M5 Networks: Hot Time For Hosted VoIP


Dan Hoffman, CEO of M5 Networks, sees his company as a particularly special breed of hosted VoIP provider. It is one that is in the best position to partner with the channel as the landscape of networking vendors continues to consolidate, solution providers evolve their business models for the new era of cloud computing, and service assurance becomes the difference between being a trusted advisor and merely reselling faceless software platforms or phone equipment.

"The channel business model is headed to a higher-level strategic integrator of cloud services," Hoffman said in a recent interview with CRN at M5's midtown Manhattan offices. "People don't realize this yet, but it's so much easier to put puzzle pieces together in the cloud and then free up the cycles to configure properly, train people properly and get all the juice out of the software you bought."

M5's growth is a case study of being ahead of the curve and anticipating those changes. Founded in May 2000 in a New York City apartment, M5 was a pioneer: one of the first companies to rise to prominence as a dedicated hosted VoIP vendor. It now has more than 150 employees, does more than $40 million in annual revenues and boasts about 1,800 customers and thousands of users nationwide.

Its products, all on the hosted delivery model, run the gamut from hosted call recording and conferencing to fax and transcription and business intelligence. At the center of its managed hosted VoIP solution is M5 Call Conductor, a core technology that, unlike other hosted VoIP services that use third-party technologies developed and maintained by those same third parties, was created by M5 in-house.

Before, M5 used Broadsoft's platform to deliver service, but after several years, realized there was a greater service assurance opportunity by owning the entire platform. Hence, M5's Smart Business Phone System, whose rollout was completed in May 2010 after five years of development. Deployments usually run about $500 a month, per customer location, with up to about $60 a month per handset, plus add-ons for integration with certain business applications.

Hoffman said the acceptance of hosted VoIP for business has grown apace with as-a-service solutions: it's a matter of efficiency, cost-cutting and flexibility. Hosted VoIP gained even more traction during the shaky economic climate of the past few years, he said, and received more attention thanks to public events like Broadsoft's June 2010 initial public offering.

"What happened in 2008 and 2009 was: people froze. They didn't do a lot. They knew the costs were low but IT departments had nobody and they couldn't take on projects," Hoffman said. "Hosted VoIP just became an obvious answer."

M5's channel partners include VARs, carrier agents and software specialists, and also strategically aligned, cloud-focused vendors like Salesforce.com. In early May, M5 also announced VoIP integration with NetSuite's SuiteCloud platform for business.

M5 has also been a particularly active acquirer of late, pulling the trigger on contact center software specialist Callfinity in April, and buying a fellow hosted VoIP provider and competitor, Geckotech, last fall. The Geckotech move made M5 the largest dedicated hosted VoIP provider in the country.

"We're in a position to continue to acquire, and we're on a mission to be a great service brand," Hoffman said. "As we meet companies where that synergy makes sense, we will acquire."

Next: M5's Focus On Service Reliability