No, there are much bigger non-core opportunities as well. We are also focused on bringing IP-voice from core to the edge for both broadband wireless access and for (fixed) broadband-mobile convergence. We acquired a company in the UK earlier this year and as we integrate their technology we will be able to deliver a complete core-to-edge IP solution.

What wireless edge VoIP options are you betting on?

We are betting on two options. One is femtocell-driven broadband mobile convergence (BMC). We think this is a market that will start developing in the middle of next year. One of the key trigger points is that the prices for femtocells, the physical base station consumers would set up in their homes or offices, are actually coming down into the $100 range. That creates a lot of demand on the network side, which we are particularly suited to solve because of our experience on the core side.

The second option is wireless broadband deployment. The next generation mobile technologies, whether GSM- or CDMA-based, are both IP technologies essentially that bring IP all the way to the edge. 4G technologies like WiMAX and LTE will just take that to the next level where you have higher speed IP to the handset. Just like broadband was key to bringing IP-voice to the edge in the fixed world, wireless broadband to the handset will drive end user IP-voice and multimedia services. The network has to be built differently than the current MSC set up. And that is also a large capital cycle. We think that will get going in the late 2008.

How do you plan to compete with the legacy vendors in the wireless VoIP?

Well, it’s important to note that Sonus is the incumbent vendor at the world’s largest wireless IP voice network, and we lead the market in terms of Wireless IP-voice minutes. That said, incumbent legacy-technology vendors have traditionally been our primary competition. Having said that, we do not exactly compete with their products because majority of their products are evolutionary in nature, trying to put IP interfaces on top of their legacy equipment. We do not compete with that. We compete mainly against their incumbency. Every deal that we have won, we have broken their incumbency.

For a service provider that has a huge legacy network it makes economic sense, at least in the short term, to just add an IP interface to the switches especially in an environment where everything is changing so fast and you are not sure what technology you will have 10 years from now. How do you fight such nature of incumbency and how do you convince a service provider about tangible benefits with new technology that has been developed as IP from ground up?

I will challenge one aspect of your question. You said it is economically prudent to just add the IP interfaces to existing switches while service providers wait and see how the evolution turns out. I think that was true several years ago. That is not the case anymore. In the early days the companies that made those bets looked at it from end office perspective rather than the core switch perspective. And that model dictated the reasoning that being incumbent vendors with a large number of Class 5 switches worldwide should allow to play with competitive advantage if customers convert the existing switch to IP switches. So the business model was to sell even more hardware to existing customers that would interface with the legacy gear.

There was certainly some plausibility in that being the answer five years ago. Today there is no plausibility in that. The flaw in that argument in the wireline world is simple. In fact had we believed that argument, we would never have started Sonus. In a world where access lines are actually declining, the need to change or evolve your last mile infrastructure carries no justification. With broadband you deliver services natively on IP and operators are now using that as opportunity to actually shut down end office systems rather than evolve them.

Ok, the hybrid switch model might be flawed. But the incumbent vendors have a long history. Incumbent service providers may want to do business with someone of their own age. Do you think that is a factor? Doing business with some one that has been around for long rather than Sonus that has been around for 10 years?

Incumbency is a valuable thing. There is no question about that. As I mentioned before, all the deals that we have been selected for, we have competed against that value of incumbency. There are three main reasons why your incumbent vendor may not necessarily be your first choice for NGN. Service providers have witnessed innumerable cases where the incumbent vendors have failed to deliver. Secondly the architecture for what needs to be done has become clearer now. And lastly, incumbency is not a worldwide phenomenon. Nortel is incumbent in North America with two carriers, but not in Japan and Europe. Alcatel could be incumbent in Europe. NEC is incumbent in Japan only. I just heard the other day that we are considered incumbent in some of the Japanese networks.

You seem very confident about Sonus’ future. If I compare your business in the carrier world with, say, Cisco’s VoIP business in the enterprise world, both companies were new to these respective areas. Cisco has done very well in the enterprise VoIP generating revenues in hundreds of millions each quarter. Why is Sonus not able to do that if you are near incumbent in the carrier VoIP market?

I think it is really just market development at this point. If you look at the market share data you will see that Sonus is the leader in this space. In the voice market you get these major transitions every 20 years. And like I said we are eight years into the twenty year cycle. Sonus has outpaced the market and will play a prominent role as this market unfolds. With voice markets you have to be more patient. It tends to be a bigger market, but it takes longer to get going. I can relate to my experience at Cascade in the Frame world. The Frame market came and went within ten years. You got much more rapid rise, but much shorter lived market.

You mentioned Cascade. A couple of personal questions. I have come across several entrepreneurs who have either been part of Cascade or Newbridge Networks. Anything special about those two companies in terms of being able to produce several entrepreneurs?

For me personally I think Cascade was an incredible experience. What Desh fostered end-to-end at Cascade was an incredible entrepreneurial spirit and long-term success. For example, there are several companies that started around the time that we started Sonus in 97/98. Most began with the view that they would work really hard for 18 months and then they would sell to one of the large players. Sonus never thought along those lines. Sonus’ view was, ‘We have picked a very fundamental market and we were going to build a big company in that space.’ And when you think like that about your company, you think differently about how you build your products, how you support your customers, and how you invest in your company. That is the change in thinking that Cascade fostered.

You have been an entrepreneur yourself. Why did you in 1998 choose to join Sonus rather than set up another company?

Sonus was very young when I joined. There were about twenty people here. It was a startup of people whom I knew very well. I had a lot of belief in their ability. Many of the engineers at Sonus had worked for me back at Cascade. At the end of the day it takes three things to be really successful with a startup: 1) You have to have a good market to address, and we have picked up a fundamental market opportunity. 2) You need a very good team of people and I think Sonus really built that. 3) The last thing you need is a little bit of luck. You can never discount that factor.