Ridgeway Systems gets eaten by Tandberg, NexTone lays out its Asian plans, and Ingate gets more cash

May 26, 2004

4 Min Read
Border Controllers Booming

It may be a niche sector, but the session border controller market is bursting with activity, as carriers and enterprises ramp up their IP services plans. In the past few days the market has seen an acquisition, a round of funding, and international expansion.

Acquisition
Videoconferencing systems specialist Tandberg Data ASA (Oslo: TAD) splashed out $16 million to acquire Ridgeway Systems & Software Inc., one of the smaller players in the market (see Tandberg Buys Ridgeway Systems).

Despite naming AT&T Corp. (NYSE: T) and Sprint Corp. (NYSE: FON) as users, Ridgeway always looked to be struggling to keep up the pace. A Light Reading Insider report earlier this year noted that it was debatable whether "Ridgeway has the muscle to be a long-term player." (See Session Controller Report.)

Tandberg will incorporate Ridgeway's software into its end-user videoconferencing equipment so that video calls can pass through corporate firewalls and overcome network address translation (NAT) problems without enterprises having to make their firewalls less secure.

Tandberg believes this will help boost the adoption of videoconferencing over IP because it'll make connections among different companies that are hooked up to different IP networks easier and more secure. To date, the majority of videoconferencing takes place within, and not between, organizations, because of the security and firewall traversal issues.

Tanderg expects to start shipping systems with integrated Ridgeway technology in early 2005.

The Insider report also noted that consolidation in the session controller sector was inevitable: "There are too many companies trying to win the same business, and as the big players move in so the market for a niche player will be further squeezed." It also stated that "the functionality currently encapsulated in these products will be incorporated into other products at the core and edge of the network," as has happened with the Tandberg acquisition (see Session Controllers: Limited Lifespan?).

And Kevin Mitchell at Infonetics Research Inc. says the session border controller market will consolidate further, "especially during the next 12 months." He adds that consolidation in the next-generation voice product market in general "is heating up," citing two recent deals as prime examples (see Lucent Buys Softswitch Vendor Telica and Tekelec Is Buying Taqua).

Funding
Ingate Systems AB, which primarily targets large enterprise users, bagged $5.8 million in funding from Japanese systems integrator Bell Net Corp. (see Ingate Gets $5.8 Million).

The new round takes Ingate's funding to more than $10 million, and will allow the company to increase its staff to about 30. The company also announced new distribution partners in North and Latin America (see Ingate Expands in America).

Ingate differs from other session controller vendors with its commitment to SIP (to the exclusion of legacy protocols such as H.323). It describes itself as the producer of the "world's only SIP-capable enterprise firewall" rather than a session controller vendor. That niche could pay off, as carriers and enterprises latch on to SIP's revenue-generating and cost-saving potential (see Heavy Reading Sees Money in SIP).

International expansion
Ingate wasn't the only session border controller expanding its horizons. NexTone Communications Inc. this week ramped up its presence in the Asia/Pacific region, where it already has customers in five countries (see Nextone Expands in Asia/Pacific).

NexTone has poached the managing director of international VOIP carrier ITXC Corp. (Nasdaq: ITXC) to beef up its Asian operation, and also announced a new customer in the form of Indian alternative operator Data Access India Ltd.

Other announcements
Kagoor Networks announced a new customer (see USA Datanet Picks Kagoor); Netrake Corp. officially named Level 3 Communications Inc. (Nasdaq: LVLT) as a customer and added to its board (see Netrake Adds Vet to Board); and Newport Networks Ltd. floated (see Session Controller IPO Scores Success).

All this activity follows another quarter of market growth, according to Mitchell at Infonetics. He says the session border controller market was worth $10.7 million in the first quarter of 2004, up 7 percent from the previous quarter. That increase was registered as the overall market for next-generation voice equipment suffered a temporary blip (see Infonetics: VOIP Kit Market Stumbles).

— Ray Le Maistre, International Editor, Boardwatch

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