Sonus

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Rich Tehrani
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Sonus

Here is an upcoming interview with the CEO of Sonus Networks. It hasn't been through editorial yet but I wanted to give my blog readers a sneak peak of our discussion. I am not sure where the Executive Suite will run -- certainly online, but perhaps IMS Magazine as well.

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I recently had a chance to interview Hassan Ahmed the CEO of Sonus Networks and it was a real pleasure. The company has been a true pioneer in VoIP -- they were around from the beginning. There are many companies today competing head to head with Sonus who downplayed VoIP and the products Sonus sold in the late nineties. Now Sonus is a benchmark that many other companies aim for.

Sonus was a Wall Street darling with a valuation well over 10 billion dollars at its peak and it crashed to lows that put them in line with most other VoIP companies in the 2001-2004 downturn. It was during that downturn when many industry publications and analysts mentioned that people won't buy from Sonus, they will only buy from large telecom equipment manufacturers -- the incumbents I you will. If you believed the word on the street, you would have thought Sonus was doomed. Much to the contrary, Sonus was one of the few that weathered the storm and just like the VoIP industry in general bounced back like a SuperBall off concrete surprising everyone at once.

Here is my long-overdue interview with Hassan Ahmed.

What can you tell me about the down years? 2001-2003.

Ahmed mentioned that Sonus was one of the last companies into the meltdown and the first out. The company's big focus at the time was how to keep from succumbing to the downturn. The specific words he used were, "Powerful downdraft." He further went on to say that the company earned its stripes on the way down and he is most proud of his team and the company since many others didn't make it through. They saw the bottom with a 20 cent stock. They thought the end of '02 was going to mark the end of the downturn.

At a certain point they realized their growth would come at expense of something else. The overall pot was not going to increase. They had to be able to demonstrate near-term value so that is where they focused their products. They had to make sure that for service providers, it was worth taking money from legacy projects and applying it to new ones.

They realized it was not a field of dreams where you tried every new technology. Furthermore they realized that VoIP was becoming global and all carriers were moving to VoIP. They further zeroed in on Europe and Japan. The company decided to focus on a distributed architecture and according to Ahmed they didn't take naïve bets.

They also had decisions to make regarding the target audience they wanted to attract. They decided to focus on supplying large public infrastructure. They didn't want small mom and pops and CLECS they wanted the large service providers.

This focus of course led Sonus to focus on scale and reliability as they realized these weren't things they could bolt on later. This customer-focused decision helped reinforce the decision to build distributed systems and related architectures

These decisions subsequently drove large performance increases. For example Sonus, early on the company's softswitch could handle 6 million busy hour call attempts while others were in the few hundred thousand range.

Hassan continued that the industry is now coalescing around IMS – "It's all about SIP and distributed networks. These were bets Sonus made early on. These bets paid off nicely." He continued, "We have been hardening and developing this technology for 8 years. For us it is just software upgrades."

What about industry comments about service providers only buying from incumbent providers?

Hassan started by telling me that the popular thinking was that the class 5 market would be bigger than the class 4. Many companies decided to focus on class 5 replacements. They thought that that incumbent circuit switched providers have thousands of class 5 switches and these would grow packet interfaces and migrating these old switches to VoIP was going to be the right answer as this is where the money is.

"There was no question class 5 was bigger in ports but world doesn't change overnight." Ahmed said. He continued, "You have to ask what the right way to do it is. The core has to evolve before the edge. Sonus embarked on a path focusing on dominating the the core first."

They also bet – the class 4-5 divide will have different switches as the ones on the edge terminate in copper pairs. In the IP world the connection to the network can be disaggregated from the delivery of service Ahmed said. You wouldn't just morph the switches in the network. The difference was software not hardware.

The fact that you have thousands of circuit switches is not an advantage as that is not where you deploy the switches in the IP world. Also – look at the wireline world – lines were declining. Morphing circuit switches didn't make sense

How does SIP play into your plans?

SIP is in their view – a very important protocol from a variety of perspectives. It is a protocol they have honed and field hardened for 15 billion minutes a month. SIP is used for Peering IP networks at VoIP level. Sonus used Sip-T early on to allow 2 networks to communicate with one another.

They felt one of the big values of SIP was that it could open up the services model which was once closed. You used to have to go to a switch vendor for custom programming. They further provided the Open Services Partner Alliance or OSPA.

"This has enabled a lot of creative companies to develop really interesting applications," according to Ahmed.

Sonus feels the IMS architecture is built on technology they has pioneered and the choices they made early on, the rest of the industry has now coalesced around. In the beginning the industry was all about cost savings, not separate networks. Now cost is table stakes. The wireless and wireline opportunities are now about service and service convergence according to the company.

Hassan was very passionate when he said, "The goal is to empower the next gen consumer the way they want to communicate. He said he looks at his kids to see the next generation of consumer. He sees lots of IM sessions that lead to VoIP as well as lots of collaboration.

Consumers want to get services once they have subscribed, independently of how they connect. The common service model needs to be agnostic as to how you join the network. That is what IMS is all about.

Creating services and driving innovation is a big part of what Sonus' focus is about. The IMS platform is about taking open service architecture to the next level. In weeks you can build brand new applications.

Ahmed continued, "In the wireless arena, VoIP is now being adopted by wireless operators. When wireless operators have broadband wireless access, the last mile becomes IP. The way you build wireless networks is IP instead of circuit based MSCs."

"IMS plays a prominent role in the future as we see it." Ahmed exclaimed.

Where is the growth in the world?

VoIP started in the US. Sonus then invested in Europe and Japan and other parts of Asia. Their Japan investment was very good as it became the second strongest Sonus market. Customers tell them they are the defacto VoIP standard in Japan. They work with wireline operators (Softbank, NTT, Softbank, JCOM) and now wireless providers.

Europe is a different story as there have been a few false starts and early on there were few decisions being made. Europe is now growing nicely and they saw good performance from this area in the last quarter. Ahmed thinks availability of licenses is what will keep a ceiling on growth in this area.

What about China and Huawei?

They haven't seen Huawei outside Asia. Not so much in the VoIP market anyway. Instead they have seen the large incumbent circuit switch providers.

What about the competitive environment?

From a competitive standpoint they see Lucent and Nortel in the US and Alcatel, Ericsson and Siemens in Europe. Finally, Cisco is not as focused in the carrier space for VoIP as the other players.

Can you stay independent and compete with all these players?

Ahmed replied:

We are 5 years in and this is a 15 year opportunity. Innovation counts. All operators are coalescing on common approach which is increasingly friendly towards technology we pioneered.

Sonus is a bonafide provider to large networks. Our focus is on building our company and we don't worry too much about others and if they need to be part of them. We are a leader and can continue to build on that leadership.

What is biggest impediment to your growth?

Their growth is a function of development of the global market. It's not early adopters anymore... All providers have embarked on VoIP. Different opportunities jump in at different times. As market develops so will Sonus' growth

He points out that anyone can become a service provider. This enables a set of operators like Yahoo! or Google to become providers

He went on to say these are quite interesting times and these developments enable more competition as you don't need to own the last mile.

It was an honor to have this long overdue interview and it is exciting to see one of the early adopters in our space doing so well. As the IMS market matures, Sonus will no doubt continue their position as an industry leader and continue to supply the next-generation of converged communications solutions.



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