Globalcomm - Photo Recap

Back from Globalcomm now, and have got a few posts to share with you now. This is a photo recap of a few things I saw and did at the show. As usual, photos courtesy of my Nokia N90.

Got a couple more posts coming right after this - one dedicated to highlights from the House of Blues parties, which will be a lot of fun. Also got one coming about my night out at the White Sox/Tigers game. I love VoIP, but live music and baseball are right up there!

First some images from the show...

Day 1 - a promising welcome from the outside...



Looks promising from the inside too - lots of big shiny signs to get your attention...




As anyone there can tell you, it was pretty quiet on the floor, though. At one point, it was just me and the birds. Not a great shot, but look closely - those specks are pigeons walking the floor!

After a while, the Candy Show across the way was starting to look more interesting... mmmm... the land of chocolate - Homer heaven....




Actually, things did pick up as the day went on. Signs of life on the floor, and Jeff's keynote, reprising his "Eve of Destruction" talk.




Later on, I attended the Telecommunications Magazine reception (no photos I'm afraid), and then the TMC/IMS Forum reception at Soldiers Field. Both were quite good - the latter was splashier, but a bit of a hike from the show venue.

Eli Katz/Baruch Sterman overlooking the field, Rich Tehrani/Neal Shact




Great renovation they've done there to expand the seating. During the conference I was lucky enough to see 2 of Chicago's major sports venues - Soldiers Field and US Cellular Field.




Day 2 - early start, but things definitely pick up.

Began the day with an early breakfast with Jeff, which was a real treat. He's raved about the Palace Diner on his blog, so of course, that's where we met. It's the real deal, esp if you love sports. I'm a fan.

Jeff with the owner, George; classic neon sign




Tuesday, Globalcomm was much more like what a big conference is supposed to be. I find it too much to take in over too little time, so you just have to pick your spots. But at first glance, it's all a bit much. Kind of like this - you get the picture.....





Just one more thing for fun to share about the show. I got a chance to travel in both low style and high style - all in a day's work I guess. :-)

For the Telecommunications reception on Monday, security wouldn't let me enter the show floor - where the reception was - since I arrived after show hours. The reception was pretty far from the entrance, so once they cleared me to come in, security was nice enough to chauffeur me over. How many of you got to do that?

At the other end of the spectrum, Jeff had a driver on hand to get us from the Palace Grill to the show after breakfast. Even though the diner is frequented by cops, the driver didn't get a ticket waiting for us all that time. I guess they know better to be nice to George's buddy Jeff!

Globalcomm - Day 3

Tear-down is well underway - the show floor just closed - it's amazing too see how fast people move when they want to go home!

Overall, a less-than-inpsiring experience, but certainly some good things along the way. I'll post about my highlights before the week is out - am just stealing 5 minutes here before the WiFi is shut down.

Did a podcast from the floor this afteroon with Carl Ford, and that should be posted in the next day or so. Globalcomm may be smaller than its predecessor, Supercomm (although one would think that "global" connotes something bigger than "super"...), but it's still quite big compared to the vertical shows that have more focus on IP communcations, like VON and Internet Telephony. So, not as much leading-edge stuff here, but I sure learned more about things like enclosures and backup power supplies!

Had a number of good briefings, so I did get updated on things I'm following, such as IPTV and WiFi/WiMax. Nothing much, though on things like open source or Web 2.0, but that's ok.

Saw Jeff Pulver's address yesterday, which was very well received. Consistent with what I've been saying above, it was a familiar message to those in the VON crowd, but for Globalcomm, it had that you-can-change-the-world call-to-action that resonated when you heard it for the first time. So, in my view, it was a message that needed to be delivered for this audience, since they weren't hearing anything like this from anyone else.

They're turning down the lights, and I'm the last one left here in the press room, so it's time to go. Quickly, the parties at House of Blues last night - Pulver's and MetaSwitch - were great - the highlight of the show for me. I got some great photos and video on my Nokia N90, and will post these when I get back to Toronto. If you've never seen or heard the Herding Cats, they are as good as it gets for live bands, and you're in for treat when you see my video clips. So come back soon, and enjoy!

