Potential VOIP Investments

Here we'll take a brief look at the first few companies on our list of potential VOIP-related investments. This is just a preliminary culling exercise. Some of these companies will make the short list and others will not.

Once we have a completed short list we'll investigate further into the selected companies.

Aastra Technologies
This Canadian company looks promising. They provide IP phones to the small business segment of the market. They just released their quarterlies this week and the trend is looking good. The stock has already appreciated 50% over the past week, so more digging would be required before making an investment in this one. Their symbol is AAH. TO. See their six months trading chart here at Yahoo. Go to Jon Arnold's comments about Aastra potential. This one moves to the short list.

ABP Technology
ABP Technology is a private company based in Dallas. They are distributors only. But it looks like they are leading distributors in the VOIP arena and their growth could be exponential. Key products distributed are snom technology IP phones, AudioCodes gateways and Allworx and Epygi IPBX's. We'll add this one to the shortlist, though we'd generally assume the big investment wins will be with the developer companies, not the distributors.

ADTRAN
ADTRAN is a big company, big enough to already be part of the Nasdaq 400 MidCaps Index. They got their start in 1986 "following AT&T's divestiture of the RBOCs with restrictions that effectively barred their manufacturing of equipment. These events created an opportunity for companies such as ADTRAN to supply network equipment to the seven RBOCs as well as more than 1,300 independent telephone companies in the United States". ADTRAN has sales of about half a billion annually. The company may have good prospects but doesn't fit in with our list of emerging VOIP-related innovators. So we won't include them on the short list though there's the potential they could buy up one of these short-listed companies soon.

Aculab
Aculab is a private company based in the U.K. with annual sales now over twenty million British pounds. They have 185 employees in five countries. Aculab was named to the 2004 Pulver 100 list as a company to watch in 2005. This is enough qualification to add it to our short list for further consideration.

Alcatel
Alcatel leads in worldwide IP PBX revenue market share, followed by Avaya and Cisco. See Tom Keating's VoIP blog for more info on their quick rise in the VoIP arena. Alcatel makes our short list.

Allworx
Allworx is a division of InSciTek Microsystems, located in the same building in Fairport, New York. InSciTek started out in 1998 as a hardware and software engineering consulting firm. They began development of the Allworx product line soon thereafter. The main product is a single-unit device that integrates phone, PC network, messaging software and group collaboration capabilities. They've raised over $10 million in venture capital so far. We'll include them on the short list but will change the name to InSciTek Microsystems.

This sums up the first six companies on our potential VoIP investments list. See the next post for an alphabetical continuation.

About Me

A very warm welcome to you. Thanks for visiting me at the Teleporting Tattler.

I'm posting here in between diaper changes. I've got an M.A. in economics and about eight years of experience as an analyst and consultant in high tech policy and strategic business plan writing. My credits also include four exhilarating years of getting burned out as a VP at a small dot.com company.

I don't have green eyes, my hair is not red and my brain seems to have deteriorated significantly since the pregnancy. My training is in social sciences and I have little understanding of anything technical. This site is a personal podium about stuff that interests me. If you're thinking of investing in some of the companies discussed here - please don't do it based on my personal ramblings. If you'd like to correct me on any technical guff, that would be much appreciated.

I hope you enjoy your visit here. If you've got any feedback or questions, please email me.

The above image is "Woman with Green Eyes" by Tamara Lempicka

VOIP developers and manufacturers

If you are like me, and are wondering where the best bet is in terms of making money on stocks from the upcoming VOIP surge, than you will want to investigate these VOIP network companies with me.

Some of them are still private companies, not yet trading on any stock exchange, some are undoubtedly small-time losers who will never get anywhere, some are divisions of larger companies and therefore not of much investor interest other than the fact they may be acquiring the other companies on this list soon, and some are companies that recently completed an IPO.

I started out with the list provided by VOIPSupply.com and added a few more companies to it.

