The Future of Metaswitch

6:00 AM Back in the driver's seat at Metaswitch, John Lazar is looking at the road ahead to see what kind of company his firm ought to be next

Phil Harvey, Editor-in-Chief

October 4, 2012

5 Min Read
The Future of Metaswitch

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.

Clouds and a Post-Carrier Future
Taylor and Lazar know that not all of Metaswitch's current service provider customers will want or need cloud-based appliances such as session border controllers. Nonetheless, Metaswitch's technology has to be cloud-ready, and there is perhaps another set of customers on the horizon for those cloud capabilities, too.

Taylor confirms that Metaswitch is running an instance of the company's Perimeta session border controller on Amazon's EC2 public cloud as a proof of concept. And that's where the Metaswitch story gets really interesting.

John Lazar is loved by his customers here, but he's clearly hedging his bets. In a press room lunch meeting, he talks openly about enabling and selling voice services, SMS and other applications and capabilities to over-the-top providers as part of a cloud service. It's just talk at the moment, but Lazar is worried that not enough of his current customers will innovate fast enough to stay competitive.

"I have to prepare us for the post-carrier future," he explains.

Of course he doesn't mean all carriers will go away. But he does mean that the relationship customers have with what used to be telephone companies will change. That's why he's even discussing, in a room full of reporters, even more far out ideas -- such as that of creating a carrier services store. Like iTunes, but for communications services. He wonders why no one, to date, has become a trusted provider of communications services that consumers or businesses could buy from local or national service providers -- all in a one-stop shop.

Should Metaswitch be in that business? Again, it's talk at this point, but Lazar is perhaps seeing a day down the road where the "switch" in Metaswitch is like the "Telegraph" in AT&T's previous corporate moniker.

"What I'm betting on here is our software heritage," Lazar tells the crowd here during his keynote. "I think we can win."

— Phil Harvey, Editor-in-Chief, Light Reading

About the Author(s)

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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