Zed 3 Affordable VoIP

One of the most colorful characters in the communications space has to be Iain Milnes, the founder of Zarak and Zultys. Zarak sold to Spirent for hundreds of millions in stock just prior to the telecom meltdown and Zultys ended up being acquired after some financial troubles. Iain parted ways with Zultys a few months back and is already at it again.

Some people call him a legend in telecom and for sure he is multifaceted, having launched successful companies in testing and the phone systems business.

In less than six months after leaving Zultys, Iain has a new company called Zed-3 (www.zed-3.com) and he is the President and majority owner. I had a chance to catch up with Iain at TMC's Communications Developer Conference (www.communicationsdeveloper.com). As the name Zed-3 implies, this is his third company to start with the letter Z. The company will make phone systems and compete head-to-head with Zultys and the myriad other companies in the IP PBX space.

The differentiator will be the focus as Iain has relationships all over the world and he will be concentrating on markets like China, Vietnam and India. Zed-3 will be based in the U.S. but Iain seems to thrive on traveling around the world and he is likely on an airplane as you read this.

At Zultys, Iain had a goal of building a $500 million dollar company. At Zed-3, Iain has revised his goal downward to $100 million; this is in part because of the cost of the company's products - they'll be priced at about one-third of what Zultys charged.

Iain believes that Zultys has ignored much of the channel. Zultys itself, however, currently informs me that they have strong relationships with the channel. The reality is probably that both companies are correct to some degree, as it is a big world out there.

At Zarak and Zultys, Iain personally got involved in building worldwide sales channels and as a result he is well-entrenched in many countries and can get things done quickly. In fact, speed is something Iain seems to be a master at leveraging.

For example, Iain has just launched a new IP PBX company, getting it up to speed in the span of a few months. However, he didn't start from scratch; he went to a company that OEMs product for many larger telecom equipment providers and purchased it. He then decided to brand some of the products as Zed-3 and, in the cases where contracts do not allow re-branding, he is able to use the new technology his company has developed to make ever-new products.

The PBXs are all VoIP and SIP-based and there is a variant that scales to 30 and 150 users. Soon there will be a 500-user model. The model numbers are the SE30, SE150 and SE500, respectively. The low-end VoIP phone will have a user price of $60. There is a mid-range phone as well which has the ability to display graphics and color; expect it to arrive at the end of this year.

Some signs of Iain's experience are captured in stories wherein he tells you how in many countries it is illegal to use VoIP and subsequently you can't import products which have the word VoIP written on them. IP telephony apparently is not flagged and products with such labels get right in.

His company has already installed systems in Bangladesh and China and a new system is in the process of being rolled out in Dubai.

Thanks to having an established company behind him and relationships with the right people, Iain's Zed-3 has already garnered approvals in over 20 countries, which is an amazing feat. Iain tells a story of how his system was approved in a major country in a mere matter of days while a very large competitor had to wait over a year for the same approval.

When I look at Iain's business model I am reminded of Cisco and how the company takes promising new companies, buys them and then makes the real money through the distribution of the companies' products worldwide. Granted, the scale of the respective operations is quite different but the concept is the same. . . Leveraging the distribution channel. In addition to being a communications equipment provider, Zed-3 is a distribution channel arbitrage play.

As you might imagine, Iain thinks Zultys has the best technology around and others in the industry certainly credit the company with technology leadership. Iain thinks that offering 90% of the Zultys feature set at one-third the price is the right formula for success - frankly, it is tough to disagree with such logic. Moreover, Iain says the Zed-3 call center products will have 100% of the Zultys features.

The company is far from a one-trick pony, as it also OEMs phones which are resold on corporate jets. The irony here is that the same company is behind ultra-sophisticated and expensive retail equipment and now this same technology will be built into extremely cost-effective phone systems around the world.

In addition, Zed-3 has a SoftPhone client, the CU3, which works with a memory stick device. The twist here is that the audio is embedded in the memory stick so you can plug the headset right into the stick and start speaking right away. This is especially useful for computers having no built-in sound capability. The soft client also executes from the memory stick, which means that there is nothing to install.

Iain says the CU3 was designed for use in a hotel and as such the NAT traversal has been worked out. NAT refers to network address translation and refers to assigning computers and devices behind a corporate firewall with local IP addresses which are concealed behind a different, external, public IP address for security reasons. Generally, NAT wreaks havoc on equipment not designed to deal with it. Iain mentioned that at Zultys, NAT traversal is something they just never got right.

He said that his hotel client generously gives away the sticks to frequent travelers along with a certain amount of free long distance time. The only catch is that you have to be staying at one of the company's properties to use the card as it checks the IP address before allowing the call to take place.

This is a really interesting application and gets one to thinking about all the extensions of such a business model in the world of VoIP. Iain tells me he is in talks with ITSPs about this product, which makes a great deal of sense. The price of the stick is in the $35 range.

Finally, there is a reverse 911 product which Iain thinks has strong homeland security potential. I am aware of other PBX companies such as Iwatsu who have also seen a revenue increase from focusing on disaster preparedness solutions such as this.

In the end, Iain is probably one of the more dynamic people in our industry. He always tells it like it is and I respect him for doing so. He should be commended for having such a grand vision, not to mention the fact that he has already begun execution on his latest plan in less than six months. Certainly the telecom market has tremendous opportunities left to be exploited, and if Zed-3 can get a strong foothold in many developing parts of the world, Iain may find himself in the process of pulling off a true telecom entrepreneurial hat trick.

TMC Launches Green Technology World Expo

Hopefully you are already signed up for TMC's Internet Telephony Conference & Expo (ITEXPO.com) to be held September 10-12 in Los Angeles, CA. I stress it strongly, because occurring at that same time and place will be another event called Green Technology World, focusing on technologies that not only save companies money but they also save the environment. The particulars are being worked out as I write this, but be sure to check out www.greentechnologyworld.com for the final details and also to peruse our new Green Blog (http://blog.tmcnet.com/green-blog).

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