Attack / Defense against Cisco

Attack / Defense against Cisco CSBU LEV Business Development

Agenda • Cisco’s offer • IP telephony • Contact center • What Cisco claims about: • Themselves and their strategy • Alcatel • What Alcatel should claim about Cisco: • SWOT • Better the devil you know • Responding to Cisco attacks • Attacking Cisco • Price positioning • Summary & takeaways

Catalyst 4224 Catalyst2611 Cisco’s Offer: IP Telephony • Call Manager • Proprietary HW for SMEs(cabinets and boards) • Compaq server for MLEs • Many features are provided by Catalyst 6500, 4224 or Cisco 26xx routers, etc. • Voicemail and unified messaging (Cisco Unity) • IP video telephony and conferencingavailable in release 4.0 Catalyst 6500

Cisco IP phones range positionning Price List without license Europe 7975G * 7970 user license at 176€ 7940 / 7960 user license at 135€ P list 7905 / 7912 user license at 72 € 7902 / analog user license at 36€ 7970G * 626€ 7960G * not yet available 382€ Color display&camera 7940G 290€ 7912G 225€ SCCP or SIP 7910G-Sw SCCP or SIP 7910G 198€ XML support and multiline 152€ 7905G 7902G 120€ 10/100BaseT switch SCCP or H323 10BaseT single line January 04 GPL Functionalities

Cisco’s Offer Contact Center • IP CC Express: (IP ICD 3.0) Voice and IP only • 75 agents and 150 IVR portsmax. per server for queue management and voice guides,voice only • IP CC Enterprise • Based on ICM for routing, IP IVR for queuing, peripheral gateways middleware, and Call Manager etc.

What Cisco claims about themselves… • Overwhelming financial leadership • In January 2003, Cisco represented 2/3rds of the total market capitalization of enterprise networking vendors (up from 1/3rd in 2001) • Tremendous financial stability: no debt • IPT market maker and technology leadership • All major PBX vendors (Alcatel, Avaya, Nortel, Siemens, etc.) copy Cisco strategy: IP converged-based architecture, no new TDM/PBX architecture • Leads many standards initiatives: SIP, in-line power, etc. • Leadership in IP telephony sales • 45% market share • 2 million Cisco IP phones, 8 million inline power ports and voice gateway ports shipped, 5,000+ organizations using Cisco IP Communications worldwide • Expertise in using IP telephony solutions • IP phones deployed internally worldwide, including Cisco IPCC contact centers

What Cisco claims about their IP telephony solutions (1/2) • Cisco IPT benefits from Cisco infrastructure: it runs better on a Cisco infrastructure • High availability, security, VPN, wireless, in-line power, VLANs, untrusted QoS through the IP phone • High flexibility in deployment to provide same level of quality for any customer topology • Clustering: scalability and redundancy • Deployment with single-site call processing or centralized call processing for companies with many small branches • SRST makes sure branches remain operable during a failure situation

What Cisco claims about their IP telephony solutions (2/2) • Cisco provides an unchallenged number of applications • XML, Softphone, Unity, Personal Assistant, IPCC, CTE 1450, Instant Messaging, IP Video, etc. • Cisco IPT has a strong ROI • Reduced circuit charges – toll bypass • Simplified moves, adds & changes and lower cost of administration • Increased productivity and workforce efficiency • Low cost, high availability for branch offices • Proven interoperability and migration plans leverage existing investment • IPCC by itself can generate fast ROI

What is Cisco’s General Competitive Strategy? • CONVERGENCE= Mobility + Multimode communications • Strong focus on wireless LAN • Sell convergence to the point of convergence in the organization • Target the CIO and the IT organization • Look for business application solutions to elevate the Cisco offering - no single‘killer app’ but see what makes sense to your customer • Sell the enhanced productivity and efficiency of IP applications • Centralized call processing withSRST (ITS) is unique and offers a compelling ROI • Sell the technology leadership of Cisco in IP telephony and its economic benefits • PBX vendors only compete well where they are the incumbent; use your champion, or sell IP on the edge. • Target pure greenfield opportunities or the branches of existing networks – use the IT organization to promote IPT and Cisco • Remember: Cisco’s financial strength enables our continued leadershipin IP through innovation and new features. • Cisco is the IPT market maker