Gotta go - heading out now to the White Sox/Tigers game - photos/video coming later.....

Globalcomm - Not All There

Just a quick post during Day 2. Don't get many chances to blog, and I've got a bunch of photos, but won't be able to post these until later.

Overall, the show has been rather lackluster. Not as big as last year, and it seems to lack energy and focus. Haven't seen that much of interest on the show floor, but I do expect to spend more time there tomorrow.

Scorecard so far - 2 t-shirts, 1 good session and 1 Yankees blow out of the Red Sox. Not a lot to write home about in terms of goodies, but lots of guys selling wires, generators and industrial-strength protective gear.

I moderated a session on VoIP earlier put on by Telecommunications Magazine. That went well and was well attended. The only other speaker I've seen so far was Jeff Pulver - he gave a keynote similar to what he covered at Spring VON, but this was largely a new audience. That went over well.

Have seen the Acme Packet folks in various places - they look pretty happy in the glow last week's IPO announcement. Good for them.

Quickly, was cited briefly in Business Week story that ran today about Net2Phone suing Skype - pretty interesting stuff.

Gotta run now, show floor closes in an hour. Hope to have more tomorrow.

Jon

Telio - Day 1 - So Far, So Good

I feel like I'm carving out a niche here for being a Telio watcher, but I just had to close the loop a bit here. While no new shares were issued on opening day, the sky did not fall, which can only be seen as good news. The news doesn't exactly come to me thick and fast from Norway - nor in a language I can understand - but from what I can tell, there are no red flags, or any ultimatums demanding shares be paid for in full regardless of market price.

As per my earlier post, a tale of two cities, for sure....


Ring those bells...Alan Duric, co-founder/CTO, Telio, and Jeff Citron of Vonage (apologies for the poor quality, esp of the Vonage photo)





Day 1 trading, at 30 NOK, as per the Oslo Bourse site....






Vonage sidebar - on Friday, they announced the hiring of Bryan DiGiorgio as their SVP of Customer Care. I suspect he's going to be one busy guy.


Technorati tags: Vonage, VoIP, Telio, Jon Arnold, telecom IPO

Acme Packet - IPO On The Way

I've been expressing concern about how the Vonage IPO will impact the appetite for others who have been waiting for the right time to make their move. One could argue that Vonage's poor showing would spell doom and gloom, and scare all the bankers away from VoIP. Or one could say the bankers are smarter than you think, and are not letting one IPO based on a broken business model - albeit a BIG IPO for this space - cloud their judgment about smaller gems that are right at their feet.

Acme Packetis one such gem, and on Friday, they filed the news about their S-1 and plans to go public. The press release doesn't say much, but indicates that Goldman Sachs is the lead banker, with Credit Suisse and J.P. Morgan co-managing the offering.

I've followed Acme for quite a while, and when you talk about leaders within a vertical, you have to look at them for their space. The session border controller market is not as well defined as other nextgen network elements such as media gateways or media servers, but there's no doubt that Acme has had the most success in this space with Tier 1 carriers. Other session border controller vendors have strengths as well, but when it comes to landing the big ones, Acme has done the best job.

They're also in a great position because among all the main vendors in this space, I believe they've taken the least amount of venture funding - $31 million, only 2 rounds - and haven't taken any since September 2003. Wow! Compare that to Vonage and you tell me where you'd rather put your money. Slow and steady wins the race. So, their early backers - Menlo Ventures and Canaan Partners- will do quite well, and if the IPO flies, they'll be in great shape.

Personally, I think Acme will do just fine, and will show the market that the vendor space may be a better bet for IPO than the operator side. No need to comment further on Vonage, but Packet8 (another virtual operator) has been public for a long time, and hasn't done that well (down from about $2.50 to about $1.40 in the past 6 months).

Back to the session border space, it's worth noting that Newport Networks, who is gunning for the same class of carriers that Acme is serving, went public over a year ago on the LSE, and raised quite a bit of money - without revenues or any name customers to speak of. Their value has long since declined - and almost 10-fold (!!) in the past 12 months - for good reason, and you'd have to think that Acme has nowhere to go but up.

