Metaswitch Q2 Update

Today, Metaswitch had their Q2 update call, and I just wanted to share some highlights. Readers of my blog will know this is a company I've followed for a long time, and it's always good to see a continuing growth story.

Being private, Metaswitch is not obligated to conduct these quarterly calls, but when things are going well, why not? I've noted before that it's unusual for a private company to share performance metrics, and they certainly provide validation, both in current terms and to support recent upward trends.

That said, the call is conducted within a small circle, and I can't share those numbers here. Furthermore, there wasn't much hard news, so I don't really have much to say. However, I can tell you that the Q2 numbers are good - sales are up - both Q-to-Q and Y-over-Y - as are margins. They continue to acquire customers, and are doing so in a variety of ways. On the call they talked about both Tier 1 and below, as well as all types of operators - wireline, mobile and cable. Their footprint continues to expand regionally, and they cited recent wins in both the CALA and APAC markets.

An underlying theme was industry consolidation, with Genband's acquisition of Nortel cited as a recent example. The message here is that Metaswitch is a stable, strong and proven partner, and this is being proven out with their continued market success. I have no reason to doubt this trend will continue, and they mentioned that their upcoming Forum customer event will have record attendance. It really is a great showcase for their market traction, and I'm looking forward to experiencing it first-hand next month.

Metaswitch Makes a Smart Move

With the recent news around making Kevin DeNuccio their CEO, Metaswitch is starting to execute on their global marketing push. If any of this is news, my last post about Metaswitch will get you up to speed. Have a look at that, and then read the rest of this post.

Today they've announced their first acquisition since then, and it's exactly what you'd expect given their big picture plans. In short, Metaswitch has acquired Richardson, TX-based App Trigger, an established vendor in the service broker space. I wasn't familiar with this company before, but I followed this space fairly closely when there were more players.

As with other IP comms sectors, service brokers have gone through their share of consolidation, and companies I was close to for some time - such as Personeta and Leapstone - are long gone. However, App Trigger remains - until now - and this looks like a good exit for them, and a smart move for Metaswitch.

If you thought the SBC space was misunderstood, it's even more so for service brokers. This is complex network technology for telcos, and being so engineering-heavy, it's no surprise that market adoption has struggled and that these companies have remained small. Bad for them, but good for Metaswitch.

As I understand things, service broker platforms bring value by enabling carriers to bridge the worlds of legacy and IP for both service creation and service delivery. A lot of legacy apps are still widely used and profitable for carriers, but they also need to move into IP, and that's where service broker platforms come into play.

Being a small company, this was a manageable acquisition for Metaswitch, and adds another layer of value right away. As noted in my last post, they're in a great spot to make acquisitions, and this seems to be the right kind of move. There aren't that many service broker players left, and it makes Metaswitch a more complete solution. First, App Trigger has a global footprint, and several Tier 1 customers, giving Metaswitch a new base to sell into.

Even better, though, is the capability this gives them to better service the global market, which is a key part of their growth plan. One of the challenges for global carriers is the wide variance of protocols used to hand off traffic to each other. This applies equally across different types of protocols, as well as addressing varying flavors within one, especially SIP. Perhaps equally important is wireless, which is a key growth area for Metaswitch, and as carriers adopt IMS and migrate to 4G and LTE, wireless service broker capabilities could become a key differentiator.

That's as far as I can take the technical discussion, but I see enough here to conclude that it's a good deal for both parties. Terms were not disclosed, but I can't imagine the cost was all that much, and certainly within Metaswitch's means. So, it's another step forward for the company, and am sure this will put some pressure on the competition to keep pace.

Metaswitch Announces New CEO

Was just on a briefing call about some news from Metaswitch. I don't track news items as a matter of course, but this announcement came my way on short notice, and being a company I follow closely, it's worth noting.

Metaswitch is a great example of a company that goes about its business quietly, deliberately and effectively. These really aren't 2.0-style virtues, but I'll take their track record any day over the fast and furious.

