One acquisition that Sonus badly needs
It remains a mystery why Sonus is not keen on acquiring a feature server company such as Broadsoft or Sylantro. They should have made an acquisition of a Class 5 feature server three years ago when consumer VoIP got going. Netcentrex was another option available at the time.
Sonus has a residential feature set in their access server product but it has not done so well. Sonus has enabled consumer VoIP offerings of AT&T (Callvantage), Qwest, AOL, Carphone Warehouse and others. Only Carphone has scaled up somewhat.
The absence of an alternative vendor in consumer VoIP has meant that most business is ironically going to the legacy vendors. Sylantro and Broadsoft are small players in consumer VoIP. I reckon Sonus with one of these products would have done very well. Sonus placed its bets on over-the-top VoIP rather than other VoIP-to-the-edge options. It turned out to be right but did not translate into any fortune for Sonus.
Acquiring a Broadsoft or a Sylantro would kill two birds with one stone. Not only is Sonus weak in residential VoIP, it does not have business Centrex feature set in its product portfolio. It partners for most of such deployments. However Broadsofts and Sylantros are now able to offer some Class 4 features as well. They are in particular doing well in business IP trunking for which they do not require a softswitch partner such as Sonus anymore.
In fact those service providers that deploy Broadsoft/Sylantro for business IP trunking sometimes extend their offer to include a hosted PBX offering utilizing Class 5 feature server from the same vendor. It makes sense to use the same vendor for hosted PBX as well as business IP trunking. And although softswitch vendors such as Sonus are also able to let their service provider customers offer business IP trunking, but the trend in the US is to use Broadsofts and Sylantros for business IP trunking.
I expect Sonus to have made an offer in the past but the price must have been low. Broadsoft has had offers from the likes of Lucent and Ericsson in the past but its expectations were rather too high. At the time when Lucent starting sniffing around, I am told that Broadsoft was asking for $350 million and Lucent did not have that kind of money to spend. They had just had a bashing from the Wall Street following the price they paid for Telica acquisition. Today both Broadsoft and Sylantro have mellowed down. It might be worth trying again.
Conclusion: Sonus should within 2008 do something about filling this major hole in its portfolio. It cannot live off its media gateway for ever. And they should hire me to look for options. The other choice is to hire JP Morgan, have them set up a meeting between the 2 CEOs, and then charge $2 million for it.