SWOT Analysis Cisco Systems Strengths- Financial strength - Strong marketing & direct touch - Strong data portfolio - Strengthening IP telephony portfolio Weaknesses - Lacks telephony features, experience & proven track record in deploying wide-scale telephony solutions - Proprietary solutions, too dependent on Cisco data network (AVVID), ref. Gartner research note - Outdated unified communication applications; Unity doesn’t support SIP, XML or VXML - Not a recognized player in contact center & SMB Opportunities - Double digit market growth in IP telephony - Capture market share from weak PBX vendors - Large installed base to churn in data - Use Cisco champions in the enterprise Threats - Cannot address the majority market demand for dual IP/TDM systems - Customer will be locked in with Cisco proprietary solutions (voice & data) - Large integrators looking for alternatives to avoid having their margins squeezed by Cisco

Better the devil you know Cisco claims, our responses • Cisco is the only financially stable vendor • Alcatel is the largest provider WW of equipment to carriers • Alcatel:13% of revenues in R&D • Cisco makes the IP market and everyone follows • The market share shift is on, in 2003 Alcatel shipped twice the amount of all IP lines in Europe compared to Cisco (Dataquest analysis, march 04) • Cisco does not create standards. They develop their own proprietary solution first to lock a customer in and then implement standards, forcing expensive upgrades. • Leadership in IP telephony sales • 24% of Alcatel sales in 2003 were real IP deployments • Cisco is an expert in using IP telephony solutions • Alcatel has also deployed VoIP solutions for its own use • Ex: French and US headquarters

Better the devil you know Cisco claims, our responses • Cisco IPT benefits from Cisco infrastructure: it runs better on a Cisco infrastructure • Right: it is heavily dependent on Cisco or else it loses major functionalities, e.g., AVLAN, router survivability, video QoS, etc. • High flexibility in deployment to provide same level of quality for any customer topology • Not true for wide area network solutions (services and features restrictions) • Alcatel OmniPCX Enterprise is a more flexible solution: a single software across the enterprise, choice of hardware to fit any site / topology • Cisco provides an unchallenged number of applications • Their unified communication suite isn’t based on state of the art technologies, e.g., doesn’t support XML, not web-based • Alcatel has a complete set of voice apps. (OmniTouch Unified Communication, Messaging, Contact Center, etc.) and has an Application Partner Program • Cisco IPT has a strong ROI • In many cases, Alcatel IPT has a stronger ROI because of its architectural flexibility: ability to integrate legacy investments and still provide an advanced level of IPT

Better the devil you know Cisco attacks, our responses • Lack of high availability features • Unlike Cisco, Alcatel OmniPCX Enterprise Communication Server is based on Linux. Cisco indicated at VoiceCon 2003 that they will migrate to Linux (to stabilize their deployments of IP Telephony). One year after there is still no roadmap. • High availability of OmniPCX Enterprise through redundancy and branch survivability • Security patch management is big issue with IOS (e.g. 6500 active version of IOS) • SRST exposes large toll fraud risks with loss of call barring

Better the devil you knowHow to attack Cisco’s IP Telephony: it’s proprietary • Alcatel provides broader support of open standards • OmniPCX Enterprise offers router-independent branch survivability • Cisco SRST is based on IOS (Cisco router dependent) • OmniPCX Enterprise offers the Automatic VLAN Assignment (AVA) feature • Cisco Discovery Protocol (CDP) is a Cisco LAN switch feature only • OmniPCX Enterprise supports a wide range of terminals: IP Touch, Reflexes, DECT/wireless, GSM/cellular, H323, SIP end points, etc. • Cisco Call Manager supports a wide range of Cisco Proprietary phones using Cisco SCCP (Skinny) or H.323, but doesn’t support SIP end points, GSM / cellular, DECT/wireless is not feature rich nor integrated (Kirk OEM). • OmniPCX Enterprise supports a full range of legacy protocols (H323, QSig, DPNSS, MLPP, etc.) • Cisco still doesn’t support full QSig feature set. • “Cisco is embracing a new form of ‘closed’ system, is attempting to return to an area where enterprises do not have the choice of buying their network infrastructure, terminals, applications from independent vendors”, Gartner

