First Quarter 2009

     It’s ironic that, to a point, the smaller the business the greater the productivity benefit of computer-based fax servers, yet the fax-server industry, for the most part, has been unable to develop a business model that addresses the needs and budget of the small business.

      But why does the small business see a disproportionately greater benefit? It begins with the absence of administrative employees. So, for example, the CEO sends his own fax and checks the fax machine himself to see if that important PO or contract has arrived. Send a fax? Print the document; then prepare a cover page. Go to the printer, pick up the two printouts, go to the fax machine, key in the destination number. No fax answer; it’s the recipient’s voice number. Back to the office to look up the correct number, and so on. Fifteen minutes wasted.

     The ability of a computer-based fax server to turn this time sink into a one-minute exercise is well documented. No printouts are required. (Save a tree!) Typically, no cover page needs to be filled in manually since the recipient is already in the server’s phone book. Inbound faxes are announced via a pop-up, end up in the recipient’s inbox, and don’t need to be printed.

     Until recently, the price of the enterprise-fax OEM’s product, at $4,000-plus, was quite simply out of the reach of a small business. Several factors contributed to this, but recent technical innovations from Commetrex have eliminated some of them. The remaining ones vanish with a little marketing innovation. Consider:

• Fax-platform pricing,
• Sales channel costs, and
• Installation and maintenance complexity and costs.

     Ten years ago, enterprise fax was based on on-premises systems provided by the fax-server vendor. And nearly all of these products were based on a hardware-software platform and multi-line-fax resources that cost over $500 per channel, inviting disruptive innovation and increased competition. In the last few years, much of that competition has come from functional substitution by the use of so-called virtual-fax services where the service provider takes care of the fax sending and receiving, using e-mail for the final or initial leg of the transaction. But with fax resources becoming 100-percent software based, the artificially high per-channel cost of resources for the server vendor were bound to fall, and they have.

     In addition to those high built-in costs, the complexity of the TDM-based systems demanded a high-cost channel that required high price points for its support. Businesses typically do not purchase a $10,000 system that must connect with the telephone network, the corporate LAN, and other corporate infrastructure by going on-line and placing an order. Multiple sales calls are required to resolve the many issues that inevitably arise: type of network interface, gateways, if required, and infrastructure connections, such as with Microsoft Exchange. And what about NAT and firewall traversal if the system is IP-based?

     Then there’s installation. If it’s a TDM-based system, trunks must be purchased and installed. If a PBX is to serve as the fax system’s front end, station-interface boards need to be added. What about those gateways for IP installations? Do they support T.38 Fax Relay? Are they compatible? Does the access provider support T.38? If not, and G.711 is to be used for fax transport, will clean faxes result?

     Solving these cost and channel-friction problems will allow the small-medium enterprise (SME) to afford this productivity-boosting product when combined with Commetrex’ “realistic” fax-resource costs. This allows the OEMs to finally construct a business model that can address the SME market. But why the interest in the SME, anyway? Well, one good reason is that for every one company that can afford a $3,000-plus fax system there are a 100 companies that can afford one for under $1,000.

     Non-commodity products, such as communications systems, typically exhibit a non-linear price-vs.-unit-volume curve. There is always a price high enough to ensure that the volume will be zero. As the selling price is reduced, those companies with the greatest need and highest ability to pay will purchase. As price is further reduced, volumes increase slowly since the price is still high relative to value and capacity to pay for the bulk of the market, so significant price reductions result in a relatively small pick up in volume. However, in most markets there is a price point—a knee in the curve--where volumes increase significantly, and incremental decreases in price result in large increases in volume, yielding a major boost in sales and margins for the OEM.

     So, how do we get rid of the obstacles and get this valuable communications facility to the companies that need it most? The answer begins with Commetrex’ all-software BladeWare HMP fax platform. For a four-port system, platform cost to the OEM plummets from $3,000 to under $1,000, even when the PC is included. If the computer platform can be piggybacked onto an existing platform, such as an IP PBX, the entire fax platform cost approaches just $100 per port. But we can get it even lower by integrating the fax-server functions into an IP PBX.

     Today, IP PBXs support voice messaging, but why not fax? After all, fax is now a software function, not necessarily a stand-alone server. Right? Well, the answer is “right”, provided the I-PBX vendor either integrates fax into his system or allows the fax-server software to be co-resident on the same computer and OS.

     OK. That takes care of the first point, platform cost, but what about the sales channel with its sales and installation costs? If the fax functions are integrated into the PBX, they will be sold along with the PBX, just as the voice-mail features are today. This makes the fax function a PBX add-on in the sales process, greatly reducing channel cost by essentially eliminating the fax-specific sales costs. Moreover, with the fax function a PBX feature, installation costs are greatly reduced.

     But what about the gateway and/or the VoIP-carrier questions? The best answer is to get rid of the gateway and use a service provider that delivers error-free T.38 faxes, such as Packet8 (8X8). Service providers, such as Packet8, offer SIP trunking over DSL with faxes delivered with T.38. It is this combination—SIP trunking and T.38—that produces the ultimate in low sales and installation costs. And the user’s satisfaction is high with trouble-free faxes.

     Commetrex has been pitching this to the I-PBX vendors for 7 years now, and it’s finally paying off. They are beginning to bring the solution in house, rather than simply pointing to a high-cost fax-server product. One quick way to do that and deliver a high-function fax-server capability is to partner with an enterprise fax-server vendor. So they are integrating and they are partnering. In any event, we’re getting closer to a dramatic expansion of the market for enterprise computer-based fax.

Respectfully, Mike Coffee CEO, Commetrex