Will some of these companies grow exponentially in the very near future? Will some be snapped up soon by larger companies such as Cisco or Nortel who want a leading presence in VOIP? Is there easy profit to be made by investing in some of these companies? Let's examine this list in more detail together over the next four weeks.

Aastra
ABP Technology
Adtran
Aculab
Alcatel
Allworx
ArtDio Intelligent Communications
AudioCodes
Avaya
Azatel
Brooktrout Technology
Carrier Access
Cisco
Clipcomm
Data Connection
Digium
DLink
Draytek
Epygi
Excel Switching
Grandstream
Gnet
GN Netcom
Hitachi(cable division)
InGate
Intertex
Inter-Tel
ipDialog
LignUp
Linksys
LSI Logic
Mediatrix
Metreos
Multitech
Netfabric
Netgear
Nimcat Networks
NMS Communications
Panasonic
Pandora Networks
Patton Electronic
Pika Technologies
Plantronics
Polycom
Red Hawk
Rhino
Sangoma
SEI Power
SIPCPE
SIPfoundry
Sipura
Surf Communications
TelcoBridges
TelTel
Trinity Convergence
Tripp Lite
Snom
Sonicwall
SOYO
Teliann
Uniden
Vegastream
ViperNetworks
Vocal Technologies
Voice Age
VXI
WildPackets
WorldACCXX
Zoom
Zultys
Zyxel

If you know of any other companies that should be on this list, please let me know.

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The above image is the NYC Stock Exchange by Rudi von Briel

Asterisk and IP PBX's: Tremendous Investment Opportunity?

We're going to be hearing a lot more about Asterisk in the next couple of years.

Asterisk is the open source software solution for setting up office telephone systems using voice over IP. This new alternative typically costs a tiny fraction of what proprietary PBX solutions would cost. Until recently, managers had no choice but to go with the expensive proprietary set-ups in order to obtain telephone systems with voicemail, call conferencing and call queuing services. This meant going with the huge telephone equipment suppliers such as Nortel, Alcatel and Siemens. But this is no longer the case and we now have an incredibly large market experiencing upheavel and transformation.

It was almost one year ago that one of the leading voices of the Linux community, John "Maddog" Hall, (President of Linux International) predicted that VOIP using Asterisk is likely to generate more business over the next three years than the entire Linux marketplace today.

This seems like an incredible growth opportunity for companies in this sector. Who are the leaders involved in this promising niche of the telecom market? Who's providing the asterisk-compatible software and hardware, the installation, support and third-party applications?

We'll look into this in the next post.





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The above image is "One for the Money" by Susan Zulauf

IceRocket: Surpassing Google Search?

IceRocket competes with Technorati and Feedster amongst others. It's still very much under the radar screen but already hugely popular with the very early adopters.

Since finding the site, I am tempted to make it my main search engine of choice. It searches for the latest information not just on blogs but on all websites.

If I feel this way, maybe many others will too. I'm not dropping Google or Yahoo yet, but I am quite intrigued by this relatively new site, to say the least.

As soon as I chanced on it, I wondered what mastermind was behind this. The interface is clean and inviting (a close imitation of Google). The search results seem superior to the many other search engines I've tried. And IceRocket doesn't have the teenage feel of some of the other blog search sites.

The site is very silent as to the background and origins of the company. There is no 'About' section to speak of. I had to do a little digging to find out anything about the background of IceRocket. But it didn't take long with the tools at my disposal.

IceRocket was founded in April 2004. Their CEO is Blake Rhodes. Rhodes originally had two partners, but they had to drop out to pursue their full-time careers. IceRocket's offices are in Dallas, Texas. In fact, their offices are in the same building as the Dallas Mavericks basketball team headquarters. This is no coincidence. Mark Cuban, the owner of the Mavericks, is also the sole seed investor behind IceRocket.

Mark Cuban got his start by putting himself through college and then co-founding a computer retail outlet (which later morphed into a systems integration company) in 1983. This company was sold to CompuServe seven years later for $6 million when it had annual revenues of $30 million. After a brief hiatus, Cuban then went on to become a co-founder of Broadcast.com in 1995. He sold this company to Yahoo for $5.7 billion in 1999. His personal proceeds from this sale were over $2 billion.

