Dialogic Connections 2006 Analysis

Perhaps the most important takeaway from the Dialogic Connections event taking place this week in Lisbon, Portugal is that Nick Jensen the President and CEO of Dialogic has a strong vision for where the company is headed. Nick states emphatically that he hates to lose and says his partners need to share this feeling. I got to meet him last night at the first company event since Eicon Networks purchased Intel’s media processing assets and formed the new Dialogic.

Dialogic CEO Nick Jensen Addresses the Crowd at Dialogic Connections 2006Nick spent some time talking about industry growth around the world and the most noteworthy is the fact that Asia/Pacific is growing quite rapidly and not just in percentages but in dollars. You need to take this market seriously as they are great partners and formidable competitors he stated. He further went on to mention this market leads in video and the people in this region are early video adopters. Nick said we should look to this Asia for the future trends that will take place in Europe.

Nick believes in openness and he feels the industry needs to work more closely together. So competitors from the old Dialogic days, such as NMS, Cantata, Aculab, etc here is an opportunity to come together as an industry for the good of all. Nick sees an opportunity for former competitors to get together and grow the pie bigger.

"We will have a better chance of doing this if we cooperate," he says. In other words cross-licensing technology from one another when it makes sense for each company is something all the companies in the communications building blocks area should be doing.

Now Nick is a savvy businessperson and is not just trying to be a Good Samaritan. Eicon Networks has spent good money buying the Dialogic assets from Intel and as the industry transitions from TDM to IP he sees much stronger competition from entrenched IP players with very deep pockets. The point is, if the industry works more closely together and continues to design and produce open building blocks — there is more of a chance that the building block industry will continue to grow and thrive.
Dialogic VP of Product Marketing Jim Machi Addresses the Crowd at Dialogic Connections 2006
While speaking to others at dinner last night, I had a chance to learn about the whole
Harry Newton controversy where Harry complained about not even getting feedback on Dialogic when he tried to purchase the company. It would seem — and this is not an official statement from anybody in particular but my summary of various conversations — that Intel did what was in the best interest of its customers. In other words Intel weighed carefully the needs of customers and looked for a company to purchase the Dialogic assets who would most likely keep the product lines intact and be a stable company to work with going forward.

Intel was looking to keep their relationships with common customers as good as they can be. After all another 10 million dollars in sale price could be accompanied by ruined relationships that cost hundreds of millions of dollars in Intel components for years to come. There was an auction process but it was controlled and directed at Dialogic partners/competitors. In addition Intel treated departing employees very well (many of whom took a nice bonus package and are semi-retiring) and burned no bridges. Finally, Intel gave Dialogic a great deal of leeway allowing a full year for the new company to transition from using the Intel logo on internal documents to Dialogic.

As you can see Intel’s actions show its commitment to employees and customers and as such they seemed to do everything in their power to find a home for Dialogic that would have the most positive impact on customers and employees.

But back to Dialogic Connections; I arrived here early yesterday and had a chance to travel and see Lisbon-based Altitude Software. As many of you know I have been complaining incessantly for a while about how I will have no connectivity in Europe this week. I was hoping to get a SIM card for the Paragon Wireless HiPi phone I brought with me but I didn’t get a chance to find a card. Subsequently I had no working cell phone and this is a terrible experience for someone who is so used to being connected with EVDO. As those who know me can attest, I not only have EVDO access on my phone but my laptop as well. I use these connections frequently and often simultaneously. Of course none of this equipment works in Europe. As luck would have it I did get lost at one point and could have used a working cell phone.

So with all the telecom problems I had, I was feeling very disconnected at dinner last night until David Seavers the CEO of Aonta (this early-stage start-up supplies hosted conferencing service to carriers) told me there was WiFi in the room we were in. Thanks to him I took and posted this video last night. He is sitting diagonally to my right in the blue shirt by the way. So while I complained about Verizon recently — hats off to the company for including WiFi in the XV6700. Thankfully the Sana Lisboa Park Hotel has free and very fast WiFi and as long as I am in the hotel I can moblog better than on the Verizon network back home.

Although I love Verizon while I am in the US I wish GSM was built into all the company’s devices. Or at least high-end ones like the XV6700. The cost shouldn’t be that high for this addition. Someone like me needs to be able to work on the best network in the states and communicate with the same device around the world.

Verizon; what can we do to get devices with GSM built in as well? What is the risk for you? Well if the Cingular network is 90% as good as yours and I travel to Europe once a year or more, I will switch to Cingular. I know you have some devices that work on GSM but not my phone which cost almost $500.

But I digress again. This is not surprising as I am still adjusting my sleep schedule to Europe and as a consequence numerous cups of Portuguese coffee are substituting as hours of sleep. On another note, I just learned Starbucks coffee is not as strong as many of us Americans think.

Nick had a number of comments this morning worth sharing:

  • Dialogic now has 600 people
  • Almost half of the company’s workforce is engineers/developers
  • The company has $200 million in sales
  • Half of the revenue comes from North America
  • The company aims to double sales to $400 million within 3 years
  • Expect to see Dialogic making more acquisitions as needed to meet or exceed their revenue goals
  • The company will be a strong gateway player
  • This was not possible under Intel
  • There will be more focus on IMS/signaling
  • HMP is great but can’t do everything
  • DSPs are needed for things like video transcoding
  • Intel was focused more on HMP and as such there was a void in Dialogic’s DSP development

So far the enthusiasm for the new Dialogic is pretty amazing. Still one French Dialogic customer I spoke with was cautiously optimistic. He said to him the Dialogic name was not as strong as Eicon. His company switched from Dialogic to Eicon a number of years back due to cost concerns. When I mentioned the management of the new Dialogic is from Eicon he seemed to resonate with the concept but he hoped prices would still be as low as they were under Eicon.

This concern was addressed a bit later by Nick who said the new Dialogic does not want to be the cheapest provider but they want to provide the best value or price/performance.

Other attendees at the conference were much more positive. Dialogic (formerly Intel) customer Bart Stroombant the Services Manager at Artilium commented on the energy in the room during the conference. He went on to say, "With Intel we didn’t know who to contact for anything. Now we have names of the key people. We know the CEO and the salesperson." He continued, "This is the first event from the company in a long while focused on telecom. Perhaps 5% of the past company seminars focused on our market."

Nick’s talk was followed up by Jim Machi the VP of Product Marketing for Dialogic and later by Cliff Didcock of Microsoft. Microsoft is a strong Dialogic partner and their unified communications strategy integrates well with Dialogic’s gateway strategy.

Microsoft's Cliff Didcock who handles Microsoft Exchange and Unified Communications Addresses the Crowd at Dialogic Connections 2006So in the end I believe that absent of geopolitical events Dialogic’s goal of doubling revenue in 3 years is doable. Their entrance into the gateway market will allow part of this growth to take place. The Microsoft relationship will likely contribute to this goal as well. In addition the company is now able to communicate and serve its customers much more effectively than at any time in the past 7 years. The focus on ATCA and signaling protocol solutions for service providers means the company is poised to generate massive revenue from the service provider space via wireless, IMS, video and other initiatives. The company is off to a good start and is worth watching. The partners are so far very enthused. What remains to be seen is if this energy and momentum can continue and how well Dialogic is able to rebuild and grow its partner program. We know Nick hates to lose and he is very aggressive. If he can execute on all the above opportunities simultaneously, Dialogic, its partners, customers and others in the industry will win as well.

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