The news item is pretty pedestrian - Kevin DeNuccio takes the CEO reins from John Lazar, who now moves into the Chairman spot, in turn from Ian Feguson, who remains on the board. You can read the details here on the press release that just ran this morning.

Kevin has big company experience from Redback Networks and Cisco, and it looked like a good move when he came on board as a director in 2008. I've seen this with other companies who are ramping up for growth and/or targeting bigger customers. This type of pedigree can be invaluable on a few levels, and it's not surprising to see Kevin now in the CEO spot.

You could argue the company wanted more of a U.S.-based/style of CEO, but I think that's the short answer. Their culture is too strong, and I don't see them becoming a rah-rah type of company trying to get really big by acquiring competitors and raising lots of money to fund it. That's not their style.

I see this more as another step along the way to deepen their management team, and position the company for continued, global growth. Metaswitch is definitely growing into new frontiers, namely wireless and developer-based applications, and of course moving further up the chain with bigger telco customers. I can see Kevin's presence helping with bigger telcos, but I'm not as sure about these other areas.

Regardless, I think this sends a positive message that Metaswitch is well positioned for 2010, and having gone through some corporate re-jigging/branding last year, they have a plan in place, and this news is just part of how they're executing on it.

I'm still not entirely sure why this move is happening and why now, and we'll just have to take it on the faith that it's all for the best. My only concern is their ability to assure core customers that nothing changes for them. They've done a great job acquiring - and keeping - Tier 2/3 carriers, and will need to be careful not to give them a reason to think they're moving away to chase bigger game. We got assurances on the call this won't happen, and I'm confident that's how things will unfold. They know their roots too well - just consider where their next customer forum takes place - Nashville. Great music aside, I can't think of a better spot to be among your people. I hope Kevin likes country and bluegrass....

Metaswitch - Rolling Along Nicely

Metaswitch is a company I've followed for a long time, and as private companies go, they're right up there in terms of being well run. Their offerings are solid, their customer base keeps growing, they're making money, the management team is stable, and they have a strong employee culture.

Doesn't get much better than that, and yesterday they had their quarterly update call. Aside from public companies with their obligatory earnings calls, I can't think of anyone else in this space who does this. As far as I know, they're not required to do this, and I think this kind of transparency is great, at least for those of us invited to the call.

I won't go much beyond the highlights shared in today's press release, other than to assure you this is a company with a plan and the ability to execute on it.

I'd say the most noteworthy news is the announcement of their 500th customer - Misamis Oriental Telephone System, based in the Phillipines. Not only is this a big milestone, but a good example of the global reach Metaswitch is starting to achieve. The company actually has two operating divisions - this is their Carriers Systems Division - CSD. They also have NPD - Network Protocols Division - which ended 2009 at the 250 customer mark, with Celtro, a Delaware-based wireless backhaul operator.

Another bright spot was the trickle-down effect of the Broadband Stimulus funding to their bottom line. They highlighted Slic Network Solutions as a recent recipient, and that money will enable them to buy a Metaswitch solution, from which they'll be able to provide lower cost VoIP services to their base of rural customers. That may not sound like much to most of you, but there are a lot of operators like Slic out there, and the combination of this funding and IOC-friendly vendors like Metaswitch is very good news, especially after such a difficult 2009.

Something else caught my eye that was briefly mentioned - their expanding relationship with Huawei. This is a company you can't ignore, and either admire or fear. They represent a lower cost alternative to all the U.S./E.U. telco vendors, and it's just a matter of time until they become a major player in their home markets. I don't have anything to add beyond the public news, but it's a partnership that I will follow with interest.

Finally, it was great to hear John Lazar talk about smart phones and the impact they're having everywhere, especially for new applications. As is the case with all platform vendors, Metaswitch has its own developer ecosystem - Innovators Community - and it's become a key element of their overall value proposition. This isn't the MetaSwitch we knew from earlier days, and now that it's Metaswitch, I see a company poised for a great run this decade. I can't think of too many companies of this size who had a stronger 2009, and the critical mass is there today to make them a top tier player in the not-too-distant future.

