The Real Reason Why Acme Packet Bought Covergence
Last week the SBC market was shaken up when Acme Packet purchased Covergence, Inc. At first glance, this would seem to be a simple consolidation play with a large competitor purchasing a smaller rival. Yet behind the scenes, Covergence gives Acme Packet some important strategic technologies that could ultimately enable Acme to move beyond being a simple infrastructure supplier.
According to the release:
"Acme Packet, Inc. (NASDAQ: APKT), the leader in session border control solutions, today announced that it has acquired privately-held Covergence, Inc. for consideration valued at approximately $22.8 million, consisting of approximately $22.2 million of Acme Packet common stock and an aggregate of $0.6 million in cash payments to stockholders of Covergence and tax withholding payments. The Maynard, Massachusetts based company is an emerging, innovative provider of software-based session border controllers (SBCs) for delivering VoIP/IP telephony, Unified Communications and Service-Oriented Architecture (SOA) applications within global 1000 enterprises."
Network World quoted Jeff Ogle, Senior Analyst, IP Services Infrastructure at Current Analysis as having this take on Acme Packet's move .
"Acme Packet is buying a competitor and significantly expanding its enterprise product strategy. The Covergence acquisition is designed to supply Acme Packet with a complete product family for the enterprise market in a fashion similar to the way it addresses the service provider market. While combining the two companies' products and revenue will have no immediate effect on this market segment, in the longer term this transaction could prove to be a wise strategic move for Acme Packet."
Jeff is right, but on only part of that score. Covergence portfolio is more than just a competing solution to Acme Packet. It's a strategy play that will enable Acme to move closer from just selling infrastructure to selling applications.
Think I'm drunk or something? Go back and read how Acme described Covergence in the release: ".....The Maynard, Massachusetts based company is an emerging, innovative provider of software-based session border controllers (SBCs) for delivering VoIP/IP telephony, Unified Communications and Service-Oriented Architecture (SOA) applications."(emphasis added)
Covergence is providing an abstraction layer that would allow telephones, or more interestingly any application, to work with any PBX. For large organizations with many PBXs, Covergence Session Managers is a consolidation solution for moving to unified communications applications. Instead of having to rip-and-replace or add on the various UC solution to your PBXs, deploy Session Manager as the overall interface and run applications against it. In this, Covergence Session Manager is closer to a Avaya's Aura than a conventional SBC.
Covergence has already demonstrated how organizations can deploy zero-footprint clients instead of telephones or even soft-clients to reduce costs. While many are skeptical about soft-clients replacing hard phones in the office, I think it's only matter of time (OK, maybe like a 100 years, but trust me "a matter of time" is one of saner predictions I've made.)
Played right Session Manager allows Acme to move towards becoming a platform for Voice 2.0 applications within the enterprise. They'll also be able to offer a solution around cost savings that come from eliminating telephones. Together, those benefits translate into a move that's a far cry just your conventional consolidation play.