Kasenna acquisition gives Espial a leadership position in IPTV VoD, and at the same time strengthens the company’s middleware portfolio. Espial will pay $6.7 million (in shares) to acquire Kasenna. Kasenna has one of the most advanced and open IPTV middleware platforms in the market from the applications point of view (Web services APIs and all). However its strength is IPTV VoD. Kasenna raised over $36 million in funding over the last four years. Intel Capital has been the main backer.

Kasenna VoD solution is used by major IPTV players like Neuf Cegetel and Fastweb. There are some deployments at cable companies as well. I am not sure whether the cable deployments are hybrid kind of installations (with VoD component being IP based). However Espial must be hoping to get some cable business with the help of Kasenna acquisition.

While it is all wonderful to sign up a million subscribers and get a second round of funding, I thought it might be a better idea to explore with Nimbuzz what their revenue model really is. I get the impression that for a while, it is based on advertising revenues. And I say that is probably wise!

Starting September this year, Nimbuzz expects to generate meaningful advertising revenues through its revenue sharing arrangement with a couple of large social networks. One of them happens to be the largest social network in Germany (not hard to guess which one). Users of these social networks will be able to communicate across their communities and various IM clouds using Nimbuzz’s web based client. Abril, a media company, will be supplying most of the ads.

Agito, the enterprise FMC vendor selling direct to enterprises, has raised $13 million in Series B. The startup has focused on verticals such as Higher Education, Manufacturing/Retail, Healthcare, and Energy/Utilities. Over 12 customers have implemented Agito solution so far.

PBX integration has been a major issue resulting in delays in enterprise FMC deployments. PBX makers take a long time in the certification process. Agito has so far achieved integration of its product with IPPBXs from Cisco, Avaya, Nortel, Asterisk, and Microsoft OCS. There is tighter integration with Cisco products. To date the company has not announced any OEM relationship.

See the comments below for a fuller picture ..

VoIP lines were up 57.7k during the quarter to 549.9k. Subscriber numbers include pending installs.

The service is now available to over 90% of homes passed. VoIP line penetration stands at 28% of Basic customers who have the service available to them.

VoIP service margins are strengthening.

Announced limited-features, basic VoIP package, third product offering in order to appeal to a larger customer base.

There are tonnes of VoIP gear in the enterprise networks now. If these enterprises start deploying SBC solutions, companies like Covergence could make it big. The company just announced new CEO, James Moran, who happens to have a strong background selling to enterprises (Moran was co-founder at edocs). Covergence has been supplying SBC solutions to both the enterprises as well as the service providers. However the vendor plans to increase its focus on the enterprise market.

The deployment mix Covergence has right now (service provider versus enterprise) is in the region of 80:20 revenue-wise. However, based on some of the large, global enterprises Covergence has struck deals with, it will probably be closer to 50:50 mix by the end of the year. Covergence website says 5 of the Fortune 25 use its SBC platform. One of the largest e-commerce companies also uses Covergence. My guess is amazon.com.

Covergence has about 150 customers, and about 30 of them are enterprises. The service provider customers are largely tier 2 and tier 3 companies that sell to business customers – generally hosted IP PBX.

Few thoughts on the BT/Ribbit rumour. I see only one attraction for BT to acquire Ribbit: the 4,000 strong developer community that Ribbit claims to have cultivated. But then BT is supposed to have signed up over 10,000 developers for its Web21C program.

How far these developers will be able to extend their Ribbit app over to BT’s Web21C platform, I am not so sure about. Ribbit uses former Syndeo platform as the underlying feature server. BT has a different underlying feature server. And then there is all the OSS/BSS integration work that developer programs need to sort out prior to making their APIs public. For BT Web21C, Microsoft takes care of the OSS/BSS integration. Suffice it to say, the apps may not be easily transferable.

DiVitas, the FMC vendor, has quietly raised another round of funding. I hear through sources that the company raised $12 million last month. The round was led by SVB Capital. Total funding raised till date is $32 million.

Usually the early stage companies are keen to announce fundings in order to attract new talent. No announcement from DiVitas yet. Is this the sign, therefore, that the company has matured? Unlike most FMC startup vendors, DiVitas has been able to gain some traction in the enterprise segment. It mainly runs into Avaya and Cisco where the latter two are unable to meet dual-mode solution requirements adequately.

My impression is that your revenue model is currently based on advertising and whitelabeling? How soon do you expect those sources to generate meaningful revenues for you?

We don’t do whitelabelling exactly. Although apart from consumer solutions we also have industry solutions, those industry solutions are social networks for mobile operators and device manufacturers. These are outsourced IM and VoIP platforms that we operate for a mobile operator. We also bring mobility to web based social networks.

Is that not whitelabelling?

No. In whitelabelling you would typically charge a certain license fee per subscriber. We do not charge the operator anything. Our solution is used for free. What we do is share the ad revenues.