MetaSwitch and XConnect - Good News Items

MetaSwitch and XConnect are very different companies, and normally have no reason to be featured in the same place. However, I've followed both for a long time, and both have recently had some good news to report. Occasionally I'll do a post like this, where this is the only common thread. In this case, I wouldn't say it's a big trend, but the economy is still weak, and signs of life are noteworthy. The big deals - like Cisco/Tandberg or Avaya/Nortel - get all the headlines, and smaller companies like MetaSwtich and XC fly low on most people's radar - but that's my bread and butter - and I'm here to tell you these companies are doing alright.

Let's start with MetaSwitch. There's a lot going on here, and it's all good - and these things always seem to happen when I'm away and too busy to blog about! Well, better late than never. Aside from being one of the most stable, straight-up companies out there, I can't think of any other private company in our space that reports its financial results. Talk about transparency. Of course, it helps when you're growing and making money. As reported in their update, revenues have now broken the $100 million mark ($113.7), and operating margins remain north of 20%.

The closest thing to this would be Mitel, who just reported results, including a hefty loss. Although private, Mitel's base of shareholders exceeds the threshold required by U.S. securities regulations for reporting purposes. To be fair, the loss is mostly a one-time event reflecting the Inter-Tel acquisition, and revenues were slightly up. Hopefully, they'll be in the black soon.

The main difference between these two private companies is that Mitel has to report these results (which I'm sure they would have preferred not to do), whereas MetaSwitch does so by choice. Both are reasonably large companies, and I see MetaSwitch as a yardstick for smaller vendors to follow to show that you can be profitbale as you get larger, and that's worth waiting for, especially to make your investors happy. I can't really say whether smaller companies prefer to remain private or to go public once they get big, but my gut says private ownership is the way to go.

Aside from the good financials, the company has done some rebranding, incorporating the Data Connection name under the MetaSwitch Networks brand. This is part of a bigger process announced at last year's Forum, whereby the carrier systems and network equipment operations have now been consolidated into a single entity.

In terms of broadening their reach, I'd like to add they've done some interesting things this year, showing a willingness to try new things. Most recently, they were the lead sponsor of the Latin America Summit at the re-launched VON event in Miami; and earlier this year they were a sponsor of eComm in San Jose. They've also re-tooled their website, which includes blogs from some top executives, which is always good to see. And if you're going to Supercomm - John Lazar will be speaking, they'll have a new booth to showcase the new branding, and you can find me hanging out with them at their House of Blues party Wednesday night!

Onward to XConnect - another company with strong U.K. roots, by the way. Their most recent good news came in the form of a $10 million funding raise, which will enable them to fulfill their 2.0 roadmap, branded "Interconnect 2.0". Basically, it's a two-pronged plan, whereby 1.) they seek to build a global ENUM-based peering federation - the Global Alliance", and 2.) their service reach will go beyond voice to encompass multimedia communcations.

The latter is really the ultimate goal for peering, where all forms of IP traffic - voice/data/video - can connect directly between any two networks, and essentially dispense with the need to traverse legacy networks. It's an ambitious agenda, and XC is not alone in recognizing that peering has been slow to catch fire in the core market of wireline VoIP services.

The economic rationale has simply not been strong enough yet for mass adoption, but XC is trying hard to change that. As such, peering needs to move up the value chain, particularly to handle video, and as the mobile world moves to 4G, LTE, etc., to address wireless traffic. These are the real growth areas for communications, and as these types of traffic begin to seek end-to-end IP routes, the value proposition for peering becomes stronger.

XConnect has been moving towards wireless for some time, and last month announced a partnership with GSMA that positions them well in this market. It's basically an interop arrangement between XC's ENUM registry and GSMA's PathFinder ENUM registry, a centralized database for mobile operators to translate phone numbers into IP addresses. PathFinder is managed by NeuStar and extends to fixed networks too, but the main idea here is to broaden XC's reach to mobile operators.

