BroadSoft acquires VoIP platform rival Sylantro

BroadSoft today said it has acquired struggling fellow voice over IP application platform vendor Sylantro Systems for an undisclosed sum.

Broadsoft said it would continue to support Sylantro customers and even market and sell Sylantro’s Multiplay Application Feature Server while working on ways to technically bring the two vendor’s platforms together. Word of the deal – along with concerns about financial problems at Sylantro – had been rumored for some time, with final details of the acquisition sewed up the last week. The Broadsoft sales team began reaching out to Sylantro customers today, according to Leslie Ferry, vice president of marketing for Broadsoft.

“We thought it was a valuable asset; otherwise we wouldn’t have acquired it,” Ferry said, noting that Broadsoft will be taking on “a majority percentage” of the Sylantro staff, initially in three to six months terms, to help with the transition. A portion of Sylantro employees would continue to be on board after that, she said. Sylantro CEO Marco Limena has left the company, a BroadSoft spokesman said.

“Broadsoft is consolidating the market for feature servers; This purchase closes a chapter in the ongoing transition to software-based telecom,” said Elisabeth Rainge, IDC analyst. “The key value of the deal is in the sylantro customer base. Broadsoft faces an uphill battle to compete on its own platform (although the economic downturn) suggests that software based telecom will increase in popularity, as service providers work to improve network efficiency and cost efficiency.”

“It’s a classic consolidation move. The main thing it really demonstrates is that BroadSoft has managed to survive this cycle of major competitors. We saw it with Acme Packet in session border controllers and we’re seeing it in media servers, media gateways” and other areas of the NGN market, said Jon Arnold, analyst with J. Arnold & Associates. On the competitive front, Arnold pointed to Comverse, which still has a strong global VoIP platform presence with its NetCentrex platform. Meanwhile, in the U.S., look for BroadSoft/Sylantro and Metaswitch to compete more directly in the application platform market, Arnold said.

“The big sticking point with big, tier one carriers is they haven’t viewed these platforms as being scalable enough,” Arnold said. “That’s one of the cards Sylantro had initially; they were getting tier one traction.”

BroadSoft and Sylantro competed for more than a decade – and with great success – to deliver carrier-grade voice over IP platforms go service providers around the globe. BroadSoft landed deals Korea Telecom, KPN, SingTel, Sprint, Telefonica, Telstra, T-Systems and Verizon. Sylantro touted wins with AT&T, China Netcom, Qwest, StarHub and Swisscom.

In the past year, as penetration of those platforms reached relative saturation, the game turned to services as both vendors rolled out application development platforms and developer programs based on Web 2.0-style APIs and approaches. Broadsoft launched its Xtended Marketplace last March; Sylantro delivered the first version of its Synapps Web services APIs even earlier.  

The vision for both companies – along with a handful of small rivals such as Ribbit (which was acquired by BT) and larger players such as network equipment providers like Alcatel Lucent and IT platform vendors such as Oracle and IBM – was to bring more open Web-style development to the voice telephony market.

Achieving this vision, however, was more difficult and took longer than many imagined. One problem was that even though a Web 2.0-style approach theoretically opened up complex telephony development to more developers, in reality each platform vendor had its own tools and APIs, splintering the market. And while integrating the Web and calling features again seemed interesting in theory, no immediate “killer app” emerged (outside the at some point ludicrously ubiquitous Salesforce.com/voice mashups, which every vendor seemed to tout).
Technical road bumps also emerged. Early developer APIs were often built on more complicated Web services and SOAP-based interfaces. BroadSoft, for instance, went that route initially before announcing plans for so-called REST-based (more Web-centric) APIs this summer, along with a Web-style developer mashup contest that wrapped up this fall. Sylantro’s APIs are still more SOAP-centric, adding technical difficulty in combining the two application platforms.

Technical challenges aside, It’s not immediately clear if the combination of the BroadSoft and Sylantro platforms, APIs and developer programs would be enough to create enough momentum to attract developers. BroadSoft today promised news on progress in its Xtended program next month, including new partners and applications. The company has about 30 applications built on its platform to date, said BroadSoft’s Ferry.

“We’ve been quite pleased with the progress [of the development program] in the last several months. We’ve had several [service provider] customers adopt the platform,” she said. “It’s a new business model, a new approach, but we are seeing service providers excited by the uniqueness of the offering.”

BroadSoft’s formal statement about the acquisition was brief, including no details on the terms of the deal. The company did state, however, that it intends to support Sylantro's Synergy platform through its direct sales force and authorized Sylantro and BroadSoft partners.

The big question will be if the VoIP and application platform market will continue to grow, especially in a downturn.

“SMBs are simply not enthralled with VoIP because there are little or no cost savings,” said Keith Nissen, analyst with In-Stat. “Hosted services, and Broadcom's future, rides on service providers deploying next-generation converged fixed/mobile services that offer benefits beyond cheaper phone calls and benefits that cannot be replicated using CPE equipment.”

Such converged services will start to hit next year, Nissen predicted, marketing in conjunction with multi-service business gateway CPE devices.

“Service providers will be marketing both hosted VoIP --in association with on-premises routing, switching, WiFi, etc -- as well as over-the-top services, such as integrated fixed/mobile voice, unified messaging, some UC functions, network-based security services, and remote CPE monitoring and software updates,” Nissen said. “Broadsoft is well positioned take advantage of these coming developments, making the longer-term outlook for the company very positive.”