SIP infrastructure specialist Sonus Networks has moved quickly to capitalize on its $42 million acquisition of Network Equipment Technologies (NET), having already confirmed an integrated product roadmap and availability for its burgeoning enterprise channel.
Coupled with the partner-centric moves Sonus has made in recent months, the acquisition is going to set the company up for a full-throttle 2013 after a year spent building its team, program and portfolio, according to Todd Abbott, senior vice president, worldwide sales.
"It's the next step in our transformation from a VoIP company focused on telcos to one very much focused on UC and the cloud and reaching that through business partners and a channel program," Abbott told CRN. "It became clear that we needed to broaden the product portfolio."
Sonus announced the NET deal on June 19, and the $42 million value was a roughly 14 percent premium on NET's June 18 closing price. At the time, Westford, Mass.-based Sonus said NET would add incremental revenue of up to $20 million during the second half of the year. The deal closed on Aug. 25, at which time Sonus officially moved 150 NET employees across three continents -- including its entire engineering team -- into its staff.
Sonus' specialty is session border controllers (SBC), whose popularity has grown thanks to increased customer adoption of the SIP infrastructure. The SBC market is expected to grow 26 percent year-over-year through 2016, according to Infonetics Research, which positioned Sonus as the fastest-growing SBC vendor -- expanding at four times the market average -- in 2011.
Sonus has hired a number of well-known UC and software channel executives behind a recent push to broaden its purview to enterprise customers. Recently, the company launched new SBC products focused on that segment, and its Sonus Partner Assure program, which went live in June, is targeted at enterprise-focused VARs and service providers.
At the time of the program launch, Sonus had 10 reseller partners, and it is intending to add another 20 to 25 by the end of 2012. NET resellers that had been active in the program at the time of the acquisition have been designated Sonus Partner Assure Authorized Resellers with the opportunity to qualify as the higher-level Sonus Partner Assure Channel Partners.
NEXT: Sonus’ Expanded PortfolioPortfolio-wise, Sonus already has its SBC 5200, which provides for 64,000 sessions on a single server, and SBC 5100, which targets the 250 to 10,000 session customer, as products to serve larger customers. But, what it gained through NET was SBC technology that can appeal to customers running fewer than 100 sessions. Sonus will sell NET's flagship Unified Exchange (UX) products as the Sonus SBC 1000 and 2000.
"It was clear that the SBC 5100 was never going to scale down to that price point," Sonus' Abbott explained. "There's not a lot of interest in delivering SIP down to that market just yet. There will be, but the technology [for now] needed to be an access device that enabled VoIP where SIP was not going to be available. We had an organic development plan to do that, but we shelved that for NET. It was all about time to market."
Sonus is still assessing the future for NET's other products, including several of its legacy gateway products, and Abbott said to expect a few to see end-of-sale notices within the next year.
Sonus' SIP business is growing 60 percent year over year, Abbott said, and at the time of the acquisition, NET's business was on pace to grow 40 percent year over year, and it had added more than 50 new customers in the previous quarter.
Having NET does two other big things for Sonus. It brings the company a large installed base of federal government customers, and it also expands Sonus' footprint with Microsoft's Lync UC platform, which Abbott agrees is now a "major" UC offering and for which the entire Sonus portfolio is now certified. Sonus should hold appeal for Microsoft Lync-focused solution providers that otherwise wouldn't be on the company's channel radar.
"If you're in the UC business, you tend to focus on one, at most two major UC providers," Abbott said. "It's rare that you would be a Cisco partner for UC and also picking up Avaya heavily or Siemens. That's not true in all cases, but these Microsoft partners are going to be a new class of partners for us that weren't part of our original target. Microsoft is going to be a major player in UC, and they have a pretty unique opportunity."
Sonus wasn't necessarily seeking acquisitions, but when NET approached Sonus, Abbott said, the deal soon made sense for everyone.
"This is a company that was financially challenged because they had not done a good job making the transition from a very large federal government business that had been historically tied to wartime-spend to shifting into the enterprise space," Abbott said. "They couldn't get the enterprise business big enough, fast enough to offset the declines in the federal space, so they were starting to drain cash and the board was looking for strategic options."
PUBLISHED SEPT. 5, 2012