Nimble, creative, adaptable -- these words have been awfully busy of late,
especially since the celebration of the "New E-conomy" has
practically become an industry unto itself. But when I flip through my
copies of Fast Company, and hear tell of "businessman as
revolutionary" or "the end of business as usual," I have to
wonder, what about companies that simply (and consistently) practice ...
innovation as usual? Such companies do exist, justifying the idea that a
company may serve as a creative locus, a catalyst for achievement.
Some companies -- smart companies -- are in it for the long run. When
adversity strikes, they endure, and they emerge stronger in the end. One
such company is Natural MicroSystems (NMS). Like many other companies
associated with computer telephony, NMS suffered when Wall Street decided
computer telephony merited "correction." NMS saw their stock
price drop more than 90 percent to a low of around $5 per share.
Today, many communications companies won't even acknowledge that they
are in the computer telephony field. They feel that being associated with
computer telephony is, financially, the kiss of death. So, what was NMS to
do? In brief, NMS identified opportunities, and leveraged its fundamental
strengths to seize those opportunities.
NMS recognized that it was hardly coincidental that the traditional
computer telephony market declined even while the communications industry
embraced IP telephony and services-oriented solutions. NMS, relying on its
expertise as a provider of DSP resource boards and convergence components,
positioned itself as a provider of building blocks for services-oriented
solutions.
NMS bet the farm on this strategy, and I am happy to say that the bet
has paid off. In recent weeks, the company's stock price has risen from $5
to over $130, inspiring no little "buzz" about the company and
its prospects. All indications are that the company will continue to enjoy
an incredible amount of well-deserved success.
But NMS is by no means an overnight success. For many years, NMS has
been a leader in the communications field, producing components at the
heart of a broad range of solutions, from call center speech recognition
systems to wireless service provider equipment... and more. We've seen NMS
grow in sophistication over the years, and it has been an inspiration. In
fact, the success of this publication was greatly influenced by the
pioneering efforts of NMS and a handful of their competitors. And we at
TMC look to NMS for continued guidance.
NMS has always been more than a leader and innovator, and more than a
company that employed wonderfully talented people. NMS has always
demonstrated a great corporate culture. NMS is a class act -- approachable
and forthcoming, always gracious, and engagingly visionary. We're happy to
say that our very first Communications Solutions Expo (in Fall 1998) and
our very first Internet Telephony Expo (in 1999) featured Bob Schecter,
NMS's president, as a keynote speaker. A unique distinction for NMS, and a
singular benefit to our attendees.
It will not escape the notice of astute readers that recent moves by
TMC parallel those made by NMS. We, too, recognize that the service
provider market has become one of the fastest growing areas in all of
communications. This realization accounts for much of the coverage in this
publication, particularly in the "next-gen" sections. It also
explains why we'll soon launch a sister publication to this magazine. The
new magazine is called Communications ASP. (Feel free to visit us and
subscribe at www.caspmag.com.)
But enough about TMC! Right now, let's get back to NMS, a jewel of a
company. What accounts for its success? To help us with that question, we
had a talk with the CTO and co-founder of NMS (and frequent contributor to
Communications Solutions�),
Brough Turner.
CS: NMS has an awesome corporate culture. How do you attract
and retain such highly talented and motivated people, through good times
and bad?
BT: From the start, we were trying to establish a company where
it would be fun to work. We've expressed this with three key ideas:
technology leadership, customer focus, and best place to work. In hiring,
we strive to hire the very best talent for every job, whether it's a
design engineer, sales manager, or administrator. And we train our
managers on how to interview and identify the top candidates. As a result,
we have a team of talented and motivated people who enjoy working
together. Then, we communicate objectives and let people go on their own.
If there have been times when the rest of the world has questioned our
strategy, we've understood what we're doing internally -- and that's kept
us all working towards our goals.
CS: What accounts for the success of NMS's approach to the
communications market?
BT: Technology leadership and focus ... When we were a small
player coming into the CTI market in the early 90s, we focused on
sub-segments that were underserved. Our DSP and density leadership got us
extra growth from the high end of the market -- enhanced services in the
public network -- at a time when the rest of the CT market was slowing
down. Next, our early attention and focus on packet-based telecom
positioned us for today's converging networks. Finally, our focus on a
pure OEM model, with a limited number of key customers, has allowed us to
provide excellent support to a set of companies, and these companies drive
large volumes of business. Today, our company is focused on the large, hot
markets and applications that these companies are targeting and winning:
network access, network services, IP services management, and enterprise
solutions.
