Genband Scores NextPoint
Genband Inc. announced Tuesday that it's acquiring NextPoint Networks Inc. for an undisclosed sum of cash and stock, with the intent of integrating that company's session border controller and security gateway functions into its media and convergence gateway products.
Genband's main product line, the G9 media gateway, acts as an intermediary between circuit-switched telephone and IP-based packet networks, translating signaling and other protocols between the two, while allowing carriers to offer new IP services without having to completely discard the billions invested in legacy networks. (See The Emergence of the Session Border Media Gateway.)
Over the years, Genband has tackled the same basic need in the fixed telco, wireless, and cable network sectors, buying and building itself a portfolio of products that service providers use to connect, secure, and route multimedia traffic among disparate networks.
With the acquisition of NextPoint, Genband will enable carriers to consolidate the edges of their networks and deploy a single element to provide complete session management for multiple types of access technologies. "The industry sees the need for all of these capabilities to converge into a single platform," says Charlie Vogt, Genband's CEO.
Genband has had its eye on doing this by itself, as we noted back in April. (See Genband Fun Facts.)
But Vogt says it "really struggled" to build everything from scratch. He says: "When you look at the comprehensive feature set and all the interoperability required, it's a tough hill to climb."
Speaking of tough climbs, when last covered by Light Reading, NextPoint Networks had fallen off a cliff. It was cutting staff, watching its CTO walk, and generally getting weird (once it made a reference to outsourcing its limbs in lieu of its brains). (See What's NextPoint's NextMove?)
Vogt said the acquisition was "the toughest transaction we've ever done... They're very proud of their technology and their company… What made it tough was getting to a valuation that everyone around the table could get excited about."
Always good for a laugh, NextPoint was itself a merger of two startups -- NexTone Communications and Reef Point Systems -- which combined in January. Before it became part of NextPoint, Reef Point Systems was known as Quarry Technologies, a maker of IP service switches that was backed by Corvis Corp. and others. (See Quarry Snares $38 Million and Reef Point: You Were the Quarry.)
Dig through Light Reading's archives and you'll even see one instance where NexTone and Reef Point, before pairing up, took shots at one another over which platform had the best security features. (See Reef Point Lands $21M, Gets Woody.)
So now all the fun and games has landed on Genband's doorstep. The obvious analysis is that, while a more converged media gateway with more functions sounds great on paper, there's just no telling if it will actually work. To that end, Genband hasn't said how long it will take before it is able to integrate NextPoint's technology into its products.
While Genband is widening its addressable market with the deal, it is getting in the face of a couple of new competitors as well. With Alcatel-Lucent (NYSE: ALU), NEC Corp. (Tokyo: 6701), Nortel Networks Ltd. , Nokia Networks , and other large systems vendors as resellers and partners, Genband's main rival of late has been Huawei Technologies Co. Ltd. , with some smaller gateway competition from AudioCodes Ltd. (Nasdaq: AUDC), the Israeli vendor whose stock has fallen 47 percent so far this year, and which recently cut back its own session border controller resources. (See AudioCodes Rakes Netrake.)
With the acquisition of NextPoint, that competitive set now includes Acme Packet Inc. (Nasdaq: APKT) and Starent Networks Corp. (Nasdaq: STAR) "You can bet we're going to get right after Acme," says Vogt, as if that company needed any bulletin board material.
Vogt says Genband, which took in $94 million in revenues during 2007, has already realized $72 million in revenues thus far this year, with $15 million coming from wireless gateway sales in India alone. He says next year as much as half the company's revenues could come from outside the U.S.
— Phil Harvey, Editor, Light Reading