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By now you have probably heard about Nortel’s acquisition of Pingtel, what it means for open source telephony and all of the other blah that comes with a large company acquiring another company with open source roots (and community) during a less then “hot” period for VoIP related news.
But is this news important and does it really impact Nortel or the industry at large?
I first became familiar with the Pingtel solution in early 2005 when they were interested in working with VoIP Supply. They had a very polished executive management team, savvy marketing, but at the end of the day their product, compared to alternatives on the market was not the best - and sales of it never really took off. Pingtel was successful in closing a few large deals for their solution, but they were eventually purchased by Bluesocket, Inc. It was a move that didn’t really make me go wow…just like this move by Nortel doesn’t have me doing handstands and cartwheels.
Here’s why:
- This news is not big - The old guard has been getting in bed with IP PBX providers and open source projects in the space for the last two years. This is nothing new.
- This is a cost cutting move - If you notice Nortel had a preexisting OEM relationship with Pingtel. Buying them will lower their costs because they are no longer paying the associated fees to Pingtel.
- There is little value to be extracted out of the open source community Pingtel is associated - If anything, this is a feel good marketing move. Sure there have been 300 features improvements out of SIPfoundry, but what has been the net increase in profits - because at Nortel’s level that is what it is all about.
I am probably going to take heat for writing this, but at the end of the day, those who think that their is some sort of business altering value in the connection to this open source community is off their rocker.
- Most open source developers are small fries - Sorry guys and gals, I respect, value and am often in awe by what you are able to produce, but at the end of the day 90% of the people contributing to the open source community aren’t going to drive significant sales revenues for the associated company. ‘
- Open source communities are difficult to monetize - The majority of the community are “long tails” (small fries) and the guys at the “head” (10% “big” players) are smart enough to figure out how to make money for themselves. Look no further than the two largest open source telephony communities, Asterisk and trixbox (heck, trixbox and parent Fonality are based off of Asterisk…because the guys behind them were smart enough to self monetize)
Say what you want, this move isn’t that big of news and isn’t going to make a profound impact on the industry at large. If anything this will help Nortel lower their costs (by eliminating their OEM costs) and position another open source community with an old guard player, but Nortel is going to all of sudden become a major player in the open source telephony space and this certainly is not going to be something that turn around a business that has been in decline the last five years.
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Very brassy! I thought that you bloggers were just supposed to parrot what everyone else is saying. JK, that is why I read yours, I can count on insightful commentary that is pertinent and timely.
I would disagree with you about the OS developers a little though. While most do not grow multi-million dollar companies themselves (some do), their contributions have a wide spread effect on companies that can leverage their efforts for profit. Maybe we are saying the same thing here, the OS developers are vitally important to the projects that they are a part of regardless of how rich they become by their involvement. Pingtel is a bad example of an OS company because they did it in reverse. They took a product and Open Sourced it whereas successful OS companies take the project and productize it.
@ Chris:
Thanks for reading and the kind words. I knew I was taking a chance, but at the end of the day, if people are upset that I call them like I see them then that is there problem - not mine. I don’t do this to get chicks (if I wanted that I’d write about clothes or something), but to help people and part of that is being open and honest.
I understand where you are coming from in regards to OS developers. Honestly, I wish I was a developer (too busy to learn, but someday I will…look out ;)), however, if you ever talk to a “corporate type” about an open source development community they only think about one thing - money. They are obsessed with how to “monetize it.”
What they fail to realize, as you state above is that the community is very valuable, although often indirectly. The problem is most “corporate types” don’t (and will never) understand this so they act like a bull in a china shop, go crazy, break all the fine china and piss off the owner (the OS developers). The result is a net negative for everyone.
Nortel and Fonality|Asterisk are on a collision course. Can disruption from Nortel be coming to Fonality’s (and Digium’s) commercial offerings? Show me the Sales Potential!
Speaking of Nortel…now that they have aquired Pingtel, and have released the SCS500 SIPFoundry based IP-PBX platform for SMB, I suspect that Fonality will need to provide some more information as to how they will compete over Nortel|Pingtel’s offerings in the commercial marketplace. It seems they want to move (and change) the discussion away from the existing open source based vendors (the Fonality and Asterisk communities) into the tradioonal vendor market space with colltateral and support offerings aimed strait at the typical commercial customer. How will Fonality transition into the mainstream?
Also Nortel|Pingtel see the Fonality|Dell solution serving typically around 20 users, sometimes 50. user deployments and do not see Fonality as a serious contender in the 50 user up market.
Point is what is it that Nortal|Pingtel has and Fonality does not … in terms of busines value since Nortel’s and Fonality’s products overlap to some extent. Also how do you ardess reviews that say “…Fonality’s PBXtra. If simplicity is more important than features” ? Features is what it’s all about in the commercial marketplace.
And as to the open source developer communinity in relation to the Nortel marketplace, they could wind up to be a liability as most of them are small, very small and this does not go down to well in the commercial marketplace where the big boys are playing. I really have not seen any of the developers contributing to the open source driving revenue revenue relevent to the reseller or product recognition in the commercial marketplace.
Nortel’s stratagy in choosing SIPFoundry (as stated on The Hyperconnected Enterprise) will cause a lot of confusion for our customers moving toward adopting open source based communications and I feel that that it would be nice to have some answers from Fonality that provide a clear direction for customers wanting to buy the Digium solutions. Nortel|Pingtel is making some stong points about SIPFoundry being a better platform and are touting their extensive developer community, with more than 60 developer partners and close to 400 active members.
How will Fonality answer this: “If your career is on the line when the phone system fails and you have nobody to call have a look at the commercial version of sipXecs, called SIPxchange, and provided by Pingtel Corp … Nortel|Pingtel offers full commercial support as you would expect from any commercial company.†That said Nortel’s not been shy about their support for open source and their use of open source. As for Digium, their Asterisk technology and brand is the biggest name in open source VoIP. How will Fonality use the Asterisk branding & communicty to their benefit for their commercial offering?
Lastly Fonality has scored another $12 million in financing from Intel Capital and Draper Fisher Jurvetson — and some of the money could be earmarked for acquisitions. Impressive, but what does it mean for traditional VARs and solutions providers needing to choose a solution?
So let the battle begin.
Moe Schwartz- Technical Director Westcon
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