CS: NMS is cited as being the first company to build DSP
resource boards especially geared for building Internet telephony
gateways. How do you see this market progressing, if at all, in light of
the fact that vendors such as Cisco are successfully producing IP
telephony gateways devoid of open, standards-based DSP resource boards?
BT: While we are intimately associated with open,
standards-based platforms, our core strategy is to leverage mass-market
computer technology to solve telecommunications problems in the most
appropriate fashion. We were able to leverage PC technology to get IP
telephony gateway technology to market before anyone else. Through our
NaturalEdge Engineering Consulting Services division, we have been able to
port this technology to a variety of embedded environments as well.
Combine this with our willingness to sell or license our technology, and
the result is that we have been designed into a variety of IP telephony
gateways that are no longer open. The good news is that internally, they
still leverage the open, standards-based software environments -- and that
helps us and our customers get new products to market rapidly.
Commenting on Cisco gateways specifically: No, we are not designed into
the mainstream Cisco gateways at present. (Although Cisco is a customer,
it isn't as large a customer as we think it should be). On the other hand,
we are designed into gateways from competing equipment suppliers such as
Lucent and Siemens.
CS: Please discuss NMS's prescient acquisition of a Teknique,
a company with SS7 expertise, as well as your more recent acquisitions,
including InnoMediaLogic and QWES.com. What is NMS's strategy for
acquisitions going forward?
BT: We've made a number of careful acquisitions over the past
six years. We started with Vox S.A. in France in 1994, which helped us
reach critical mass in the European market and added substantially to our
DSP capabilities.
Next, we acquired Teknique in 1996 for their SS7 and data
communications expertise. At that time, we had direct need of SS7
capability for our public network business, and we were just starting to
develop our first IP gateway. Teknique brought us the needed expertise.
A little later, we acquired ViaDSP for their DSP expertise -- they
helped accelerate our gateway developments. In 1999, we acquired QWES.com
for their PolicyPoint product and their expertise in Quality of Service (QoS).
QoS is a critical missing piece for the widespread adoption of VoIP
technology.
Most recently, we acquired InnoMediaLogic (IML) for their leadership in
the voice over ATM market and their next-generation access network
technology. With this acquisition, our network access technologies,
products, and services deliver limitless scalability with thousands of
voice and data channels per card, and unlimited interconnection for
advanced voice switching. As a result of our best-available -- and
exclusive -- DSP and ASIC technology, we are now able to offer highest
performance, highest density, and lowest cost-per-port solutions.
CS: You've worked hard to popularize CompactPCI. What are
your opinions and insights with regards to CompactPCI in the present and
future?
BT: We expect the CompactPCI market to continue to grow and
evolve. There are several schemes in development that promise to carry
CompactPCI far beyond the capacity of the current CT Bus (H.110) and PCI
Bus. The best of these schemes evolve gracefully from existing CompactPCI
products and continue to leverage mass market PC technology in
CompactPCI's robust packaging. We expect to help drive these evolution
efforts beginning later this year and in 2001.
CS: NMS was one of the first telecom companies to embrace
open source technology. How has the move to open source affected your
business?
BT: Typically, our key customers look to us to provide direct
support, not just open source, so in that sense, open source is not so key
for our business, but it was key to advancing the adoption of CompactPCI
-- an initiative we felt was important for our industry and for NMS. Our
open source initiative was firstly an effort to speed the adoption of
CompactPCI by providing adaptable hot-swap software, and secondly a way to
make our boards available to Linux programmers before we had the resources
to directly support Linux. I know of several companies who have directly
used our hot-swap software to get their CompactPCI products to market and
hundreds of people who have at least looked at our hot-swap software for
guidance.
CS: NMS was on the forefront of ending the bus wars between
MVIP and SCSA. Please give us a synopsis of the market before and after
the bus war era.
BT: We never wanted a "bus war." When we invented MVIP
in 1990, there was no open bus that could switch digital telephony
signals. But by the mid-90s there were two camps. We didn't want to put
two connectors on each board, so in December 1995, we made an ECTF
submission entitled "Ending the Bus Wars." Then we got a dozen
or so companies involved in making it happen. This included NMS, Dialogic,
and several larger players, including Lucent, Nortel, and Siemens. The
result was the CT Bus (H.100 and H.110), now the only telephony bus for
new designs.
CS: Discuss the state of standards in general. Where have we
come and where do we need to go to ensure continued growth in the telecom
market?
