140-year-old telco embraces its nemesis

When I spoke to Ribbit in early May, CEO Ted Griggs told me his company was out to obsolete telcos: "Phone companies aren't open. That's a problem," he said. But yesterday, Ribbit sold out to BT, which the FT's Chris Nuttall helpfully reminded us "began as a telegraphic service in 1868." So why is Ribbit sleeping with the venerable epitome of its erstwhile enemy? The story the BT-Ribbit team were spinning yesterday was that the new enemies are closed IP telephony systems such as Google Android and Skype.

Perhaps BT really does mean to reinvent itself with the aid of its new acquisition. SaaS analyst Jeff Kaplan, who started out working in telecoms, says he's "always viewed BT as among the most visionary of the major telecom companies," and highlights its statement yesterday that the "acquisition will accelerate BT's strategy to transform itself into a next-generation, platform-based, software-driven services company."

Certainly, BT has shown itself committed to succeeding with SaaS (however many times it fails in the attempt), and its CIO JP Rangaswami declares on his personal blog that he's "passionate" about "how telephony becoming software and the wireless internet interact with mobile devices" and "about opensource" and "democratised innovation." Perhaps BT will end up surprising us all by forging a fresh destiny.

At the heart of the Ribbit acquisition is a telco-grade softswitch that acts as a bridge from the closed telco world into the open landscape of the Web. Much like Google acquisition Grand Central, it enables rerouting of calls between devices, but in Ribbit's case the 'wow' factor has come from a softphone implemented using Flex technology in the browser. Griggs told me in May that the business opportunity his team saw was in voice as an add-on to software, especially SaaS: "If you can move telephony into the browser you've opened it up to 75 million endpoints up there."

At the time we spoke, Ribbit had released its add-in for Salesforce.com to general availability. The company had also attracted a lot of attention for its consumer app called Amphibian but had earlier shown off the Ribbit API to Salesforce.com developers, one of whom had come up with Ribbit for Salesforce. The application includes a 'virtual cellphone' within Salesforce.com with integrated SMS capabilities and the ability to, for example, call someone straight back from a message, as well as a neat feature that automatically converts voicemail into text (using a transcription engine, PhoneTag — formerly SimulScribe — which combines machine technology with human editing). Powerfully, this makes voice messages searchable.

One thing I wondered about the application at the time was its affordability. It was $25 per user per month, but the killer add-on charge was $20 for 20 minutes of voicemail transcription plus $0.25 per additional minute. Users were also encouraged to dictate memos to themselves using the transcription feature, which you could imagine rapidly racking up costs. In a business environment, though, that kind of time-saving feature could be worth the extra money, as Griggs pointed out to me: "When you embed voice into the workflow of the application, that creates value."

Perhaps BT has recognised the potential of this kind of meshing of business workflow with lucrative telephony-based services. Not just for Salesforce.com but for a host of different application providers. "Internally we call this a reference application," said Griggs of Ribbit for Salesforce. In other words, it triggers parallels to other applications that could be created. The company was already talking to many other application providers including Oracle, NetSuite, Coghead, OpSource, Kana and others, he told me. That means Ribbit, as Tom Foremski insightfully observed back in January, is a platform company: "Developers need only focus on creating great apps, Ribbit provides them with the e-commerce infrastructure. Brilliant."

UPDATED 7th August: Or perhaps, as Tom Foremski has now written, Ribbit was just indulging in a form of innovation blackmail, in which innovative start-ups launch with the sole aim of "being acquired by the very companies they are supposed to be disrupting." Not so much brilliant as dispiriting.