Can you please brief us about the rationale behind this acquisition of ThinkEngine Networks?

Think Engine initially built a large media server. When the company realized that there is not going to be a lot of demand on the large media server side, they went into applications along with a lower per port cost for their media server product line. We bought them because we ourselves wanted to get into the applications business. This was a cost effective way to get us going in that direction.

There is obviously a media server functionality overlap here?

There is certainly some overlap but Cognitronics does not offer an application other than some specific custom applications for specific customers. Whereas ThinkEngine has a much bigger appeal to the conferencing industry. So there is some degree of overlap but there are mainly parallel development maps.

Your target markets range from large service providers to enterprises. Which of these markets has brought in more business for Cognitronics so far?

It has been the combination of the ILECs and the MSOs. Most of the recent new customers we have taken on are related to the conferencing space, which is the ThinkEngine product. We have two products.  The CX4000 which provides greater AIN functionality. We sell it to MSOs and ILECs mainly. Then we have VSR, which we are selling more specifically to enterprises e.g. enterprises that want to provide their own cost effective conferencing. VSR can provide upto a thousand SIP VoIP ports. We also plan to come out with the platform that can make sense to address both markets.

Cognitronics has done good amount of business in TDM. Can you tell me why have not your deployments scaled up on the IP side?

CX 4000 has IP competency but if you look at what the media server business has become, it is not a 20,000 port requirement. This is typically well under a 1000 ports kind of deployments business. And when you look at the pricing and competition that is out there without naming anyone, it has become a fairly inexpensive offering. We are mainly in the AIN space. A customer buying AIN type applications today may want a transitional plan to go to IP with the same box. That is the capability we offer. We actually built what the customer asked for and so they buy now as opposed to taking a chance to invest in something that might never happen.

Is a standalone media server business viable in present market conditions?

I think you are talking about a broader macro-economic telecom issue. There are several companies building quality hardware and quality software. There are not many buyers however. There is no question in my mind that this industry needs to consolidate. Consolidation is more than a trend. You can’t build the business case if you do not believe in consolidation. A great media server can work perfectly but it is the level of growth potential that you should look at. If the growth potential is not what it takes to stay standalone for long, then you have got to consolidate the product as part of larger group of product offerings.

What is the most visible market trends in the media server segment?

The market has slowed down. Every media server vendor is talking about an IMS strategy. Prior to that we were dealing with Voice XML. That has a play in the industry but I think it has slowed down and has given us all a chance to catch up. But the companies that drive that are the softswitch vendors. If you have a SIP interface you can play an IP. Two years down the road you have got to have an IMS story.

What is Cognitronics doing on the IMS front?

I have got numerous engineering requirements in requests from current customers, so we are trying to determine what we have to do. I think the industry is just talking about IMS and not doing much about it.

What would be the advantages in using your product as opposed to the ones from IP Unity, Convedia and Cantata?

I think they have done a great job. Our closest competitors are Convedia and Snowshore (Cantata) which took funding and built media server technology but did not build up applications. Convedia has done a great job of addressing those companies who required the media server for applications they were building. I think IP Unity has raised the most money and they have relatively done a great job in the industry but they really are a voice mail and conferencing company. Their model is more aligned with Comverse than with Convedia or Snowshore or even our Thinkengine. So everybody has got a limited space and IP Unity has the broadest reach among us lot. Convedia’s media server has done a great job. The question is how many media servers can they sell. Snowshore decided to sell out to Brooktrout (Cantata) because again they needed bigger footprint.

You seem to be very weak on the international side of your business as compared to these competitors?

We have not done well on international front and we are very actively developing an international sales program. It is one of our weaknesses, yes.

What should we expect from Cognitronics in the immediate future?

We are going to rename Cognitronics Corporation at the next shareholder meeting. We have got to rename and rebrand the company. We will rename the company as ThinkEngine Networks Inc. We acquired ThinkEngine back in November. We will name the whole entity after it because in my opinion that represents the future growth of our business. We are going to emphasize development of applications as opposed to just standalone media server.

There is also a push towards software based media servers. Any plans in that area?

There are certain customers who want a software only solution and if you have the right distribution network I think that is fine. But frankly I do not like that business very much. We will not make money chasing 6 or 7 companies who are going in that direction. That is why we are emphasizing applications. In short let us have the software based solution but it should be part of an application. It should not be developed so that we are able to compete with somebody selling a media server for $90 a channel.

Which in your opinion are the most common application areas in media server industry today?

It is voice mail hands down. Everybody needs voice mail and it is the commodity out there and the winner is Comverse. Everybody else is picking up the scraps. Voice mail is the most sought after application and the next one is conferencing.