How many social networks and operators have you partnered with? What is the usage among the operators right now?

We have signed up 10 social networks and 3 mobile operators. One of the operators is using the full Nimbuzz solution. The other two, for now, are promoting our web client to their mobile users. With regard to social networks we will go live with our joint offering with a social network in Germany in August.

You will also have PSTN termination business in place. Which part of your business do you expect to be bigger: ad revenue sharing or the PSTN termination?

Added 29 million users during 2Q08. Total subscriber base now stands at 338.2 million registered users worldwide. This includes subscribers sign ups through partners such as iSkoot, Fring etc.

$136 million in revenue for the quarter, representing 51% year-over-year growth.

Skype-to-Skype (PC-to-PC) minutes are estimated 14.8 billion and representing 38% year-over-year growth.

Skype Out Minutes (PC-to-Phone) are estimated 1.9 billion and representing 42% year-over-year growth.

Skype launched 4.0 in Beta, the largest redesign of the Skype interface since the company’s inception.

It has been over 13 years since Vocaltec pioneered VoIP. And for most of those 13 years it has been unable to keep its head above the water. The company has just announced the departure of its existing CEO. Pioneers ought to be preserved like the British Royalty. I think the best way for Vocaltec to preserve itself is to follow the open source market trend. Few random thoughts below …

- Vocaltec product is the earliest VoIP product around. Vocaltec was first with several things: first PC-to-PC calling software, first PC-to-phone client, first media gateway, first gatekeeper (h.323). The company has plenty of VoIP experience. Developers will benefit a great deal from this platform.

- Most new generation VoIP companies offer services off the Web in a hosted fashion. Vocaltec product is supposed to be very good in terms of managing voice over public internet.

Natural Convergence has announced the latest version of its VoIP platform. It has been almost a year since the vendor made any product related announcement. Natural Convergence Inc (NCI) develops hosted VoIP platform meant for providers serving smaller businesses. Just to give you an idea of the size of the company's deployments, its customers support in excess of 49,000 small business users.

The licenses sold is doubling every 8 months, according to the vendor. NCI has customers in North and South America and the EU.

There is one common source of revenue for mobile VoIP/callback companies: cheap long distance calling. Some of them arrange the termination into the public telephone networks themselves. Some do it via Skype. While mobile telephony arbitrage is rather new (except for the calling card market), the barriers to entry into mobile VoIP/callback are not exactly tough. You pay a few thousand dollars and you can be up and running in a matter of days.

In markets with low entry barriers, you have to bet big money on the venture. Mobile VoIP companies do not have that kind of money. I have been exploring the revenue models of these companies for some time. Outside the arbitrage business, you find models such as Nimbuzz that are based on advertising. Nimbuzz will be dealing with text based ads. There are also certain audio based ad models in the market. There is some whitelabelling going on as well whereby a mobile VoIP company enables a cell operator to offer the service.

Over the last two years you seem to have shifted focus from PC centric communications to mobile centric communications. What opportunities do you see on the mobile side?

Many of our customers are mobile operators as well. So unifying the user experience across desktop and mobile is a big opportunity for us. Apart from the service providers we also have our OEM partners like Nortel collaborating with us across our desktop and mobile product offerings.

You have invested in FMC and handover technologies through the Firsthand and Bridgeport acquisitions. What are the prospects of handover technologies once wireless broadband becomes ubiquitous?

The FMC and handover technologies turn the Internet into a large roaming network. That is very valuable for a service provider. It also enables a service provider to offload a lot of voice traffic over to IP. So from a service provider standpoint there are several benefits at this stage. This kind of technology also facilitates a lot of new wireless data services.

How far have the Firsthand and Bridgeport acquisitions been assimilated into your other product lines? And are there going to be further acquisitions?

We have had two new deployments that involve 3 of the 4 solutions acquired by us. So the integration of the acquired solutions has been satisfactory. There are more things we can enable through a more tighter integration: things like mobile centrex and widgets for various features. We are working on those bits. We were partners with these companies before we acquired them. We validated the prospects of joint products with our existing customers prior to the acquisitions.

On the acquisitions front, making three acquisitions in nine months is a huge task. We grew from 50 people to 150 within a year. So we have to be careful. But if they make sense and they have interesting solutions around mobile, identity, presence, and they add value to our existing customer base and strategy, we are prepared to consider. But it is not going to be our big focus for the next two quarters.

Verimatrix, the pay-TV content security vendor, has closed Series C round of funding. The company is not disclosing the amount. The total amount from prior rounds adds up to $23m, which includes $2m in angel investments that were not announced. Sources suggest the investment is in the region of $7 million with post-money company valuation of $90 million.

The vendor has sold 5 million product licenses that include IPTV set-tops and PC clients. This number is obviously a little ahead of live subscriber numbers. Verimatrix had its first deployment in 2003 at Korea Telecom. It has an impressive list of tier ones IPTV customers including NTT, Belgacom, KPN, Tele2/Versatel, Telecom Italia and TeliaSonera.