To conclude, both companies are showing signs of growth in the IP comms market; with MetaSwitch posting profits and strong revenues, and XConnect raising new money. Both can be done by having the right vision and ability to execute to plan. These are easier said than done, and you don't have to look far to find good startups struggling to raise money or good companies getting acquired for all kinds of reasons. While Cisco, Google, Avaya et al will continue to get bigger at the top end, there are still good stories to be told at the mid or lower levels of the market, and I'll continue talking about them as they pass my way.

What Service Providers Can Learn From MetaSwitch

My current Service Provider Views column on TMCnet is running now. It's the third in my series of takeaways from last month's MetaSwitch Forum in terms of service provider implications. This time it's the company itself - MetaSwitch - who I think offers a pretty good template for doing the kind of things that service providers need to do to be competitive.

To understand why I say that, please read the article, which you can access here, and as always, I'd love to hear your thoughts.

Service Provider Views Article - Learning from Tier 3 Carriers

My latest Service Provider Views column is running now on TMCnet.

It's the first of a series I'm writing based on my learning from the MetaSwitch Forum, which I was involved with earlier this month.

This article is my take on what big carriers can learn from small carriers, and there were a lot of small carriers at the Forum. MetaSwitch has done a great job tapping into this market, and their customers are doing some pretty impressive things. I got some first hand exposure to this there, and my article provides some examples about how they're using IP communications to stay competitive in a difficult market. You can download the article here, and if this is your cup of tea, then I'm sure you'll like my next couple of articles which will continue on this theme.

MetaSwitch Forum 2009 - Day 3

The MetaSwitch Forum 2009 wrapped up today with a nice mix of panels and keynotes. My day started prompt at 8:30, as I moderated a session on consumer VoIP. I could do a whole day on this topic, so with only 40 minutes we barely got going. That's fine - it was still good. Joining me was Kevin Edwards of Embarq and Richard Wardell of Wyoming-based TCT. It was a nice contrast between large and small operators, and I'm not going to tell you which of the two is doing more interesting things with fiber and converged services. The audience turnout was strong and we had some good Q&A at the end.

I caught a bit of Doug Mohney's IPTV panel following mine, and again, you'd be surprised how far along the curve some of these IOCs are. From what I can gather, a lot of these rural households are getting way faster broadband speeds than I can get back in Toronto. Go figure. Well, frankly, give MetaSwitch a lot of the credit. They've done a great job providing their customers with the right technologies as well as some vision about what is possible. I guess that helps explain why so many customers came out to the forum - they're there to learn, not just from MetaSwitch, but what many of their peers are doing.

The rest of the day took place in the main hall with a keynote and a couple of panels. First was a keynote by Dennis Huber, CTO of Embarq - he talked about their approach to innovation, and as big telcos go, they seem to have the right focus here. It sure will be interesting to watch how things unfold with them and Century Tel.

After that, there were two panels. First, Carol Wilson moderated a State of the Industry session. There was some good discussion there about a favorite topic of mine - the service provider of the future. Although this was a pretty conservative audience, I would have liked to have seen them push the envelope a bit further. They touched on many important issues, but didn't really address emerging business models, which I think needed to be there. I was glad to see Gary Kim bring up machine-to-machine or person-to-machine communications, which is another area that I think will be huge.

Following that was a closing Q&A with the MetaSwitch exec team, which I thought was a fitting way to wrap up. It was great to see all of them up there together, sharing their views on what's coming, and having some open dialog with the audience. One of the things I really like about MetaSwitch is the collective nature of their culture. There isn't any one guy - like Steve Jobs - who drives everything. All of the exec team brings something to the table, and it was nice to get this full range of views on where the company - and the market - is going.

All told, it was a very worthwhile event, and they pulled it off pretty much exactly to plan. Kudos to Carol Daniels, Andy Randall and the full Marketing team - they sure make it look easy. After the wrap up session, there were some recreational activities for the afternoon, and I did the Hoover Dam tour. Highly recommended - that was a great experience, and I've included a couple of pictures below.


