Sonus (Nasdaq: SONS) on Monday completed its $42 million acquisition of Network Equipment Technologies (NET), adding another piece to its growing enterprise product portfolio.
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Purchasing NET gives Sonus a number of new capabilities. Not only does the vendor immediately expand its growing set of Session Border Controller (SBC) products, but it also enhances its presence in the U.S. and U.K. government segments that are starting to leverage SIP-based platforms.
NET said that the public sector contributed to half of its 2011 total revenues. The vendor currently provides its gear to the U.S. Department of Defense (DoD) and its military branches, NASA and the British Ministry of Defense.
While there is value with the government side of acquiring NET, it's only part of the story.
"We consider the public sector element as an upside, but it's a struggling market that, while having a lot of communications needs, is very lumpy and a lot of companies can get stranded focusing exclusively on that space," said Ray Dolan, CEO of Sonus, in an interview with FierceTelecom. "While they were a public sector company, they decided to morph into another mission, which is cloud-based UC for the SMB market."
That's not to say that Dolan does not believe the public sector element isn't important. He added that the public sector really is just one part of a strategy to develop a set of SBCs that can be used to provide cloud-based unified communications (UC) applications to enterprises delivered by the service provider.
"Our product line was mostly high end, and the 5100 product launch began the accelerated move down market to lower session density, greater simplicity, and lower cost," Dolan said. "This acquisition about accelerating that access and bringing that forward probably by 12 months from the standpoint of bringing products to market in a unified way under one umbrella, one channel, one solution, and one brand."
Besides enhancing their reach into the government channel, buying NET gives Sonus an even larger portfolio of SBC products that allows SIP-enabled UC services for enterprise customers from the network core to the edge.
Another positive element of the combined portfolio is that the overall SBC portfolio, including NET's UX product, has been certified under Microsoft's (Nasdaq: MSFT) Lync solution program, so a company won't have to worry about interoperability issues when it deploys its UC systems.
With the acquisition complete, Sonus said it will begin integration plans for both customer-facing operations and support immediately, while former NET channel partners will become Sonus Partner Assure Authorized Resellers with the ability to qualify as Sonus Partner Assure Channel Partners.
The acquisition is also a competitive move for Sonus in that they now become a more formidable threat to early SBC player Acme Packet (Nasdaq: APKT), a Burlington, Mass.-based vendor. Acme has also been honing its enterprise service skills in recent years a way to diversify its customer base beyond the service provider industry and the NET acquisition will enable Sonus to more effectively compete for more enterprise business.
While the overall adoption of SIP by enterprises is still arguably nascent, an Infonetics report released in April suggests that the market for enterprise SBCs will grow 26 percent year-over-year over the next four years. Diane Myers, Infonetics' directing analyst for VoIP and IMS research, said that the growth of SBCs will be linked to the ongoing migration away from traditional TDM-based voice services to SIP trunking.
With many SMBs and larger businesses either nearing the end of life with their traditional PBX phone systems, a growing base of both incumbent and competitive service providers, including cable operators such as Cox and Comcast Business (Nasdaq: CMCSA), have been rolling out their own set of SIP trunking services. SMBs that don't have large IT departments are embracing the idea of handing off their voice network service functions (i.e., voice mail and call management) to a third-party service provider.
For more:
- see the release
On the Hot Seat: Sonus Networks CEO Ray Dolan sets sights on lucrative SBC, enterprise markets
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