One aspect that is so special about IceRocket is that it enables all web site owners, not just blogs, to list their sites within the RSS system. To see more about this, check out "Syndicating Your Website's Content in Five Minutes".

At this juncture, I'd like to throw out a philosophical question.

What is the one development in the 21st century that may bring us closer to the future ideal for humanity?

I will quote Jason Calacanis on the answer, although this was not his question. In his plea for Google, MSN and Yahoo to think about adding a blog search in their search bar he says:

"Adding blogs as the second tab on the search bar gives equal billing to citizens and the media."

This may be the most optimistically powerful view of where the 21st century is taking us. And IceRocket seems to be there for the slam dunk.

Look for one of the big three to buy them before the year is out.

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The above image of Blake Rhodes was borrowed from TCU Magazine.

Yahoo Search Update - Changes in Algorithm

Yahoo is undergoing a major update in their search engine algorithms. It looks to be bad news for people who's sites are not located in the U.S.

My two older blogs (about eight and six months old) have been getting about 120 page views a day from Yahoo searchers. Until today. Now I'm not getting a single hit. Even though these blogs shows up in the top five for some keywords, I believe this is only for viewers in Canada and does not appear this way to viewers in the States.

Is anyone else experiencing this with the new Yahoo update?

The future for Google's Blogger ?

I started my foray into blogging about eight months ago. Since then I've been completely hooked. I can see how blogging will be a huge force in the near future, and that we are only at the beginning of the growth curve in terms of what the future of content on the web will represent.

Soon after I started blogging, I became fascinated with the whole SEO (Search Engine Optimization) world. I wanted to know how I could get my blog to rank highly in the search engines. While pouring over SEO information, I also had a ton of other stuff to learn about the process of blogging, so I let some things slide and I didn't heed one of the basic principles of efficient SEO.

One of the key pieces of advice that usually comes up regarding how to improve your rankings in the search engines is to drop your free blogging account and get your own domain name and hosting service. As great as the Blogger service has become, it is widely believed that one's blog would rank higher in the search engines immediately using a paid hosting service and a unique domain name.

As I said, I've been blogging for about eight months. Only in the last month has Google even recognized my first blog and so far this has been in only a tiny way. MSN Search has not yet registered any of my four blogs. All these blogs have legitimate original content and I haven't tried any 'black hat' tricks on any of them - not even 'grey hat' for that matter.

So, now I find I am devoting a good twelve hours minimum each week to blogging. I'm highly motivated to make a success of this exciting endeavor. So, it seems logical that I should drop everything else and sign up for a domain name and hosting service and start over, this time much more professionally.

So why am I still with Blogspot.com? After all, for less than $10 measly dollars a month I could have my own domain name and web hosting service.

I think a lot of people must be in the same quandary as me right now. Maybe over a million people? Doesn't Google's Blogger have at least five million blogs right now?

Their market share of the entire blogging market is thought to be somewhere between thirty and forty percent.

The main reason I haven't switched is because I have become so invested in Blogger. I understand everything about it now (though it took me a long time to learn the hard way) and I have all my content up there. I'm even doing well in Yahoo's index for two of my blogs.

I'm intimidated with the thought of what I would have to re-learn if I was to get my own domain name and would have to learn another brand of blogging software. I realize these packages may be just as simple as Blogger but I've no guarantee that my blogging will be much more visible as a result of a big investment in my time to switch, move everything and confront all the unknowns.

Blogging has such a huge appeal primarily because it's doable by the majority who have always wanted a web site but didn't know the first thing about setting one up. This is also what makes it such an amazingly 'sticky' product. Once people get going with one blogging package, they become attached to it and it's hard to get them to move to a competitor.

But the motivation to move off Blogger has become stronger for me with each week. I can only imagine the countless benefits I'm missing out on with my free blogging service.

However, then the big idea occurred to me. Google is a very smart company.

