Convedia Thrives on Asian Base

IP media server vendor Convedia Corp. made a rare move today -- it actually named a customer (see WebEx Picks Convedia Gear ).

More than 50 service providers use this startup's IP box, yet the vendor has named only a handful (see PointOne Picks Convedia Media Servers, for example). Today, conferencing specialist WebEx Communications Inc. (Nasdaq: WEBX) was the name let out of the bag.

The U.S. service provider, which specializes in providing realtime video and audio conferencing services to businesses, has been using Convedia's high-end CMS-6000 media servers, and some smaller CMS-1000 units, for more than a year now, says Grant Henderson, the vendor's head of marketing and strategy.

Henderson claims that account was won after a "very competitive bakeoff with some of the more traditional media server players, including Polycom Inc. and Voyant," which was subsequently acquired by Polycom.

Now Henderson sees some of the larger equipment vendors, such as Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Siemens Information and Communications Networks Inc. as his major competitors.

That's because carriers are becoming increasingly interested in the capabilities of these servers, which enable IP versions of popular voice services, such as interactive voice response (IVR), messaging, and conference bridges. Like the markets for other specialized IP systems, such as session border controllers, it's small and niche, but growing fast. Infonetics Research Inc. noted a 56 percent growth in media server sales in the second quarter of this year compared with the previous three months (see Session Controllers in Demand).

Analyst Kevin Mitchell says that while Infonetics isn't currently providing market share in the media server sector just yet, Convedia has "been among the leaders in the past few quarters, and many providers in our survey research mention having Convedia or evaluating [its technology]."

Convedia's strength in the market was also verified by research from iLocus (see Convedia Claims IP Media Server Lead).

Henderson claims the company's service provider customers include many high-profile operator accounts, though most want to maintain a media silence. Henderson wouldn't confirm or deny industry talk that puts Convedia's servers at the heart of AT&T Corp.'s (NYSE: T) CallVantage VOIP service.

What he will say, though, is that many of the customers are based in Asia, where Convedia's one OEM deal with an as yet unnamed "major equipment company" has resulted in multiple deals. Currently, 40 percent of the Convedia's revenues come from the Asia-Pacific region.

"Asia has led the world in broadband, and now operators are adding layers of services on top of those connections, and Europe looks set to follow. We've seen some movement there, and have our media servers in BT Group plc's (NYSE: BTY; London: BTA) labs in Martlesham as part of its 21st Century network program. There's also activity from the 3G mobile operators, which are issuing RFPs as they look to expand their IP services," says Henderson.

Growing in new territories doesn't provide any technical issues for Convedia, he adds. By deciding to leave a TDM element out of its servers, and so not morphing the product into a media gateway, the same product can be used all over the world. "The media gateway vendors have to deal with a lot of regional issues and physical connections to legacy networks. We don't have that problem. Ours is a pure IP device."

That focus has allowed Convedia to strike a lot of marketing partnerships as well as its OEM deal. "We work with all the major session border controller vendors, including Newport Networks Ltd. and Netrake Corp., and the major VOIP application platform vendors, such as Sylantro Systems Corp. and VocalData Inc." (See Netrake, Convedia Team Up, VocalData and Convedia Partner, Sylantro, Convedia Offer IP Centrex, and Newport, Convedia Team Up.)

All those partnerships have brought in business, says Henderson, and Convedia expects to double its revenues this year compared with 2003 as the market picks up. As a private company, Convedia doesn't reveal its sales figures, but it's claiming current quarter-on-quarter growth of 35 to 40 percent, though Henderson says the vendor is not yet cashflow positive.

That will come as carriers, fixed and mobile, look to offer more and more IP-based services, such as gaming and videomail, across their broadband networks, says the marketing man.

— Ray Le Maistre, International News Editor, Light Reading