• VoIP subscribers in Norway 136K. Added 3k new subs during 2Q08.

• VoIP subscribers in Sweden 212K. Added 3k new subs during 2Q08.

• VoIP subscribers in Denmark 116K. Added 9k new subs during 2Q08.

• TeliaSonera ended 2Q08 with 427k IPTV subscribers.

• Added 20k new IPTV subscribers in 2Q08.

• Country by country results include:
Sweden ended with 320k IPTV subscribers, an increase of 2k in 2Q08.
Norway ended with 8k IPTV subscribers, an increase of 4k in 2Q08.
Lithuania ended with 35k IPTV subscribers, an increase of 10k in 2Q08.
Estonia ended with 64k IPTV subscribers, an increase of 4k in 2Q08.

Added 60k new VoIP subscribers during 2Q08. Total subscribers: 983k.

VoIP subscriber base represents 44% penetration into broadband accounts.

Netherlands VoIP market: KPN 983k subscribers; Cable 1.17 million subscribers; Others 320k. Total around 2.47 million subscribers.

21k VoIP business lines (platform sourced from Broadsoft)

• Added 42,210 new IPTV subscribers during 2Q08. At the end of June 2008, the total Belgacom IPTV subscriber base was 391,460

• IPTV ARPU: EUR 17.6 compared to EUR 15.7 a year ago

• Added 8k new VoIP subscribers during 2Q08. At the end of June 2008, the total VoIP subscriber base 24k.

• During the quarter, Belgacom started offering Video-on-Demand and HD channels

• Belgacom customers that want only TV service running over their broadband connection can also avail of the service. Customers are not required to subscribe to Internet services.

AT&T: 549k IPTV subscribers, up 170k from previous quarter.

Verizon: 1.4 million IPTV subscribers, up 176k from previous quarter. IPTV penetration averaged 19.7 percent across all markets, up from 13.3 percent. IPTV available for sale to 7.0 million premises.

This is Vonage’s second attempt at mobile VoIP. We saw the first iteration some three years back when Vonage teamed up with UTStarcom to offer single mode Voice-over-WiFi. UTStarcom supplied the handset.

Having a handset dedicated for just mobile VoIP might have turned out to be a bad idea in retrospect. You would have restricted yourself to just those customers who would be willing to buy a UTStarcom handset. UTStarcom recently restructured the ownership of its handset business.

I guess the first major success GIPS had was Skype. You have been behind Skype which became a big phenomenon. You also have new startups like Nimbuzz as your customers. Who in your opinion has the right strategy in place to emerge as the next major player in consumer VoIP?

I think the competition now is not about emergence of another Skype. VoIP is being added as a capability to almost all the major messaging softclients out there. Most of them are GIPS customers. You also have VoIP integrated into the mobile handsets. If Skype is to see competition, it is likely to come from mobile VoIP companies.

How far has GIPS been able to leverage the success it had with Skype?

Skype was certainly the customer that put GIPS on the roadmap. That opened the doors for many of the deals that we did subsequently. Fortunately the reverse is not true. When we lost Skype as a customer we did not lose other deals. Over the last few quarters we have had some great wins such as Baidu.

I think media gateway wins would have been a bigger source of revenue for GIPS. Why is GIPS not targeting media gateway vendors? Is it because they tend to have their own voice processing solutions?

You have probably not come across our customer list. Out customers include companies like Cisco, Nortel and Avaya. You should assume that we will in the future move from pure P2P client implementations to gateway deployments. That is a logical conclusion to have and you can assume that we are going in that direction.

It has been almost two years since the Acme Packet IPO. VoIP industry could do with another little boost. I have my eyes set on Asterisk/Digum next. I think there could either be an acquisition of the company or an IPO within the next 12 months. The usage of Open Source VoIP has hit that critical level where it becomes a force to reckon with.

Digium serves as the corporate identity of the Asterisk project, an Open Source VoIP platform which on average is downloaded 3,000 times per day. The company makes money from (1) selling hardware that lets Asterisk platform interwork with PSTN, (2) licensed version of Asterisk IP PBX system, and (3) IP PBX license revenue selling the recently acquired Switchvox product.

Switchvox product is one of several licensed versions of Asterisk in the market. Digium has in fact also acquired a company that organised Astricon trade show that brings under a thousand developers together from various countries. Astricon owners also ran an Asterisk training program.

So those are the sources of revenue. The company claims to have had 26th consecutive profitable growth quarter. It has shipped over 4 million gateway ports so far. Approximate geographic split of ports/revenues is as follows: 52% North America, 25% EMEA, 23% APAC and CALA. Europe is ramping up fast. Nearly 45% of all Asterisk downloads these days come from Europe.