quarters of respondents are either unfamiliar with FMC (43%) or familiar but have no interest in adopting (29%). Put simply, the benefits of FMC are nice to have but not critical to key enterprise demands such as improving workforce mobility and productivity or reducing costs.
So, Divitas changed its tack, Longboard and a myriad of other are gone, the remnants of Ascendent Systems can scarcely be found within RIM and Agito seems to be going strong on its original path. What should we make of this mishegaas? I started by saying enterprise FMC is dead. Perhaps I was too hasty, but it’s certainly comatose.
Josh Holbrook can be contacted directly at: [email protected].