Dennis Huber, Embarq



State of the Industry panel



Exec Q&A session

MetaSwitch Forum - Day 2

Today was a bit more hands-on for customers with several vendor-specific breakouts and the Expo showcase opening up. New Board member Kevin DeNuccio opened with a keynote outlining major trends impacting telecom. It set the stage for big picture issues that I know customers were talking about throughout the day. I'll be touching on some of these myself in tomorrow morning's panel on consumer VoIP. Am really looking forward to that.

Otherwise, the big story today was a couple of MetaSwitch announcements. First was a series of new features as part of their Version 7.0 release. Lots of Google-based widgets that give their CommPortal more of a Web 2.0 look and feel.

Second was the launch of the Innovators Community. I really like this one, and represents their formal entry into the third party apps space. Any vendor with an appreciable customer base and partner ecosystem needs to be doing this now, and along with the news, there's a dedicated website to support the community. You need to register first, but here's the link. Judging by the heavy traffic around the MetaSwitch demo setups today, interest was justifiably high.

Kevin DeNuccio's keynote



Polycom's VVX 1500 media phone



Expo showcase activity

MetaSwitch Forum - More Day 1 - Fun Time

Last night was party night for the MetaSwitch Forum, and as usual, it was a blast. Literally. It was held at the Stratosphere, which I'm sure is the tallest vantage point in Las Vegas. We were blasted up the elevator to the observation deck for food, entertainment and a great 360 view of the world 866 feet below us. It sure gets windy up there, but being a full moon, the skyline was just amazing.


Talk about cool - a MetaSwitch ice block at the bar




The Rat Pack lives...



The Strip and beyond

MetaSwitch Forum 2009 - Day 1

Finally getting a chance to post about the MetaSwitch Forum, which kicked off last night. I had some serious PC problems just before flying out, which has impacted my blogging, and I'm making do as best I can. Before updating you on today, I should say that Rich Tehrani got the jump on posting, and he blogged about the reception last night, so if you want to start at the beginning, go here. Rich has been posting regularly since then, so you might want to follow his blog along with mine.

From what I can tell, I'm the only industry analyst here, so I'm keeping myself company. There are a handful of press/media here - Rich, Gary Kim, Carol Wilson, Dough Mohney and Richard Martin (you should tap them as well for their coverage of the forum) - so that's my default crowd to be running with. Aside from us, of course, it's all about the customers, and there are plenty here. It's been great talking them up - you learn so much this way about the little things that go on in their world, and hardly ever turns up in the media.

Overall, it's been great so far. Attendence is up from last year - some 630 all told - and that alone tells you a lot about the support for what they're doing. The sessions today have been about the MetaSwitch roadmap, along with a media/press-only luncheon where we had some quiet time with their senior management team - but that stays off-line.

There have been 2 public news items so far - 1.) the appointment of John Lazar as the overall CEO - up til now, he was sharing the role with Graeme MacArthur; 2.)the addition of Kevin DeNuccio to their Board - he brings solid Tier 1 experience, which may tell you a thing or two about some of their plans. You can read more about these items here and here. Tomorrow will see a slew of press releases from technology partners, along with an important new focus for MetaSwitch.

That's all for now, but here are a few photos and some brief commentary...


Andy Randall in his customary role welcoming us to the forum. He talked about the "No Limits" theme this year, with the message being that operators have many options now for providing services, and they shouldn't limit themselves with legacy telecom thinking.










John Lazar and Graeme MacArthur with the CEO-level view of the market. Very good job connecting the dots between the weak economy and what it means for both carriers and vendors. Also talked about the MetaSwitch culture and why the company is well positioned for growth. They made it clear that MetaSwitch intends to remain independent and to become a true Tier 1 player. A key lever for doing this is their focus on staying customer-centric, and investing heavily in R&D - roughly 30% of revenues, which is pretty impressive.