Better the devil you knowHow to attack Cisco’s IP Telephony: it doesn’t network • Mono-site: Alcatel has a long head start in telephony • Cisco CM doesn’t have many features currently requested in RFPs • Call by name limited to idle state (need external directory for a transfer), basic attendant features, no 29-party conference, no soft key access to voicemail features, no DISA, call-back only high end phones (7940-60), no voice guides, etc.. • Multi-site: Alcatel has the best networking solution (ABC) while Cisco has a very low-featured solution between large sites • In a cluster, only 4 duplicated Call Managers can be distributed over the WAN (4 duplicated large sites only, 8 servers, compared to Enterprise with 100/200) • WAN requirements to support intra-cluster signaling are unrealistic: • 40 ms round trip delay max between sites, zero packet loss • Minimum 1 Mbps of bandwidth per 10000 BHCA • If call managers can’t be clustered on the WAN, or beyond 4 CM: • No database synchronization • Service level= basic call, transfer, conference, park, caller ID...

Better the devil you knowConfiguring Cisco’s AVVID means high TCO • Cisco intertwines its IP telephony offering with its LAN and WAN products. This requires more effort to install and configure IP Telephony. • Requires a multitude of interfaces to configure a system • In the HQ (One GUI for the Call Manager configuration and CLI for Catalyst 6500 modules configuration • In medium/large branch and Small branch, SRST and PSTN module config. is done on Catalyst 4224 CLI or 2611 management (also CLI based) • Need to synchronize Call Manager and LAN switches for SW release upgrades • Need to stop operations for software upgrade in branch, e.g. Catalyst 4224 (no support of hot swappable components in IOS) • SRST (remote survivability option) requires a separate image to configure on a node by node basis • OmniPCX Enterprise management provides much better TCO • A single web based interface (image) to manage HQ, regional sites, branch • Configuring local distributed OXE servers is much simpler than SRST and is done from a single tool • No disruption for upgrades (work on standby processor while the other runs)

Better the devil you knowHow to attack Cisco’s applications • Cisco PC Telephony is restricted to phone emulation on PC • The lack of integration in Lotus, Microsoft or web browser makes it irrelevant for most office and mobile workers. • Cisco applications do not integrate easily with eBusiness applications • Cisco Unity, unlike Alcatel Unified Communication, doesn’t support recent APIs or protocols (e.g., XML, VXML, SIP) • Unity can’t be integrated with eBusiness apps and provide Web services • Cisco XML strategy consists only of offering XML toolkits for end user to develop their own XML services accessible from phones; this will drive small, standalone apps. (e.g., stock price, weather) not eBusiness integration • Alcatel strategy is to offer XML APIs for the most important voice services (e.g.. from “make call” to value added telephony features, UM, etc.). They can easily be integrated into multi O.S. or any eBusiness applications and be used as web services

Better the devil you knowHow to attack Cisco’s mobility: it’s WLAN or nothing • Cisco’s focus is on campus mobility with voice over Wireless LAN • Cisco first generation heavy access points solution • complex to manage (radio engineering) • is not suitable for voice due to handover delays between APs located in different sub-networks • Cisco doesn’t offer off site mobility solutions • Alcatel offers the broadest mobility portfolio on the market • Off-site: Alcatel supports cellular clients and Unified Communications on PDAs, laptops, phones... • On-site: • Digital wireless (DECT/PWT) has high scalability and feature support for voice-only mobility, and supplies 3rd party heavy duty terminals, intrinsically safe base stations and for industrial environment). • Alcatel WLAN solution is optimized for voice performance (QoS & roaming)