Looking ahead, this space has seen a few exits already, most notably Kagoor going to Juniper and Jasomi going to Ditech. Who's left? Well, NexTone and Netrake are the biggest and strongest pureplays in this space. Both are doing well for different reasons, but if I had to hedge my bets, I'd say NexTone is next up in this space to go public.

Technorati tags: Acme Packet, telecom IPO, Jon Arnold

Canadian IP Thought Leaders Podcast - Mathew Ingram, Globe & Mail

This week's podcast was with Mathew Ingram, who's a technology writer for the Globe & Mail here in Toronto. Mathew is one of the people behind the Mesh Web 2.0 conference that was just held here. He's got a pretty good perspective on this space, and we talked about various issues around what makes Web 2.0 interesting and about how strong the interest seems to be. Inevitably we went on the blogger vs. journalist tangent that I'm so fond of, and Mathew speaks very well to the issue.

You can listen to the podcast here, as well as read up more on Mathew and his blog.

Next week I'm hoping to do a pod or two live from the floor at the PPN booth - #31048 - at Globalcomm. Hope to see you there.


Technorati tags: Web 2.0, podcasts, Jon Arnold

Telio - a Better Way to do a VoIP IPO

Tomorrow is the IPO launch for Norway-based Telio. While not a household name in North America, Telio has a following among those who attend VON events, and in my view, are the Vonage of Europe . They have been quietly building up a great voice over broadband business � primarily in Norway � and are ready to share it with the world. This in itself is not a big story, but in the wake (literally) of Vonage�s IPO, Telio stands in stark contrast to how one can go about building a profitable business in a market that is rapidly becoming commoditized.

To cite sources first, James Enck, who�s always on top of things, esp in Europe had a good post about Telio yesterday. There are two stories here, one micro and one macro. The micro story, which is what James discusses, centers on the pricing of their IPO and the unusual scenario in terms making shares available for sale. He points to the press release from the Oslo Bourse, which explains that the market makers were only able to generate strong support for the stock at a price of 30 NOK.

Noting that the market there has been volatile, the press release seems worded in a way to make you wonder why Telio's management has elected to stick to the price range they think the stock is worth, namely 31 - 37 NOK. As a result, the stock will be listed at 30 NOK, but no new shares will be issued. They'll take their chances and hope the market proves them right, in which case, the share price will move up into their target zone, and only then will the public get a shot at the float.

To some, this might look haughty and short-sighted, especially coming from a tiny company, and it could be argued they should be grateful to take 30 and go with the flow. Telio isn't that way, and they sure aren't like Vonage.

Their management's position says a lot about the character of this company and how radically different their bargaining position is compared to Vonage. In their view, they have cash in the bank and don't need this money for immediate operations, so they don't have to give the stock away, and they're not desperate to take whatever comes their way. Good thing Vonage didn't do that! Telio is in a much stronger market position relative to Vonage, and it's highly unlikey their offering will follow Vonage's course. If it does, then, sure, you can say "I told you so", but I don't see that happening.

For those of you not familiar with Telio, you can study their Investor Presentation here - it's well done and easy to follow. Otherwise, I'll give you the Readers Digest version, straight from the source. I've been speaking with Telio's founders today, and have been following them closely from the beginning.

This is the macro story I'm trying to get to, and I briefly want to talk about how Telio differs from Vonage, and why they are enroute to a successful IPO. This really is a tale of two cities, and I want to get the point across that mass marketing spending is not the only way build a business, and in some ways, it's so Business 1.0.

Telio has built up a residential VoIP subscriber base of over 90,000, and guess what - they're profitable, and they have money in the bank. Their future doesn't ride on an IPO. They can make it without it, and it wasn't a fallback position because nobody came along to buy them. Compared to Telio, Vonage is very Business 1.0 in the sense that they didn't fully exploit the power of the Internet. They've spent most of their money on traditional advertising to build a business in a traditional - and very American - way. The more you spend, the more subs you get - but that's a treadmill you can never get off.