Is it possible they may be developing this kind of add-on fee-based service to be available to their Blogspot accounts in the very near future?

If this is indeed the case, I would jump on it right away. To be able to stay with good old Blogger, but also have my own domain name and all the advantages of a web hosting service would be heaven. I'd be thrilled to pay $15 bucks a month for the rest of my life - easy!

Now assume Google may have one million bloggers who feel the same way I do. That kind of market share could vault it immediately into one of the largest web hosting companies in the world.

If the average person then paid $12 monthly for the services, we're looking at a respectable additional $150 million per year to their coffers. And given that blogging seems to be enjoying the highest growth of almost any industry niche right now (is it not over 100% per year with the latest indications from Technorati?) this new division of the Google empire could be worth one billion dollars per year - possibly in less than three years!

Maybe this also explains the current Google interest in power line internet access?

Anyway, that is the long story for why I have not yet left Blogspot.com.

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The above images are "Calling All Butterflies" by Patrick Coffaro
and "A line of telephone poles traveling over golden grassland" by George Grall

Stock portfolio tracker: Is my stock going up?

Have you ever wished you could tell how your technology stock portfolio was doing without turning on the computer? Or have you ever felt you were an addicted keyboard monkey hitting the refresh button all the time to see if your stock portfolio (or web traffic) was going up?

The Ambient Orb a very cool invention to free your mind, save you oodles of time and provide you with the solution you need to get away from that refresh button. Check it out at The Art of Lighting Fixtures.

Beyond DSL: T-1 Lines are looking good

If you are thinking you are in need of a better broadband solution than your existing DSL connection, the next higher stage available to you is a T-1 line.

T1 internet connections have dropped sharply in price over recent years. They are still quite a bit more expensive than DSL and typically cost over $300 per month but at this price they are starting to become very popular alternatives to DSL.

You may be willing to pay this extra price if you consider the Internet to be crucial to your work or online business. You may need to ensure that your connection is never down and is always reliable. Unlike a DSL connection, the T1 line is guaranteed to be running 24 hours a day.

The T-1 line also guarantees access to 1.544 Mbps. It's not dependent on how many other customers the carrier may have or how intensively these other people are using their DSL connections.

The top twenty broadband providers in the United States provide over 90% of the broadband. You may end up with one of these providers but there are also lots of T-1 resellers and some provide much better service than others. The T1 market is a buyer's market now; it is very competitive. If you are willing to pay at least $550 a month you can secure yourself a T1 line almost anywhere in the States.

The Linux hype before the VOIP IPO flurry

At the peak of the Linux IPO hype in 2000, I wrote an article about the ten private companies most likely to be acquired or go forward with an IPO. I was completely transfixed by the whole linux scene at that point, as many other participants and analysts were.

In hindsight the article is embarassingly on the frothy side. Some of the companies I lauded here don't even exist today. But of the ten private linux companies I predicted would do well, a few actually did. If I had been a venture capitalist and had put equal amounts into these companies (including those that eventually flopped) I think the return may still have been at least a ten bagger.

Reading the article again after five years brings back some vivid bittersweet memories. I'm sure anyone who worked in this industry at that time could relate to that. Below is the article as written five years ago.

An Overview of the Linux IPO and Acquisition Arena: Who's Next?

By Mitrax
June 2000

The financial world woke up to the market potential of Linux in August 1999 when Red Hat became the first pure Linux player to issue an IPO. Since then many analysts, venture capitalists and members of the press have began to pay serious attention to developments in the linux arena, as well as in the broader open source segment of the information technology sector.

A flurry of financial activity has taken place since this first stupendously successful IPO. Andover.net, Caldera Systems, Cobalt Networks and VA Linux were the next in line to proceed with IPO's. Other players, including Lineo, Linuxcare, TurboLinux, and Rackspace are likely to proceed to the IPO gates very shortly and we can expect several more companies to follow suit in the next few months.

