An Update on Dilithium

By Rich Tehrani, CEO, TMC  |  September 01, 2010

There are rumors circulating that Dilithium (News - Alert) Networks has gone bankrupt or is in receivership. You may recall I first wrote about the company’s video transcoding and delivery solutions in April of last year.

But recently a competitor mentioned in passing that the company was gone, and I checked the website and found it was not operational. However, e-mail messages did not bounce and the phones still work, so my digging eventually led me to Marwan Jabri, the founder and CTO, who is now also acting CEO.

Jabri explained that the company is not in bankruptcy or receivership, but it is closing overseas offices, restructuring and will be divesting some assets. He blamed the global economic slowdown; but, as noted in my article from about a year and a half ago, the company said it was cash-flow positive and growing at 400 percent. It is obviously very difficult to reconcile the above numbers with the rest of this story. And a reliable source told me the company’s investors are getting tired of funding a company that seems to have no exit after a decade.

I asked Jabri how, if mobile video is booming, the company is having problems. After all, I used the company’s product for a while and was impressed at how it was able to transcode and deliver video from TV stations live to my mobile device over spotty 3G. Jabri responded that there are huge trials the company is in the middle of in both India and China, but the challenge is monetization – carriers are still trying to figure out how to make money from video.

As I have mentioned before, carriers sometimes seem to take joy in dragging their feet so as to bankrupt startups. I am not saying this is the case in this situation, but banking on wireless service providers taking advantage of new paradigms is a tough way for startups to make money. Indeed, Jabri noted that a delay in payments from carriers has forced the company to “do what it can do to protect [the] shareholders and technology and products it has.”

He concluded by saying that carriers are investing heavily in video and that we are in an early stage of the market. However, my question is: If the company can’t get its website up, how will it sell anything, ever?

Nonetheless, as a fan of mobile video and someone who was impressed with the technology as a user, I wish them the best. NGN

Rich Tehrani is CEO of TMC. In addition, he is the Chairman of the world’s best-attended communications conference, INTERNET TELEPHONY Conference & EXPO (ITEXPO). He is also the author of his own communications and technology blog.