As small business and branch offices look to cut costs, managing multi-service gateways (MSGs) for them might prove a growing, lucrative field for telecom service providers.
"The economics have always favored owning your own equipment," said Keith Nissen, a principal analyst with In-Stat who recently published a report on the devices. "However, a bundled solution allows a company to take a product purchased by a small business … then remotely provision and manage it, and you get the best of both worlds."
Nissen's research found a rapid about-face in terms of corporate willingness to outsource MSG management, particularly in the branch offices of major enterprises. In 2005, two-thirds of enterprise branch offices managed their equipment on site, while 75% of small business managed their own equipment.
"I did the same survey again at the end of 2007, and I found that small businesses really haven't changed," Nissen said. "But branch offices are evolving, and now only a third manage their equipment on site."
While some MSG management has moved to internal IT shops, a lot is going to savvy service providers that see an opportunity to help manage customer communications without the need for costly truck rolls and regular on-site maintenance: Most MSGs come with strong remote management functionality, so the branch office can be across town or across the world and still be managed effectively.
Prime candidates for this outsourcing include enterprises in vertical markets with a high percentage of staff spread throughout hundreds or thousands of branch offices: Realty, insurance and tax-preparation outfits might all fit the bill.
Nissen's study found that branch offices were the first to take the plunge to managed MSGs, but he said small and medium-sized businesses will probably soon follow suit, particularly if service providers can offer management at the right price point.
"That may end up being a very attractive solution for small businesses that say, 'I just don't want to have to know how to set up my security policies. I want somebody I can call who can fix it,' " he said.
Once the initial service sale is made, Nissen noted, a variety of ARPU-enchancing add-ons could be included, such as service provider-managed antivirus and VPN.
"The No. 1 benefit of all of this is it combines multiple functions into a single box, which reduces the cost of equipment," Nissen said. "It makes life simpler for small businesses and branch offices."
Have a question or suggestion for a story? Contact news writer Michael Morisy.