Recently in VoIP Category

I've been having a sideline conversation with one of the readers of my last blog entry on CounterPath, and I thought it was a good idea to share the back and forth comments here and perhaps expand the discussion to include input from others.

I have a question for you. First, I am a shareholder of a significant number of shares of CounterPath. For the life of me, I can't understand why the share price and volume have
languished in this stock. It has had nothing but good news for months now. They're landing huge customers, revenue is ramping up, insider (Steven Bruk) is buying shares in the open market. I could go on, but I'm sure you're as familiar with the company as I.

Thank you,

D

My Response:

Hi D:

I understand your frustration. The lack of investor interest may be due to a sort of "Vonage effect" that is hampering a number of VoIP-related companies. While the millions Vonage has spent for marketing has helped to popularize VoIP service among the masses, it has also had quite a negative impact on its financial performance and stock -- and I fear has depressed the rest of the VoIP sector somewhat.

The brightside, I believe, is that this market condition will be relatively short-lived. Few investors outside of the IP communications industry know much about the industry yet -- the array of companies or the products/services that are making their way into the marketpace. Once they do, companies like CounterPath stand to benefit greatly, along with their stockholders.

My advice is to you, therefore, is to hang in there, and think mid to long term on your stock holdings. The overall trajectory of the IP communications technology space is only heading north...

D's Reply:

Tell me if you share this conclusion:

I think telecoms are going to have to evolve into something a lot more streamline than they are today in order to survive and will eventually, have to push softphones as a way of cutting down on equipment expense as VoIP is going to be the standard medium for telecommunications. There's no sense in having to license a softphone and buy or produce a mechanical phone.

My Latest Reponse:

I agree completely that service providers need to evolve in order to stay competitive and survive in the marketplace -- and the good news is that we are starting to see a good deal of evolution occuring -- especially in the managed service provider (MSP), P2P and hosted IP-PBX markets.

The growth in softphone use will come not only from providers "pushing" them on customers but also from an evolutionary change in end user behavior and buying habits, the widespread availability of reliable e911 support (which CounterPath and Intrado are working on), and continuing advances in broadband wireless coverage.

However, I'm not sure we'll see the wholesale replacement of hardware-based phone sets by softphones anytime soon.  Rather, I believe softphones will continue to be used more as complementary/adjunct communications tools -- perfect for mobile and remote office/teleworker applications.

What do you think? Please post your comments, if you have any,  below!

O' Loyal Blog Readers,

Here's another sneak peek at an upcoming column in Internet Telephony magazine.

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A great deal has been written about the concept of “Web 2.0” – with much of it in search of a workable definition. The term has certainly become wildly popular, with more than 56 million citations in Google. But there is also much disagreement about what it means – while some dismiss it as a creation of marketing and PR hypesters, others embrace it as the new model for Web-based businesses and services.

According to Tim O’Reilly in his seminal piece “What Is Web 2.0: Design Patterns and Business Models for the Next Generation of Software,” he writes that the concept of “Web 2.0” “got its start during a brainstorming session between O'Reilly Media and MediaLive International a few years ago, when Web pioneer and O’Reilly VP Dale Dougherty noted that far from having "crashed", the Web was more important than ever, with exciting new applications and sites popping up with surprising regularity.”

Indeed, it’s clear that the rise of “Web 2.0” has created a dazzling array of new companies, business models and services. But it is also creating vast new opportunities for Web-based IP communications services, allowing service providers to leverage a toolkit of Web 2.0 technologies, including XML, SIP, RSS, REST, and AJAX, that allows them to integrate their communications services with other Web-based services so that they can interoperate in seamless and quite powerful ways.