BT: New markets can emerge without standards, but explosive
growth requires standards of some sort, whether sanctioned by official
bodies or promoted by one or a few market leaders. CompactPCI is a
standards success story. IP telephony has settled on a few standards --
H.323, MGCP, and SIP for now. That's a bit too many, but the market is
evolving, and vendors are just implementing all three. Would we progress
faster if there were only one? Probably yes, but there are still arguments
over which standard is rich enough to support all the new services we are
all hoping for.
Perhaps the important area where widespread adoption of one set of
standards could help grow the telephony market is in software development.
New services, that is, new applications, drive the industry. And yet, no
software standard has really taken off -- not TAPI, JTAPI, or any of the
ECTF software standards. Telephony application development remains in the
hands of a relatively small community, untouched by the millions of
Windows, Java, or Web developers.
My current bet to break this logjam is an emerging set of IETF
developments that are partly associated with SIP, that is, CPL (call
processing language) and various XML derivatives like VXML or XTML. But
this will depend upon the completion and widespread adoption of the SIP
family of standards. Whatever happens, we have some exciting times ahead.
CS: At the latest Communications Solutions Expo, we noticed
that many of your partners displayed truly state-of-the-art communications
solutions. (In particular, we were wowed by NMS's voice portal technology
and partnerships.) Please update us on the interesting things your
partners are doing.
BT: We firmly believe that speech is the "natural"
interface to the rich, dynamic content of the Web... and we are wowed by
the announcements our partners are making in the voice portal arena. As
background, NMS's HearSay is the industry's first integrated, extensible
voice portal platform, designed to accelerate the development and
deployment of a new generation of voice-driven Web applications, voice
portal solutions, and v-commerce (voice-enabled e-commerce) solutions.
In the area of unified messaging , there are more incredibly
interesting services coming on the market. One from our partners,
EnvoyWorldWide (formerly Message Blaster.com), has recently brought out a
Web-based messaging application, called MessageBlaster, that lets
organizations communicate with customers regardless of location or choice
of delivery media (phone, cell phone, fax, pager, or e-mail). This
application, which uses our AG4000 platform, tracks, monitors, and reports
responses across platforms and recipients in real time.
CS: NMS seems to be increasingly focusing on enhanced
services and network access. Fair assessment? Why? What are your plans for
these areas?
BT: Actually we have five market-centered business units. We
have progressed from a functional organization to a set of business units,
allowing us to be more responsive to our customers, who are developing
solutions for the hottest, fastest-growing markets in this new era of
communications. These business units are: New Network Access, New Network
Services, IP Services Management, Enterprise Solutions, and Engineering
Consulting Services.
CS: Traditionally, industry watchers have considered NMS,
Intel/Dialogic, and Brooktrout to be "The Big Three," and most
directly competitive with one another. Is that still the case? How have
the three companies changed over the years?
BT: Actually, at this point our principal competitors are the
internal development groups at the large communications equipment
suppliers. Luckily, their management increasingly realizes that it's more
efficient to go outside for technology, freeing their own teams to focus
on solutions. In specific market segments, we sometimes see these
competitors, but by now, we are also both a customer of and supplier to
Dialogic/Intel and a partner with Brooktrout in some markets, so it's a
different world from that of three years ago.
CS: NMS now generates about 60 percent of its revenues
outside of North America. Has that always been the case?
BT: It's fair to say that about 60 percent of our revenues are
due to international business. Global markets are very large, we have
comprehensive international telecom approvals, and we're able to rapidly
obtain approvals in other remote markets when our customers need them.
Actually, about 33 percent of our revenue is from direct sales outside of
the United States, but many of the products we sell to companies in the
United States are for systems that are destined for export. Our solutions
are deployed in over 65 countries worldwide.
CS: The industry has always credited NMS with articulating
clear and expansive (and inclusive) visions, encouraging coalition
building and growth throughout communications. How will you apply this
philosophy to ensure future growth?
BT: We are well on our way to being the dominant supplier of
enabling technology in this new era of communications. This has and will
continue to require not only internal development, but also acquisitions
and partnerships. Even in these rapidly moving markets, you can also
expect to see us following our established path of fostering industry
coalitions whenever it can help enlarge to total market for all. I've
already alluded to our forthcoming efforts towards an evolution strategy
to dramatically expand the value of CompactPCI -- and you'll see us
contributing even more to initiatives within the IETF and other large
bodies.
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