There are only a handful of linux companies who employ over fifty people at this time, but it is already apparent that these larger companies are not hesitating to scoop out potential winners before these smaller privately-held companies build the wherewithal to proceed to the IPO gates; or worse, before they are acquired by the competition.

Knowledgeable players in this industry have been busy hand-picking their favorites over the past year. At least fifty private Linux companies have been acquired by Red Hat, VA Linux, Internet.com and others during this time.

In this article we review some of this recent acquisition activity. We also select ten relatively unknown private companies which are most likely to proceed with an IPO or be acquired by a larger company over the next year.

Overview of Recent Acquisition Activity

Linux is a computer operating competing with other operating systems such as Windows, NT, Mac and Solaris. The unique and revolutionary aspect about Linux however, is that unlike other operating systems, which are proprietary and under the ownership and development control of one company, Linux source code is open to everyone and has been developed by thousands of independent programmers all working together on a volunteer basis to improve on the basic software over a period of many years. Such a cooperative endeavor, coordinated and developed by a massive number of independent volunteers around the world, could not have occurred before the advent of the networked communication system made possible with the emergence of the Internet. In this sense Linux can be considered to be a product of the Internet and it is only one application of a myriad of other open source software developments which are now being developed in the same manner.

There are three basic segments of the Linux market. Software development, hardware enhancement and the actual 'marketplaces' or 'community centres' where hundreds of thousands of programmers and other players in this community gather to disseminate news, exchange ideas and build on the current base of innovation.

Linux hardware leaders are VA Linux, Penguin Computing, IndyBox, Cobalt Networks and Atipa Linux Solutions. However, the larger, more established computer hardware companies are now entering this market space and their long-standing corporate customer relationships and much larger marketing arms will make the competitive situation tougher for the smaller hardware companies. It is likely we will see the formation of several significant alliances and acquisitions between the older hardware companies and the linux upstarts over the next year.

The Linux operating system is now distributed commercially by a handful of software companies (including Corel, Caldera, Red Hat, MandrakeSoft, Stormix Technologies, SuSE and TurboLinux) which all originally competed on the basis of making small enhancements to the basic linux freeware in terms of packaging it together to make it easier to use and install. The only other differentiation between these companies aside from these value-added enhancements consisted of the varying quality of technical support services they offered to their customers, and more importantly, their relative marketing savvy and the resulting demand they could generate from the audience of current and potential Linux enthusiasts.

Linux software and hardware companies are competing against established giants in the IT sector, companies such as Microsoft, Sun, Compaq and Hewlett-Packard. These larger companies have spent billions of marketing dollars and many years of networking to develop formidable fortresses of third-party middlemen and distribution channels to get their products out to the end user. But with the advent of the Internet, these long-established distribution channels are now beginning to unravel. Many of the leading software and hardware companies are finding that their existing agreements with distributors present a barrier in their abilities to sell their own products directly to the end-user over the Internet. This recent flux and upheaval in distribution channels is of significant advantage to the new players. The Internet is making it possible for these companies to sell and market their products directly to an international audience of potential buyers, but getting noticed in all the noise is still the necessary prerequisite to stimulating demand. This is where the larger linux content and community sites serve an increasingly central role as the largest virtual marketplaces where the market of buyers and sellers congregate, and it explains why the majority of the largest independent content sites have been acquired within the first year of the first Linux IPO.

Only a few of these hardware and software companies have been financed with adequate capital to enable them to expand rapidly and gain market share as quickly as possible. These companies have begun aggressive acquisition campaigns to add value and differentiate themselves from the competition. For example, within a couple of months of receiving their IPO proceeds, Red Hat announced they were purchasing Cygnus Solutions, a provider of GNU open source development tools for embedded systems, for $674 million (based on share price at the time of the announcement). They also acquired Hell's Kitchen Systems (developers of a credit card verification system) in January and the transaction, based on Red Hat's share price at the time, was valued at $90 million, even though Hell's Kitchen was a tiny company employing only five people. In July they acquired WireSpeed Communications (another embedded systems developer) for approximately $30 million.