So what is a “Web 2.0” application? While it means many things to many people, we can safely say that at the most basic level it involves the use of a variety of Web-based technologies to provide highly flexible, feature-rich, personalized services delivered to end users. To make it all happen, these applications rely on a high-degree of integration and interoperability among an “ecosystem” of Web sites that allow them to share applications and data. The term “mash-up” was conceived as a way to illustrate the way APIs and data are combined to create brand new applications and services (for example, mashing up Google Earth satellite maps with specialized databases to create maps of home values (homevalues.com), or crime rates in specific Chicago neighborhoods (chicagocrime.org).

In his definitive piece mentioned above, Tim O’Reilly envisions the “Web 2.0” concept being bounded by seven guiding principles that are demonstrated in part or in total by true Web 2.0 applications. These include “The Web as Platform”, the “Harnessing of Collective Intelligence”, “Data is the Next Intel Inside”, “End of the Software Release Cycle”, “Lightweight Programming Models”, “Software Above the Level of a Single Device”, and “Rich User Experiences.” It is no accident that many of the breakthrough Web-based IP communications services in operation today garner check marks for many of these principles.

VoIP 2.0, a term championed by TMC, hints at the convergence of Web 2.0-based technologies and real-time IP communications services. It makes perfect sense, since in a pure IP environment like the Web, IP Voice and video are treated like just another network application. Therefore, the possibilities for innovative Web 2.0/VoIP/IP video mash-ups are endless.

Recently, there have been a number of early-stage VoIP mash-ups. tglo, the VoIP division of theglobe.com, announced a few months ago the availability of its tglophone for users of Monster.com. Job seekers at Monster.com will easily be able to enable their resumes and accounts with "click to call" capabilities. Recruiters can review resumes and immediately connect with job seekers for free around the world. In another tglo “mash-up, Craigslist.com "phone icons" will appear next to product listings allowing for a click-to-call connections between buyers and sellers. The eBay/Skype combination aims for the same synergies.

In the longer term, look for voice and video to be further integrated into our online existence – click-to-talk buttons that are part of the standard feature set of all software applications, Second-Life avatars that speak, rather than text chat, to each other; the spread of podcast-infused reviews of products and services…The list can go on and on.

Managed Service Provider (MSP) Whaleback Systems just completed a $7.5 million Series B round of financing, led by Castile Ventures with participation from new investor Egan-Managed Capital and existing investor Ascent Venture Partners. The financing will be used to expand Whaleback's channel and geographic market coverage and to fund aggressive feature development for Whaleback's CrystalBlue SMB Voice Service.

Unlike traditional systems, the Whaleback CrystalBlue Voice Service is 100 percent premises- based and software-driven. It includes an IP PBX with Key System Unit features and Road Warrior Functionality, and features an all-inclusive, unlimited nationwide calling package for SMBs that need between 5 and 1500 stations.

Castile Ventures is investing its third fund in innovative enterprises developing future generations of enterprise, mass market and service provider information technology.
Founded in 1998, Castile Ventures is a top- performing early stage venture capital firm investing in innovative enterprises developing future generations of information technology for enterprises, service providers and the mass market. Currently managing three funds, Castile’s investments include Ahura Corp, Brix Networks, GeoTrust (acquired by VeriSign), Neah Power (NPWS), Network Intelligence (acquired by EMC), Quantiva (acquired by NetScout Systems), Sandbridge Technologies, SilverStorm Technologies, Sonus Networks (NASDAQ: SONS), Stargus (acquired by C-COR), and Trapeze Networks.

While profitable domestic U.S. arbitrage scenarios are hard to come by today, with all the cutthroat competition for transport and termination and resulting price pressure, the International marketplace still holds a number of intriging opportunities.

George Dinsdale,  a VoIP industry vet and principal at IGP (Internet Global Phone), a small but fast-growing ITSP that sells minutes between the US and a number of international POPs (including the Phillipines and South America), recently told me about how IGP is completing local Brazilian calls by routing them through New York. He said it's simply cheaper to do it that way!

Indeed, there are many other scenarios -- and I've love to hear from anyone who has an interesting "arbitrage anecdote" to share!

