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The Future of Metaswitch

Phil Harvey
The Philter
Phil Harvey
10/4/2012
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6:00 AM -- ORLANDO, Fla. -- Metaswitch Forum 2012 -- John Lazar has taken the stage and is, once again, ready for his close-up.

Not that John Lazar, the other one.

Lazar, named Metaswitch's CEO in June, has been out of the driver's seat for two years as the company was being run by Kevin DeNuccio, the former Redback Networks Inc. chief who had caviar wishes and IPO dreams. (See DeNuccio Replaced as Metaswitch CEO.)

DeNuccio is still on Metaswitch's board, and Lazar says he consults with DeNuccio regularly.

But Lazar isn't here talking growth, necessarily. He's using the word transformation an awful lot. The time away from the CEO chair allowed him to look at the company he's worked for since 1987 more objectively.

Now that he's back, the former software engineer is describing Metaswitch as a "software company." He's not just trying to sound hip. His four-part strategy provides a glimpse into a company that is helping its customers modernize their networks, while giving them a reasonable path to provide revenue-generating services that businesses and consumers want, over IP networks.

The challenge facing Lazar is interesting. Metaswitch had revenues last year around $156 million, and it now has about 650 employees, of which 300 are engineers. But the kinds of customers he has built Metaswitch's business on aren't necessarily the same ones that will take advantage of its most leading-edge capabilities.

Lazar, then, is looking at a future where Metaswitch could very well become less of a telecom infrastructure provider and more of a Web-scale, network service enabler. To stay relevant in that context, Metaswitch would have to court over-the-top providers that aren't phone companies, don't own telecom networks, and are the very companies poised to take revenues from Metaswitch's oldest customers.

A Four Point Plan
Lazar's first priority, though, is to focus his business. He used his keynote here to declare that Metaswitch will solidify its position as a premium name in VoIP infrastructure. That is Metaswitch's main business now, and larger firms like Genband Inc. , Ericsson AB (Nasdaq: ERIC) and others are currently in command of more market share. But product managers in sessions here are frequently citing higher quality calls and simpler software interfaces as living proof that Metaswitch has a distinct market advantage, even if they're not shipping as many boxes as competitors.

The next item in Lazar's strategy is to take advantage of the business services market. How? By better enabling telcos of all sizes to sell hosted business voice services to enterprises and giving them a way to add value along the way.

At this show I'm introduced to Integra Telecom Inc. , which is using Metaswitch gear to provide a hosted voice service to businesses in its 35 metro markets. Such capabilities could enable Integra to go to war with other telcos, selling business voice and related hosted services in territories where it doesn't have facilities.

Integra execs say that a hosted solution is a "marginal, but meaningful improvement" in the business when compared to the economics of selling a managed PBX service. But competition someday may require Integra to be more flexible and to consider wholesaling services or competing outright in other markets, and this is sort of an insurance policy.

The third part of Lazar's plan is to position Metaswitch as a solid alternative supplier in the session border controller market, which Acme Packet Inc. (Nasdaq: APKT) dominates. He noted that he's "blown away" by the level of complacency he gets when talking to service providers about denial of service attacks. "You can't predict what's going to hit you," he told the crowd here.

Finally, Lazar wants Metaswitch to, on behalf of its customers, clarify what the cloud means. In step with that item, Martin Taylor, Metaswitch's CTO, used his keynote to outline how Metaswitch, which now sells its products via specialized hardware, will move to standard, commodity servers, then to virtualized servers and, finally, to services that are designed specially for the cloud.

For the rest of the story, go to Page 2.

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fgoldstein
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fgoldstein,
User Rank: Light Sabre
12/5/2012 | 5:19:49 PM
re: The Future of Metaswitch


The company now called Metaswitch was for years Data Connection Ltd., a software company building protocol code.  The original Metaswitch product took a lot of their existing code modules that had gone into other companies' products, filled in some gaps, and created a CO switch that ran entirely on merchant iron.  This was simultaneously radical and obvious, a smart place to be.


