Genband has established a history of acquiring stressed companies and assets. I hope it works out for the company. But there are just too many media gateway platforms in its portfolio now. The latest one that it has acquired is Nokia Siemens Networks’ high density trunk gateway. That is probably the third high density trunk gateway platform in its product portfolio. Even Ciscos and Nortels do not have that kind of redundancy and variety available in this product segment.
My first impression after coming across the Genband-NSN announcement was that the previous acquisition of Tekelec gateways has probably failed. However we are told that T-Mobile, one of the main customers using that former Tekelec product, is 100 percent committed to the Genband product. The only possible competitor to Genband’s media gateway deployment at T-Mobile could have been the Telica product acquired and actively promoted by Alcatel-Lucent which has some traction in the wireless market (Alcatel-Lucent brings in the call control element in T-Mobile Voice-over-Packet deployment OEMing Genband trunk gateway). However Telica platform is CDMA based and does not interface as desired.
Anyway, coming back to the issue of multiple trunk gateway platforms, not only will Genband have to work on the product rationalization, the company needs vast resources to support and scale their customers. The NSN gateway acquisition adds some great customers - Cablevision, AT&T, Shaw Communications, Telefonica, Deutsche Telecom, KPN, TOT and Oi/Telemar - but it also adds plenty of additional R&D staff based in Brazil. Genband had previously inherited over 250 R&D staff from its Tekelec gateway acquisition. It will be a challenge maintaining hundreds of R&D staff at a pre-IPO startup stage that Genband is in.
The NSN asset must have come at a decent price. Looking at the NSN trunk gateway shipments over the year 2007, it has had a good amount of traction. I would guess a minimum price tag of $40 million for the product even with lower margins on the product. Unless the deal is structured such that Genband does not shell out this amount of money, I don’t see how and why the investment would make sense for a small company.
As far as NSN is concerned, I don't understand why it would sell off its product to another company and then agree to exclusively resell it. That would either imply that NSN is not able to sell the product well (which Genband a smaller outfit can hardly be expected to improve upon), or that NSN is struggling with the margins (which Genband can only improve upon by cutting down on the related R&D staff).
On the other hand, if Genband is actually able to make a success out of the acquired assets, we could see a major alternative media gateway vendor emerging. So far we have only seen Sonus and Cisco succeed in being able to challenge the legacy vendors in that area. Genband has so far seen most of its deployment in North America, NSN gateway acquisition will give it a large international footprint. In terms of trunk gateway market share, expect Genband to feature among the top 3 for a while.