Anthony Zuiker - WHO is this guy? Wow, what a treat. TV watchers should know him as the creator of CSI, which I didn't realize was so HUGE. Aside from getting a taste of what makes the show so special, his main message what about what calls cross-platform story telling. I see so much of this my everyday work, and it was great to hear someone outside of telecom talk like this. His basic premise is that our behaviors are different today, and nobody simply watches TV any more. People want a more immersive, involved experience - one that they control - not the TV networks. It's not good news for TV as we know - no surprise there. Anthony is basically showing a better way - a new business model that the TV industry needs to adopt. I love what he's doing, and the takeway for MetaSwitch's customers, is that they need to start thinking in these terms as well. MetaSwitch gives them a platform and the tools to create these new communications experiences, and hopefully he'll inspire them to start thinking more outside the box.





Chris Mairs giving his CTO vision, with a key focus on the idea that service providers are experiencing a separation of services from pipes, and it's going to be really hard for them to be good at both. It was great to see him talk about Skype's SILK codec and Google Voice as important disruptors. He presented at eComm last month, where those items were very much part of the landscape. That's less the case with their customer base, but that needs to change, so kudos to MetaSwitch for bringing this into the mix.


Once you've had your fill of keynotes, there's always the beach - Las Vegas style...





Finally, a bit of reality. It's fairly quiet in Las Vegas these days, so the go-go energy isn't what it used to be. Here's a telling example - the sign here sure looks welcoming, but the Welcome Center is empty - literally. It's hard to see this, but in the left corner of the storefront window is a big For Lease sign. Ugh.

Next Stop - MetaSwitch Forum 2009

The MetaSwitch Forum is one of the best customer events going, and I'm really looking forward to attending again this year.

UPDATE - due to a late scheduling change, I'm going to be moderating one of the panels now. It's on Thursday morning, and is about one of my favorite topics - strategies for succeeding with VoIP in the consumer space. Most of MetaSwitch's customers are Tier 3 operators, many of whom are in rural markets. The competition may not be as intense as in larger centers, but it's still a factor, and VoIP is relatively new for consumers. Should be an interesting session, and you can learn more about it here:

Time to Raise or Fold? Consumer Telephony Strategies in a Down Economy

It says a lot in this economy for companies like MetaSwitch who are still willing and able to do events on this scale in Las Vegas. The important thing is that they value their customers, and they use this forum not just as a way to show it on an individual basis, but also to build community. All customer events strive to do this, but there's no doubt in my mind it's very real here.

The forum is also a great way to showcase their latest solutions as well as their technology partners, such as ADTRAN, Acme Packet, Aastra, Occam Networks and many others. Am very much looking forward to getting all the updates and spending time with the MetaSwitch team - as well as their partners and of course the customers.

Customer events are usually pretty closed, and I'm one of only a handful of outsiders attending, so if you follow MetaSwitch, you'll want to keep tabs on my blog.

Aside from the business aspect of the forum, MetaSwitch always runs a fun event. It will be pretty hard to top last year's New Orleans forum, but I think we'll do just fine in Las Vegas.

2008 Year in Photos - Part 1

One way I like to recap the year is a photo review of the events and cool places I got to see in 2008. I'm no globetrotter, but I do my best to participate in a wide variety of industry events. This goes a long way to keep me current and connected to a whole lot of interesting companies that are leading the way in IP communications. I also love photography, and try to live in the moment with whatever camera I've got.

This summarizes my travels in the first half of the year, and tomorrow I'll do the second half.

CBC's Test the Nation, Toronto, January

What a fun way to start the year. Test the Nation is a national quiz show on CBC TV, and is based on teams from various walks of life. I was invited to be on the Blogger team, and we were up against ths likes of Chefs, Pilots, Taxi drivers, and... Celebrity Look Alikes! Definitely the best perk I've had as a blogger.



The celeb look-alikes were better looking than the bloggers, but were the top team in the end. Got more pix like this in my original post.




Not only did we win as a team, but fellow blogger Rick Spence came away with the top personal score among all the contestants. Whoo hoo.




TMC's IT Expo, Miami Beach, January

Can't think of a better place to be in the dead of winter. The big giveaway prize was this red Mustang, and it sure helped bring traffic on to the show floor.