Telio - very much like Skype - is Business 2.0 (not really Web 2.0, but that will come). I have learned that 75% of their customers come from referrals and friends - pure organic growth and viral marketing. Not as dramatic as Skype, who has zero marketing spend - but pretty darned close. Not only are their customer acquisition costs much lower than Vonage, but they do a better job of retaining those customers. They won't reveal their precise churn level, but it's below 1%, which is terrific. Vonage's churn is respectable for the market it is in, but it's quite a bit higher than Telio. These two simple metrics go a long way to explaining why these companies are on divergent paths.

Telio has done a great job leveraging the Internet to build its customer base, and they've built a more efficient organization to support growth. On top of having lower overhead, they also claim a higher ARPU than Vonage (despite having more free calling zones than Vonage) - two more factors that make the difference between profits and losses. The higher ARPU comes from the fact that their target customer is a bit different than Vonage. They focus more on people who "communicate a lot" - power users, so to speak. Vonage is more lowest common denominator, which means less likelihood of adopting premium services.

In short, Telio wants to "grow smart and not burn our capital". Very different philosphy to Vonage, isn't it? Another way Telio has leveraged the Internet - and IP economics in particular - is the simple notion that small is beautiful. One of the trump cards of any virtual provider is not having the burden of a costly network infrastructure. You don't need millions of subs to make money!!!

The US market is about 70 times the size of Norway. On a per capita basis, Telio's 90,000+ subs translates to over 6 million in the US. That would make them far and away the market leader there. But they don't need to be that big. Being profitable with less than 100,000 subs gives hope to dozens or hundreds of other startups that with the right business model, they can make money. Of course, most of them don't and won't, but Telio is proving that it can be done. This is how you build a successful Internet business. It's not just a matter of doing one or two big things right or differently. It's a lot of little things that add up to viable business model.

That said, the future is far from certain. Telio holds a comparable market share position to Vonage in the US - about 35% of the rez VoIP market. As with Vonage, there are dozens of other VoIP pureplays in Norway, but they're all hopelessly behind Telio. Their main competition is the big telcos, who aren't doing much yet with VoIP. The Investor document shows PTT Telenor being #2 with 13% share. It's pretty safe to say those numbers will climb once they get busy - much like what is happening now in the US with CallVantage and VoiceWing. The big difference for Telio is that cable has low penetration in Norway, so it's all DSL for broadband, and there are no Time Warners or Cablevisions there to give them a run for their money.

Although competition will intensify, VoIP is really the first stage of growth. Telio keeps developing applications and is well along the path to offering FMC and MVNO services - not just in Norway, but across Europe. These plans are pretty clearly laid out in part 4 of their Investor document. So, will they be able to keep growing virally - or have they simply captured all the early adopters? How will they hold up when the market gets more competitive? Can their technology - and organization - scale to keep pace with growth?

It's too early to tell, but it seems to me they have a much better handle on how to migrate to wireless services than Vonage, and in Europe, that really opens things up for them. Is this the little engine that could? I think so.

Which company would you rather invest in? One that has publicly stated their IPO funds would be used to maintain marketing spend to continue acquiring customers? Or one that is cash flow positive already and will reinvest into the business to fund growth into new markets and new services? It's a no brainer for me.

Before I sign off, I just have to come back to a comment I made last week about how Vonage and Mastercard went IPO on the same day. Talk about going in opposite directions. Vonage opened at $17, and is now down aroud $12, while Mastercard opened at $39, and is up at $47. I know I get philosophical at times, but it just strikes me as so odd that the market rewards companies that help us spend money we don't have, and they punish those who try to save consumers a few bucks. To twist things a bit further, Mastercard actually profits from Vonage since they are one of the credit cards that subscribers can use to pay for their Vonage subscription......

Final thought - whether you're in the Vonage camp or Telio, I can think of one guy who comes out a winner both ways. Who else? Jeff Pulver. He's the Von in Vonage, and is also an advisor to Telio. Smile Jeff!

Technorati tags: Vonage, VoIP, Telio, Jon Arnold, Jeff Pulver