Digium vs. Fonality Round 2

Tom Keating : VoIP & Gadgets Blog
Tom Keating
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Digium vs. Fonality Round 2

Back In October of last year, I figured out that something was up between Asterisk@Home (now Trixbox) and Fonality. Chris Lyman, the CEO of Fonality told me, "I don't know how you figured out on June 6th that we were getting involved with trixbox, but my hat goes off to you." Chris gave me the scoop that Fonality was acquiring Asterisk@Home, which sent shockwaves through the Asterisk community since Asterisk@Home was an open source GPL "free" software product and Fonality is a business looking to make money off of Asterisk.

Asterisk@Home, a turnkey, bootable CD that easily installs Asterisk in minutes quickly became a popular Asterisk distro and so there was iniitally some concern that Asterisk@Home/Trixbox would no longer be free and under GPL due to the Fonality acquisition. Fortunately, Chris has chosen to keep Trixbox under GPL, but the Asterisk@Home acquisition was the first major salvo fired in the battle between Asterisk/Digium and Trixbox/Fonality. Perhaps the second salvo was when it appeared that Digium was redirecting the old Asterisk@Home domain website to their AsteriskNOW website.

Make no mistake, Digium and Fonality are competitors. With the new BuyNOW feature which I gave a heads-up on a few weeks ago and which launched officially at ITEXPO, Digium and Fonality are even more competitive with each other. The reason? The BuyNOW feature allows an AsteriskNOW user to purchase a Polycom IP phone specially designed to work with AsteriskNOW with a simple click of the mouse. Digium gets a "cut" of the revenue from the sale of this Polycom phone which goes through an exclusive partnership with NETXUSA, a VoIP distributor. Fonality also supports Polycom phone and they too have special firmware they load onto their Polycom phones, but they charge $40 to provision it where as Asterisk doesn't charge to provision the phone. This extra cost helps favor Asterisk/Digium in the battle with Fonality.

But all is not peaches for Digium. They have an exclusive partnership with NEXTUSA, so if another distributor wants to sell Polycom phones to work with Asterisk, they have to go through NEXTUSA for the special firmware and lose a portion of the revenue. Obviously, competing distributors such as VoIPSupply.com, ABP,  or Voxilla won't be happy. But this certainly gives Digium yet another revenue source. My sources within the distributor market have already expressed some displeasure over this "BuyNOW" feature which bypasses them.

I should mention that Sangoma Technologies is another competitor to Digium nipping at their heels with their telephony cards which compete directly with Digium's bread-and-butter hardware business. Considering Digium makes about 90% of their revenue from their hardware cards and 10% from support & licensing (Asterisk Business Edition), adding an additional revenue avenue makes good sense, especially if Sangoma starts to chip away at that 90% revenue source.

Both Digium and Fonality offer "free" plug-and-play versions of Asterisk that you simply boot off of a CD and both companies offer a "migration path" to the "paid" version of Asterisk. For Digium it's Asterisk Business Edition and for Fonality it's their PBXtra product. They both have a vested interest in making money from phones as well as upgrading "free users" to the paid versions. Both products have their merits and certainly Fonality has added some cool proprietary software to their PBXtra product, including a powerful softphone client with presence, call center features, etc. There is certainly some value-add in the Fonality solution, but not everyone needs these features or is willing to pay extra for them.

The battle between Digium and Fonality is getting interesting. I met with Mark Spencer and Bill Miller, the VP of Marketing at their booth, which I have to say was absolutely mobbed. They offered some interesting perspectives on Digium vs. Fonality, but they were off the record, so alas I can't share it here. Chris Lyman has also shared some thoughts about Digium, but that too was off the record.

In any event, in the Digium booth Digium employees were demonstrating the quick 7 steps needed to install AsteriskNOW. Amazingly, the crowd was like 4 people deep and 15 people wide. I'm thinking they will win a TMC ITEXPO Best of Show. Yeah, no brainer...  At ITEXPO they made several important new Asterisk announcements, which I covered covered, but I neglected to mention that they launched AsteriskNOW Beta 4 at ITEXPO. Alec Saunders also has a good roundup of this news, but don't tell him he's at ITEXPO, cause he's not. VoIPMonitor.net assumed Alec was at the first VoIP tradeshow of 2007 - an honest mistake, but you should be here Alec, you're missing out!

Gigaom has an interesting article today on the Digium/Fonality battle worth checking out. Finally, check out Mark Spencer on Youtube demoing how to install AsteriskNOW:

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