Jeff Pulver's Social Media Breakfast, Toronto, March

Jeff's never-ending world tour of social media breakfasts made a well-received visit to my town at our local deli. Definitely the shortest commute I've had outside of my home office.




eComm 2008, San Jose, March

Probably the most important event I attended all year, and it should be even better in 2009.





Above: Lee Dryburgh, me - moderating the wireless panel, Truphone's James Body helping my son Max unlock his iPhone, just bought that morning from the local Apple store

Dimension Data Analyst Day, Boston, April




Dialogic Analyst Day, New York

Really enjoyed this event, but the camera in my Nokia phone had a major meltdown, and I have no photos from the sessions. The personal highlight for me, though, was the Yankee Stadium tour they gave us. What a fantastic experience, especially for Red Sox fan like me. I was able to salvage a few shots from the tour, and here's one. You can view a bunch more on my original post.



IT360 Conference, Toronto, April

Canadian telecom conferences are few and far between, and generally smaller than U.S. events. This was one of the bigger ones, and I had my hands full chairing the tracks on Unified Communications.



MetaSwitch Forum, New Orleans, April

April was my busiest month in 2008, and the MetaSwitch Forum was the most fun. They always put on a great event, and the setting made it so enjoyable. Got plenty more photos of N'awlins if you're into virtual tourism on my original posts - view them here and here.





Above: Andy Randall, the amazing Mardi Gras World, a taste of the French Quarter


Nortel Analyst Day, Ottawa, May

I was one of only 3 analysts/media attending this event, and we got a very sneak preview at some things that Nortel had not previously shared with the public. It was quite the day, and you can read/see more about it on my original post. Things haven't gone too well for Nortel since, but they do have some cool technology that is going to find its way to your desktop sooner or later.





Above: Project Chainsaw demo, Telepresence demo


Cisco Channel Showcase, Toronto, May

BroadSoft Acquires Sylantro

After just posting that I'm not a news guy, you might be surprised to see this one!

Well, it's a hot story and has been talked about in the blogs few a while now. I've followed this space and these companies since 2001, so it's familiar territory. I'm not here with the breaking news, but the story is simple - today, BroadSoft finally announced its acquisition of arch-rival Sylantro Systems.

For sake of expediency, I'll steer you to Andy Abramson's post from this morning, which sums things up nicely. Since then, Telephony has come out with a more detailed summation, and they were nice enough cite me a few times.

Way back when, this used to be a 4 horse race, with NetCentrex and VocalData being the other two players of note. VocalData was always the smallest, and after some setbacks and twists, they ended up in BroadSoft's stable in August. NetCentrex became part of Comverse in 2006, and while never much of a player in North America, some metrics show them to be the overall global market leader, largely on the strength of their residential VoIP deployments in Europe.

For North America, that just leaves two standing, and now they're one. I was fortunate enough to attend this year's BroadSoft Connections event, so I can tell you first hand that BroadSoft has a good thing going. It was also clear at that time that Sylantro was becoming a weak #2, and the signs were there that something had to give.

I really could never see the logic of acquiring Sylantro, but it's a classic consolidation move, and I suspect it didn't cost them a cent. On that basis, I guess, it's hard not to do this, especially since the last thing you want is to see their assets turn up elsewhere. Early on, Sylantro had the edge on BroadSoft for Tier 1 relationships - AT&T, IBM, Microsoft, etc., but that's not so much the case any more.

Taking them out of the market under these conditions ensures market dominance for BroadSoft, so kudos to Mike Tessler and his team for getting this done. We're going into a tough market, but BroadSoft's Web 2.0 focus is going to help service providers get through these times, and their story becomes that much stronger when you hold almost all the cards.

Just like Mitel and Inter-Tel last year, the next step is integration, and I'm sure they've got this pretty well thought out, especially after a modest staff layoff recently. As with Avaya going private, these things are much easier to do than being a public company, and eventually, markets will improve, and the long-awaited BroadSoft IPO should be the payoff many loyal employees have been working towards.

Looking ahead, I see this setting the stage for healthy competition with another strong company I'm a big fan of - MetaSwitch. It's too early to tell how that will play out, but that's going to be a good story to watch in 2009.