VA Linux has also been actively buying up companies. In February they announced they were acquiring Andover.Net in a stock transaction valued at almost $1 billion at the time of the announcement. Andover was a strategic investment in that it supplied VA Linux with instant ownership of the largest Linux community on the web. Currently Andover.net serves about 60 million page impressions per month, and their largest properties include Slashdot.org, which is the largest news and community site frequented regularly by this targeted audience and Freshmeat.net which is a leading online support site for Linux and Open Source. VA has also invested heavily in Linux.com, another site dedicated to the worldwide audience of serious linux users and developers. Since then, VA Linux has also acquired TruSolutions for approximately $200 million (TruSolutions was a competing developer of Linux servers and was rumored to be headed for an IPO) and NetAttach, a developer of storage solutions for Linux.

Internet.com has also been a very early and active player in the linux space. Internet.com is a news and information content site for IT professionals. Their goal is to be the number one news and information site for technical and business professionals in the IT sector and in this goal they compete with other public companies such as CNET and ZDNET. The Linux and Open Source communities represent the fastest growing segment of this larger community and Internet.com has been quietly buying up many of the leading Linux content sites since last year. Soon after their IPO they purchased LinuxToday.com in October of 1999. LinuxToday was the second most popular news site for Linux enthusiasts, after Slashdot.org, and it had five million page views and almost 400,000 monthly unique visitors at that time. That same month, Internet.com also purchased LinuxCentral.com which was one of the three largest e-commerce sites focusing on selling hardware, software and other products geared exclusively at the Linux and Open Source community and which competes with other vendor neutral e-commerce sites for Linux products such as LinuxMall.com, TheLinuxStore.com and elinux.com. In December, they followed up with purchases of SharkyExtreme.com (which at the time had approximately 10 million page views a month and whose readership is composed mainly of technology professionals) and LinuxStart.com, another popular content site frequented by the Linux community. In January they purchased JustLinux.com. and in February they followed up with the purchases of Linuxnewbie.org, PHPBuilder.com and LinuxProgramming.com. In March they bought LinuxApps.com, a leading download site for Linux developers. By August of 2000, their total monthly unique users were 2.1 million.

Several other players have recently acquired Linux-related properties. The following table shows some of this activity over the past year.



Buyer ---------------------------> Acquired Companies
Atipa Linux Solutions---------- Enhanced Software Technologies
Applix-------------------------- Cosource.com
Cobalt Networks----------------Chili!Soft and Progressive Systems
Corel ----------------------------Newlix (30%) and Linux Force (30%)
Dell ------------------------------ConvergeNet Technologies
EBIZ Enterprises----------------- LinuxMall.com
Internet.com---LinuxToday, Linux Central, SharkyExtreme, Linuxnewbie
Lineo-----------FirePlug Computers, Moreton Bay Ventures, Zentropix
LinuxCare------------------------ The Puffin Group
Motorola------------------------- Metrowerks
Red Hat--------Hell's Kitchen Sys.,Cygnus, WireSpeed, Bluecurve, C2Net
Sun-------------------------------StarOffice, Cobalt Networks
Tucows.com--------------------- Linux Weekly News
TurboLinux ----------------------Lynx Real-Time Systems
VA Linux---Andover.net, Linux Hardware, TruSolutions, NetAttach
ZDNET (to be acquired by CNET) --LinuxDevices.com



Likely Candidates for Acquisition or IPO: Who is next?

Who is next? In the following paragraphs we select a handful of other emerging but still private companies in the open source arena who are ripe targets for acquisition or an IPO over the next year.

Continued in Part II.


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The image above is "Penguin Diving" by Artist Unknown

Zhone acquires ParaDyne

Someone at Zhone Technologies (ZHNE) knows what they're doing. Their deal to buy ParaDyne (PDYN) was announced today. Both companies have great prospects and are unreasonably undervalued. As I write this at 10:00am PST, Zhone stock is down 20% this morning. Buying Zhone stock today could be the easiest scoop of the week.