I recently met up with Donovan Jones and Jason Fischl, CounterPath's President/COO and CTO respectively, and they told me that revenues are growing around 20% per quarter -- a very nice clip even if Donovan does say so himself! Given that almost every service provider and hardware vendor I met up with at the last VON show that had a softphone product was licensing it from CounterPath, this number is perfectly believable -- and in my view set to grow even larger.

CounterPath Solutions is without question one of, if not THE leading provider of VoIP and Video over IP SIP softphones (with over 191 customers and more than 6 million IP endpoints deployed), and they recently announced an alliance with Intrado Inc., the leading provider of VoIP E911 services to develop new functionality within CounterPath’s softphone to support automatic location identification on mobile VoIP 911 calls. For most prospective large corporate and government users of VoIP, this is a very important development, as access to emergency services is actually a mandated policy that in many cases severely restricts the use of softphones.

The technology will enable the softphone to integrate directly with Intrado’s systems in order to detect and send location information automatically when a 911 call is made from a wireless VoIP end-user device. This means that calls made from a softphone on a laptop or smartphone, for example, will be directed to the appropriate public safety answering point (PSAP) and that emergency operators can link the caller's current physical location with the phone number used to dial for help. As a result, service providers deploying a CounterPath softphone with their VoIP service will be able to provide E911 services to customers.

This past August, CounterPath and Intrado’s VoIP location technology was tested successfully in a joint E911 trial throughout New York City. The results proved the technology’s consistent location identification ability.

Packet Island Inc., a provider of VoIP lifecycle management solutions for the SME VoIP market, received its first round of venture funding from a group of venture capital firms led by Startup Capital Ventures. The other VCs participating in the Series A round are Garage Technology Ventures and Rincon Ventures.

According to Andy Aczel and Preveen Kumar, co-founders of Packet Island, “We took two years to build a solid SaaS platform that had the architecture to support the deployment model and economic sensitivity of the SME market. By focusing our SaaS platform to solve the VoIP management needs of the IP Centrex market, we’ve been able to address a burning problem in a fast growing space, and gain industry recognition by means of key industry awards. We wanted investors who had the breadth and depth in the markets we were going after, and that’s exactly what we got with our VC syndicate led by Dr. John Davidson from Startup Capital Ventures.”

Dr. John Davidson, co-founder and CTO of LAN pioneer, Ungermann-Bass, and General Partner of Startup Capital Ventures, says  “As a long time participant in the networking industry, I have seen the remarkable scaling down of the price and size of enterprise networking gear without seeing an attendant reduction in complexity. Small companies can now cost-effectively deploy all the networking functionality of a large company, but typically must rely on a Managed Service Provider to insure its smooth operation. Service Providers in turn need a scalable solution to manage and control client networks from a distance. Packet Island has architected a remote network analysis platform which it deploys in a Software as a Service (SaaS) model to meet the needs of MSPs. The company has correctly aimed its first service modules at the Perfect Storm in which a total absence of management tools for Voice over IP systems is met by the ready availability of these mission critical systems for small and medium sized businesses. With more than 17 million traditional Centrex lines converting to VoIP in the next few years and with over 7 million SMEs in the US eligible to participate in this conversion, Packet Island has chosen a fertile space in which to make its initial product thrust.”

Founded in 2004, Packet Island Inc. is located in Silicon Valley. Since its founding, Packet Island has pioneered the development of SaaS-based solutions for the remote management of SME networks. Packet Island’s core technology is based on a highly scalable SaaS platform called PacketSmart, and small 4”x4” plug-and-play micro-appliances that are used for deep packet inspection. The PacketSmart platform consists of a scalable cluster of software application servers that have been built from the ground up to deliver remote network management services to hundreds of thousands of SMEs from a single hardware infrastructure. The first set of network management service modules that Packet Island has launched on PacketSmart is targeted at the fast growing IP Centrex market. These service modules enable VoIP service providers to offer VoIP network assessment, VoIP installation verification, VoIP troubleshooting, and VoIP SLA Management services to the SME market without any truck rolls.