DCL renamed the company after the product that came to dominate its sales. But it's still a software comany at heart, whose core skill is making things work on commodity hardware.  The secret sauce is in support, which they do very well. So it's natural for them to recombine their software modules to address new markets.

RBR
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RBR,
User Rank: Light Beer
12/5/2012 | 5:19:47 PM
re: The Future of Metaswitch


Redux Cisco.  Routers and Switches are just appliances to run their software.  Right move for Metaswitch, tough love to their valued customer base; transform with us, or hello telegraph. 

paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:19:46 PM
re: The Future of Metaswitch


Ummm...I worked security appliances which were simply x86 servers running FreeBSD or Linux.  Routers tend to have things like switch fabrics and specialized high performance I/O.  Except at the low end they are definitely NOT appliances.  I can not imagine how many Dell Blade Servers would be required to provide the network throughput of a CRS-1.  


seven


 

RBR
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RBR,
User Rank: Light Beer
12/5/2012 | 5:19:36 PM
re: The Future of Metaswitch

Dearest brook, you are welcome to call that hardware running switching or routing software whatever you like.  I’ll leave that between you and Cisco / VMware. 

Of import is Phil’s column and excellent panel discussion at the Metaswitch Forum (kudo’s Phil, well done) on the impact of virtualization on both vendor and service provider.  It is far too easy for us to associate a vendor with the hardware they sell, or a service provider with the physical network they operate.  As Mr. Lazar and team hammered home, it is our intellect and product awareness of how telephony services are provided, manifested in software for vendors, or business practices for a service provider, where our comparative advantages in the future market resides.  Hitherto, placement of our hardware or our geography defined our respective market space.  Mr. Lazar clearly sees the need to expand his market through virtualization and his team is enthusiastically coaching service providers to do the same.   The same forces are at work with OTT on MVPD’s and Aps on Mobile Wireless Service Providers.

Last year’s Forum highlighted the physical network and pipe, bolstering service providers to transform how they see themselves.  This year, MetaSwitch cut the cord between network and service, aware that their customers must do the same.  Those centered on the access, the physical network, must seek the support of that ecosystem (a very viable market, ripe with opportunity). Those confident in their telephony service can join MetaSwitch to compete in the cloud.  Point being, MetaSwitch can no longer rely on hardware sales to sell their product, and Local Exchange Carriers can no longer rely on telephone service, to sell their access.  Virtualization is changing everything.  Bernie’s companion commentary (Oct 5, 2012) sums it up well.  Time to decide is now.


 

RBR
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RBR,
User Rank: Light Beer
12/5/2012 | 5:19:35 PM
re: The Future of Metaswitch


AFC was a great company, liked your stuff. 


Agreed, Hosted IP PBX is indeed tough, and trixbox is a very viable market killer already, not to mention the Microsoft or Google free stuff coming.  Its more the telephony service, legacy PSTN interface, and knowing telephone products where LEC's have advantage they need to leverage.  Indeed, the whole concept of a PBX is likely fading.  What remains are customer needs for voice communications, those specialized aps that are used like call fowarding, hunt gorups, auto attendant, find-me-follow-me, etc... and providers who understand both need and solution.  Ever watch an IT professional sell a UCM, ugly...  


MetaSwitch and LEC's have a symbiotic future, as you aptly allude "both good and ill".


Cheers.

paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:19:35 PM
re: The Future of Metaswitch


RBR,


I don't work at Cisco or VMWare and never have.  The last company that I worked for that is known here is AFC.  I have talked about working in a company that is in the Email Security business as a SaaS vendor.


There are many people in the virtual "Unified Communications" business.  Metaswitch for both good and ill will now have a whole new set of competitors.  Like Microsoft for example.  Not saying that they can't do well, just this is NOT new ground.  Heck there are even open source switches in this space.


seven


 

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