Digium Bets Big On The Channel As Asterisk, Switchvox Take Off

In a bad economic climate that's left many a networking and infrastructure vendor running for cover, Digium saw a golden opportunity and ran with it.

Betting that tough times would cause a number of IT managers to second-guess their legacy systems when it came time to refresh, Digium has been throwing resources at its channel program throughout 2009 with the expectation that enough partners would see increased end-user interest in both its Asterisk open-source telephony platform and Switchvox unified communications portfolio to fuel substantial growth.

With a retooled channel program and a modest, but fiercely dedicated partner community ready to bleed Digium, the bet's paid off, said the company's channel chief.

"The interest level we were getting with resellers skyrocketed in the face of the economic environment we were in," said Jim Butler, director of worldwide channel sales at Digium. "Resellers are looking for an alternative to the expensive, proprietary systems out there today, and now we can give them the resources to get involved and up to speed faster. Switchvox especially is driving these resellers. It's a toolkit that can do just about anything."

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Digium in March 2007 launched its first formal channel program for VoIP products based on Asterisk, for which Digium is the primary developer. At the time, Butler said, it recruited about 200 VARs that were already using Asterisk and developing applications around the platform.

In September 2007 was when Digium really put a stake in the ground, however, announcing that it would acquire Switchvox, an SMB-focused vendor with products based on Digium's Asterisk VoIP software. Its channel gains have been steady ever since, and it has continued to make crucial, business-focused updates to Switchvox AA 300-- a "true turnkey," as it's referred to by CRN Test Center, which named it among 2009's most innovative products.

Digium's also been successful in luring executives away from rivals, especially Adtran, where CEO Danny Windham, Vice President of Worldwide Sales Steven Harvey and Vice President of Marketing Leslie Conway all worked before Digium (The two companies have strong ties, as Adtran was an early investor in Digium and holds an equity interest in the company).

"Digium has always been a channel-focused kind of company, but Switchvox was before mostly direct sales," Butler said. "Much of our growth has therefore come from the resellers."

Partners said they are enjoying the fruits of Digium's channel labors.

"They've embraced the channel as the most logical way to grow Digium and Asterisk, and Digium is now much more similar to a traditional vendor than it had been in the past," said Corey McFadden, managing partner at Infradapt, an Easton, Pa.-based solution provider. "The fact that they've added so many resellers gives customers confidence. They're not a one-man show, and now there's a whole ecosystem of vendors providing support and integration solutions, too. I mean, Asterisk is such a Swiss army knife of a solution. You don't really need anything else."

According to Butler, Digium signed its 500th reseller in October 2009. Most recently, in late November, Digium added a new Affiliate level to its Authorized Reseller Partner Program, to provide what Digium calls "an entry-level tier for resellers who are interested in selling Digium unified communications and IP telephony solutions without a required minimum annual revenue commitment."

It's a crucial step in Digium's channel growth: attracting the dabblers, and the casually interested.

"It's designed to attract those business partners who might not be in a position to make a big investment in Digium, but could grow their business to a spot where they will be," Butler said. "We've recruited about 40 of them in the past two weeks, and reseller applications have already increased about 25 percent. The interest in Digium solutions has risen dramatically. A lot of these guys can't win opportunities in the small-medium space with their legacy vendors, so they're looking for new ways to win deals."

Butler added that Digium is continuing to add to its channel sales staff, especially inside channel account managers and field-based channel account managers in its marketing department. He said that a formalized certification and training program for VARs around Digium deployments is also on the way, likely to launch in the first quarter.

The lack of a more formalized training program, in fact, is one of the only complaints Digium partners interviewed by Channelweb.com levied against the vendor.

"They're good at so many things, but partner training on installation of Switchvox is something they really need," said Armando Garcia, president of Dicar Networks, a San Jose, Calif.-based solution provider. "A one-day Webinar or an actual training program that's Webinar-based, that would be great. Some [customers] have very complex set-ups, and every one wants different functionality for things like voicemail."

NEXT: Barriers To Open-Source VoIP Fall

The push to do more with less in a rough economy has many customers looking in new places for better, more efficient infrastructure.

"We now get a lot of questions from folks who would have brushed it off before and just rubber stamped an Avaya or Cisco solution," McFadden said. "Now they're going back and looking. To us, this is so much better than anything the competitors have at this level. Now is the right time. With the economy and the bankruptcy of Nortel and things like that, people are much more open to alternatives than they had been in the past."

Previous barriers to open source deployments -- worries about proprietary technology, for example -- have also gradually fallen away, solution providers argue.

"There's a strong argument that open source software has significantly changed the way the enterprise computing market looks," said McFadden. "In recent years, you've seen people like IBM really go to bat for Linux, and I mean, companies like Google would not exist but for the availability of things like Linux and open source. Any company that looks at that as a negative is doing themselves a disservice and also ignoring facts."

That the Asterisk platform isn't wedded to proprietary systems has been a major selling point, he said, and helped extend Digium's penetration in niches like call centers, where, McFadden said, Asterisk is a "silver bullet."

"Asterisk is the last phone system you'll ever have to buy," McFadden said. "That's probably the most compelling story of one versus another, all other things being equal. The pace of development is also a selling point on an open source solution versus a proprietary one. You can provide new features for Asterisk that in Cisco or another proprietary system you might be waiting five years for."

Other solution providers championed Digium's flexibility with other vendors, from Skype to Polycom.

"They [Digium] still don't have phones yet, but they have people like Polycom and snom for that. It's a nice tight package that's well supported, well designed and fairly reasonably priced," said Zach Garcia, chief marketing officer at Chromis Technology, a Phoenix, Ariz.-based solution provider that focuses exclusively on the Asterisk platform. "They're competitive out there. Folks get quotes from Avaya, from Shoretel, and Digium isn't always the cheapest but they're always competitive. We beat the pants off of Cisco all the time, I can tell you that."

Dicar's Armando Garcia said Digium has played its cards right as it has built up its channel program.

"One of the first things Digium did when their partner program was launched was to increase prices on their Web site. If a customer went to buy from them direct, they would say contact a reseller, you can get a better price," he said. "They pushed things our way by increasing their MSRP. I've been in the channel a long time, and you don't see that."

About 30 percent of Dicar's business is Digium/Asterisk, he said, and he expects that to grow next year (his company also specializes in Check Point, Netgear and Microsoft).

Dicar's Garcia cut his teeth in the channel selling Cisco products at a former VAR, but these days he "doesn't do Cisco." Many of his customers -- which include wine merchants in Northern California -- aren't by nature technology people, so leading with particular technology features is a definite no-no anyway.

"It's too expensive to get into their [Cisco's] program, and it's a difficult sale, and the margins are low," he said. "I've been down that route before. This time around it's a different company that's most important to us: it's smaller, customer-focused and it's easy to explain what the benefits to business are. This is not a speeds and feeds Cisco sale."