CISCO MAKES VoIP MOVEMENT WITH DYNAMICSOFT PURCHASE

Cisco Systems said last week it will acquire dynamicsoft for $55 million in cash. With its second VoIP-related acquisition agreement in a month, Cisco took another step toward CEO John Chamber's goal of cracking the telecom voice market and supplanting the struggling voice technology leaders.

“This definitely strengthens our service provider portfolio,” said Mark Bakies, director of solutions marketing at Cisco.

Last month, Cisco announced the acquisition of P-Cube, a provider of IP service control platforms, for $200 million.

In dynamicsoft, Cisco gets both proven, deployed technology and the intellectual property of a company that led the market on session initiation protocol (SIP)-based technology development. Yet despite notable wireless deployments at Sprint and Unefon of Mexico, as well as with i2 telecom International and Vonage, it appears Cisco paid more for potential than performance.

“At $55 million, one has to wonder what the actual revenue figures for dynamicsoft must be, considering that $64 million in funding has been poured into the company since the 1999/2000 time frame,” said Jim Lawrence, program director for convergence strategies and network architectures at Stratecast Partners. “Given the extent of dynamicsoft's product line and customer base, it looks like Cisco got a bargain.”

It is unclear who from the leadership team at dynamicsoft will transition to Cisco or how many of its 104 employees will be retained. Ex-Stratus Technologies executive Patrick Farley took over as dynamicsoft's CEO one year ago this month. Details on his status were not released. However, Chief Scientist Jonathan Rosenberg, co-developer of the SIP protocol and one of its most visible proponents, will join Cisco.

The people and products of dynamicsoft will become part of Cisco's voice technology group, led by Don Proctor, vice president and general manager. Although the assets of P-Cube will be put under Cisco's broadband edge and midrange routing business unit, led by Pankaj Patel, vice president and general manager, a common capability of both companies is in presence management.

“We think that what we got in dynamicsoft is pretty unique,” Bakies said. “A lot of voice-over-IP [technology] to date has just been replacing the traditional voice we got from the PSTN. But now we can allow people to create some real whiz-band stuff.”

Dynamicsoft's three flagship products are its AppEngine, Service Engine and Presence Engine. The AppEngine is a development platform for creating converged communications services. The Service Engine is a real-time communication services platform for developing and deploying new applications over a common framework. It integrates capabilities such as authentication, authorization and call routing. The Presence Engine collects, manages and distributes real-time user and device status, enabling the network to be subscriber aware.

“This is a company that has made its name by developing products for presence, and they are carrier-grade,” said Robert Rosenberg, principal analyst with Insight Research. “This is an area where Cisco will want to have product.”

Bakies said all dynamicsoft's wireless wins are important to Cisco, but the company is looking to position itself for what it sees as the emerging wireline/wireless converged market enabled by the proliferation of smartphones and a presence-aware network. Cisco envisions scenarios such as wireless operators partnering with broadband operators or using broadband connections for 802.11 home networking and broadband operators acting as mobile virtual network operators by offering a single user interface for wireless and wireline communications.

Enabling the bundling of these and other services is the ticket to the carrier market, Bakies said (see figure).