Congrats are due to Steve Guthrie, all around good guy and a VoIP industry veteran, on his recent appointment as Director of Global Product Marketing for the IP telephony business unit at Integrated Research. Steve was formerly with Xelor Software as VP of Marketing.

In his new job, Steve will play a broad marketing role across the company’s Americas, Europe and PacAsia regions. One key initiative is to help lead the company from its Cisco-only focus to a multi-vendor strategy where the company's PROGNOSIS VoIP management solutions integrate into Cisco, Avaya, Nortel and Alcatel environments and provide a single view for these disparate systems that so many large enterprises have deployed across their global operations.

Since joining IR last month, Steve has already been in front of a half-dozen prospects and customers, on site with a customer where IR is managing 22,000 IPT nodes, and together with several MSPs that have end-users ranging from several hundred nodes to many thousand nodes.

Steve's new business contact details are below.


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Steven Guthrie
Director, Global Product Marketing, IP Telephony
PROGNOSIS -- precise performance monitoring

(m) +781-248-6956
(f) +781-662-9166
(im) steven_Guthrie@hotmail.com
(e) steve.guthrie@prognosis.com
(w) www.prognosis.com

As Rich Tehrani wrote recently, IP peering was one of the main themes to emerge at this past VON event in Boston. Another peering trend, SIP Trunking, which involves the direct IP connection of a SIP-enabled IP-PBX and SIP-compliant VoIP service provider, was also evident at the show and generated a few notable announcements.

First and foremost, the SIP Forum formally announced their embrace and ownership of SIPconnect -- a SIP trunking specification originally pioneered by Cbeyond Communications, Broadsoft, Cisco, and other vendors.

Another announcement from Bandwidth.com entailed their recent roll out of a SIP trunking solution aimed at the SMB and enterprise business market. They announced distribution deals for that product with Mitel and VoIP Supply, both of which will bundle the offering with their hardware solutions for business looking to maximize the value of their IP PBX systems.

I arrived at VON Fall in Boston this morning, and thought I'd share my initial impressions of the event so far.

The exhibit floor looks quite good, with 350 or so booths and decent traffic. The vendors seem pumped and ready for an expected 9,000 attendees over the course of the week. Other numbers being bandied about include 175 registered press and analysts, and 325 speakers on the conference roster.

I sat in on the opening keynote featuring Jeff Pulver and Ted Leonsis, Vice Chairman of AOL and President of AOL Audience. Most of the discussion was around video over IP as the next big industry disruptor, and I have to agree that the Internet is indeed ready for video primetime. An important  distinction was made between IPTV and video over IP -- IPTV is defined as the telcos foray into video services as the means to counter the cable MSOs, and as such is still a walled garden just like the cable operators offerings.

Video over IP, on the other hand, is really video running over the Internet as an application, and what IP did for voice it will also do for video in terms of freeing video from the constraints of the walled gardens of the established service providers and establishing the concept of video as an application where anything is possible.

I did detect a bit of boredom on Jeff's part with respect to VoIP -- he seems to be tiring of the technology and clearly finds Video over IP a more compelling area right now.

By all accounts, looks like outsourced IP phone system provider M5 Networks is on a tear: Over the last three years (2002-2005), M5's growth was 491.2 percent, placing it at number 272 on the Inc. magazine 500 ranking of the fastest-growing private companies in the U.S. -- and one of only 27 telecommunications companies to make the list.

M5 is one of 17 New York City-based companies added to the list for the first time in 2006. This year's biggest gainer, the New York metropolitan area is now represented on the Inc. 500 list by a total of 42 of the country's fastest-growing companies, making it a close second behind
Washington, D.C. for hottest metropolitan area on the list.