Apr 17, 2003 12:00 PM,

Audiocodes buys market share via Nortel media server acquisition

By Tim McElligott

Israel-based voice-over-packet technology company Audiocodes said it will buy its way into a leading media server market position by acquiring Nortel’s UAS product group. The sale brings Nortel $5.5 million over the first year and a potential $13.5 million over the subsequent 18 months as part of a resale agreement and conditions pertaining to the integration of their technologies.

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This was Audiocodes’ first acquisition. For cracking open its $100 million nest egg, Audiocodes will get approximately 20 employees currently supporting Nortel’s UAS and other products, mostly related to the Succession product line. The company also nailed down a three-year exclusive supply agreement to support UAS in Nortel’s Succession softswitch and signed a master OEM supply agreement for other products, including AudioCodes’ IPmedia 2000 media server and Mediant 2000 media gateway.

“This is a space that can not have more than one or two media servers. So for other media server companies that want to sell into the voice-over-packet market, it limits their ability to grab significant share,” said Ben Rabinowitz, vice president of Audiocodes systems group. “For companies like Convedia and Snowshore, this is probably not good news.”

The UAS product enables conferencing, multi-language announcements and other media server-based applications for voice-over-packet networks. “Like all products, you have to constantly upgrade the UAS to keep it best-of-breed,” Rabinowitz said. “Nortel decided it made more sense to sell the company to someone who can continue to upgrade the platform.”

Audiocodes won the right to acquire the Nortel unit through a competitive bidding process, but insists it didn’t necessarily go to the highest bidder. “Their UAS product is essential for Succession to work. They needed to know whomever they sold it to was strong financially and has the research and development and partnering skills to keep it best of breed.”

Audiocodes will integrate UAS with its IPmedia 2000 platform and expects to be ready to sell the integrated product by the fourth quarter.