When a successful startup fails to achieve the desired exit, what to do? Embrace even bigger challenges. That is what IP Unity did some time back and that is what MetaSwitch is doing by merging with applications division of Data Connection.
Data Connection is the parent company of MetaSwitch. Its applications division and MetaSwitch units have practically been doing business together. However for the sake of better efficiency and scale the two have formally come together to cash in on opportunities where the two can cross sell under one roof. One such opportunity is Qwest.
But first a little bit about MetaSwitch. The company has been one of the most successful startups in nextgen voice. It’s 2Q07 revenues were in the region of $12 million. It started as an alternative vendor for nextgen Class 5 switches, quickly capitalizing on the rural ILEC opportunities in the US. After Taqua was acquired by Tekelec, MetaSwtich became the undisputed leader in that segment. However, as service providers opted more and more for hosted VoIP architecture, MetaSwitch began offering disaggregated application server option for hosted Voice over Broadband type offerings. And it has been doing well in that market since 2005.
The applications server orientation must have been one of the motivations for the merger. The merged unit will surely have application sever bias. In fact MetaSwitch progressed further along that path when it introduced a generic applications server a couple of months back. We hope the merger does not de-emphasize the integrated Class 5 switch business within MetaSwitch, especially since it is now up against Taqua again in that market segment.
Now over to the Qwest opportunity: Qwest has been a customer of Data Connection applications platforms. MetaSwitch could potentially cross sell its NGN solutions. However if those types of expectations are the basis and motivation for the merger, then MetaSwitch truly has embraced a huge challenge. Last time Sonus acquired TTI, the intention was to gain the Qwest account since Qwest had been trialing TTI softswitch. Sonus paid over $400 million for the acquisition. But Qwest never deployed the original TTI product.