Is Paetec’s Purchase of Allworx A Positive Sign or a Negative One?
Posted: October 16th, 2007 | Author: Garrett Smith | Filed under: VoIP Commentary | 3 Comments »IP Phone System Consolidation Continues
Right down the road from VoIP Supply, news broke last week that CLEC Paetec has purchased IP PBX provider Allworx. According to the release, Paetec picked up Allworx for $25 million. While this is just the latest in a string of recent IP PBX consolidations, it is interesting that Allworx went for only $25 million. Based on generally available information, the number of awards, and industry recognition, I would have thought Allworx would have commanded a much higher price tag.
This makes me wonder what Digium payed for SwitchVox, who is considerably smaller than Allworx (maybe $3 – $5 million?) and what the value of other industry leading IP PBX providers such as Fonality might be. Hopefully this is just the beginning of bigger things to come for IP PBX providers and not a sign that the marketplace for IP PBX systems is not a s hot as one might expect.
I am curious about this acquisition. What do you think PaeTec’s intentions are? Is it to sign up all of Allworx’s resellers as PaeTec agents? Is it for PaeTec direct reps to be able to present a total solution to their SMB clients? Maybe the price tag was just a bargain that PaeTec couldn’t pass up, and they’ll figure it all out later.
I think there is good synergies between the two companies and both will benefit from the acquisition. For Paetec, having their own system to sell gives their resellers and direct sales staff more of a complete solution to offer customers, and for Allworx they get access to a huge customer base.
The way I see it, it is a win-win.
Don’t they risk the chance of falling into the channel vs. direct argument you made in your latest “Help!” post?
PaeTec has a large direct force, and Allworx has a large VAR channel. Will the PaeTec direct force be competing with the Allworx VARs? In my opinion, the best move would be to leave Allworx as a channel only product and have the PaeTec channel managers swoop in and sign them up as agents for their services.