Better the devil you knowHow to attack Cisco’s contact center applications • Cisco contact center solutions • Cisco IP CC Expressdoesn’t scale and has no multi-media • Limited to 75 agents • No duplication, no networking , etc. • Alcatel OmniTouch supports 1500 agents and has multi media capabilities • Cisco IPCC Enterprise is expensive, difficult to integrate and manage • Complex management: each application has its own management tool • Complex for the agents with four different agent desktops • Fat client for inbound voice, SDK only for outbound voice, thin client for web collaboration and thin client for mail • No web contact VoIP call through (surprising for an IP champion?) • No VxML voice platform • Based on Geotel who had a very limited penetration in the enterprise market • Genesys contact center suite is more feature rich and coherent (simplified integration and management)

PricingFull IP with high level telephony • Both OmniPCX Enterprise and Cisco Call Manager have attained a similar market price for full IP • in addition Alcatel offers hybrid option for better value • Overall, in advanced telephony, pricing including Alcatel’s IP Touch 4038 or Cisco’s 7960 are similar but Alcatel phones deliver better telephony features: • dial by name from an alpha keyboard regardless of the call status • direct always on access to Unified Communication

PricingFull IP with low level telephony • Cisco can provide low-cost basic IP telephony: 7902 phone, however: • Cisco pricing starts at 160€ per user (basic telephony, 7902 + license) • Costly voicemail services: € 80 end user versus €30 on Alcatel 4645 • Low feature level, far behind analog telephony: no caller ID, no call back, no voice guides, etc. • Separate Ethernet cables for phone and PC = negation of IP Tel ROI • No switch port means 100€ extra for additional Ethernet port with PoE • Buy and manage 2 LAN switch ports per user • Costly cable additions during moves, adds and changes • Alcatel recommends IP phones with embedded switches, since they provide a much better return on investment, • For low cost solutions • Analog phones connected to OmniPCX Enterprise provide all the above features for a lower price and for a similar TCO (cost of management) • SIP phones will provide low cost IP phone solutions in the future

How to attack Cisco (1/2) • Openness • Cisco ToIP does not integrate well with legacy PBXs • Going with Cisco for a customer means: • Higher investment due to having to go full IP from the start • Networkability • Cisco makes networking a costly exercise for the customer; therefore, in most cases a very low level of features transparency will be provided in multi-site configurations • Going with Cisco for a customer means: • Accepting a lower level of services, i.e., loss in productivity from current state; IP should not be a ‘downward leveling’ • High cost to keep the same level of services • SRST is complex to manage

How to attack Cisco (2/2) • Manageability • Cisco ToIP is intertwined with their data infrastructure, i.e., management requires numerous, complex configuration tasks • Going with Cisco means not reducing management costs (TCO) as much as with Alcatel’s solutions; ToIP should be as manageable as any other eBusiness apps • Integration of unified communication applications • Cisco’s current application portfolio is not based on emerging open Internet standards (e.g., XML, SIP, VXML) • Going with Cisco for applications today could generate high costs of integration and / or upgrades • Contact centers • Cisco’s current offer is incomplete in the medium range (Express) and complex to manage and operate in the high-end range • Going with Cisco in contact centers means a high TCO solution and an opportunity missed to go with best of breed (Alcatel / Genesys)

At each level of ROI, Alcatel makes the difference… Alcatel > Cisco Alcatel = Cisco Making Money Mobility Packaged IPcontact center TEV Multi-mediacontact center Cost of management TCO Telephony Services in network Networkability WAN transparency Highest Reliability Direct ROI Architectural Flexibility Saving Money Integrability of Apps Value-added/Most “Qualitative” Benefits Immediate/Most “Tangible” Benefits

Thank You

Attack / Defense against Cisco