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Rich Tehrani’s Executive Suite is a monthly feature in which leading executives in the VoIP and IP Communications industry discuss their company’s latest developments with TMC president Rich Tehrani, as well as providing analysis on industry news and trends.

Technology Marketing Corporation President and Editor-in-Chief Rich Tehrani recently interviewed Mark Spencer, President of Digium.

Mark Spenser

Mark Spencer


Digium's Mark Spencer

While there are, clearly some firms that are unwilling to part with their proprietary secrets, much of the telecom industry has accepted that the open source model is, at the very least, a viable alternative. Indeed, open source makes it considerably simpler and more cost effective to meet the needs of individual customers, which subsequently raises customer satisfaction and all that goes with it.

The initial code for Asterisk (News - Alert) , the original open source telephony platform designed as a flexible and more cost effective alternative to traditional solutions, was originally written by Digium president Mark Spencer when faced with the exorbitant costs of purchasing a PBX (News - Alert) . Since then, Asterisk has been contributed to from open source software engineers around the world and now supports an expansive range of protocols for the handling and transmission of voice communication over various interfaces. In fact, just recently, Digium released version 1.4 of Asterisk, including more than 20 new added functionalities, including Jabber/Jingle/GoogleTalk compatibility and greater scalability and interoperability features.

I had the chance to talk to Mark about the direction Digium is taking, as well as about the benefits of an open source architecture.

RT: You’ve recently received a good amount of funding and have announced that somewhere between half a million and a million people have downloaded and/or are using Asterisk. Can you tell me a little bit about the growing user base as well as the funding?

MS: Our experience was probably different than most companies in that we’ve been profitable since 2002, and we didn’t really have any kind of immediate need for the money. But we really want to be sure that we do everything we can to best execute and best deliver on the expectations of our customers and users as it relates to Asterisk. After looking at lots of options, including consultants and other venture capital firms and so on, we really settled on Matrix as the best partner for where we are right now.

RT: Regarding the need for the money, what kinds of things do you expect to be doing?

MS: We don’t really have any immediate plans, but the cash will be available if we need it. In the meantime, we’re just going to do what it takes to really try to grow the business.

RT: Tell me about your growth rates. How have they been growing and are there any things you’re going to do to help increase the growth rate?

MS: Historically, we’ve grown about 100% a year for the last several years and we have definitely some ideas about what we’re going to try to do to step it up a notch, although there’s nothing yet that we have formally announced.

RT: Tell me a little bit about this growth. When you say growth, is it growth in downloads, growth in use, growth in revenue?

MS: While I would say the growth in downloads is the first that you see, the coverage and the expansion are also in terms of the number of companies that are involved in Asterisk. So it’s a mix really.

It’s kind of exciting, from a technologist’s point of view, to see that everything you say about your open source promotes new kinds of applications; it’s nice to see that actually taking place. Not that there’s anything wrong with the traditional Voice over IP stuff — building gateways, building cost switches, building calling card platforms — but it’s especially exciting to start to see next generation applications. It’s almost like Web 2.0 is turning into Telephony 2.0.

RT: So, what are some of the things you’ve seen in Telephony, some of these applications that are worth knowing about?

MS: I think they range everywhere. There’s the creative idea that you can use your phone to pay for your parking spaces by calling a phone number and entering in the parking space phone number and your credit card, and then when you drive away, a sensor detects when you leave and texts a message, “Here’s your receipt.”

Then you’ve got the people at NYU that have the sort of geo-tagging sort of thing — geo-tagging meets blogging where they put a sticker at a given location and it has a phone number and a blog entry and you dial that number and enter that blog entry and you get to hear a blog about the particular location where that sticker is.

These are probably not million dollar businesses that are being built, but they are the first sort of sprouts, in terms of new applications. There’s also Unwired Buyer, which allows people to bid on eBay (News - Alert) items by telephone and to be called when, for example, they are outbid.

RT: Do you see any other applications, such as that one, that are paradigm changing?

MS: We’re seeing some cool stuff in terms of integration with other applications, like some of the stuff Zimbra demonstrated. They’ve got some demos where they’ve shown not only click-to-dial for Asterisk, but where you can have a conference scheduled and then Zimbra will call all the participants in the conference automatically for you with just a click.

RT: So, there are a lot of new applications, and that’s also an open source product, right?

MS: That’s correct, and that, for me, is the most exciting part — the stuff that’s coming out of open source.

RT: Are there any other open source things we should be familiar with?

MS: Those are the ones that would probably jump out. We’ve seen a lot of people studying to integrate SugarCRM with Asterisk, which is kind of neat too. So we’re seeing some overlap there. It’s an interesting area, and they make sense when you start pulling these open source projects together.

RT: Do you see some sort of common framework for these open source companies to work together in a more seamless fashion or in things like service oriented architecture or XML?

MS: I don’t think it’s totally defined yet, but I think that we will see it, yes. Especially in the next year, we’re going to see much more integration, especially as we move our schools, just because customers are going to demand it and what it can enable.

I think the first generation was sort of the creation of Red Hat (News - Alert) , right? The idea that you can have a real operating system that is open source and commercially supported, but what’s going to be next is the whole idea that your entire back office, from CRM to PBX to accounting, is going to be able to be acquired in open source.

RT: Is a company like Oracle (News - Alert) going to lose share to solutions like what you just described?

MS: I would not necessarily underestimate the big guys, either in the telecom space or in other spaces. I think they can kind of see the lesson, the writing on the wall, as it relates to the way Linux has solid performance in a lot of areas. They’ve kind of watched them through how Microsoft (News - Alert) has reacted, and learned from what’s been effective for Microsoft and what hasn’t. I don’t think they’re going to fall asleep at the wheel. I think they’re not going to do things exactly the same way that Microsoft did, by any means.

RT: What about the patent challenges with open source? The word on the street is that some of the open source technologies are infringing on patents that are held by some of the private companies.

MS: I think software patents, generally, are kind of a problem for the whole industry. It’s not something that’s specific to open source, but we’re certainly aware of it. Of course, part of the beauty of what we do is that we’re developing core technologies and, to a great degree, frankly, the technology that goes in the software itself is not always leading edge. More often, it’s how you actually apply the technology and the software that creates these advance services.

I think it’s a question more for the industry at large and it’s not going to depend so much on whether you’re using Asterisk or some other platform. Rather, it will be more the patent question as it relates more to business processes and algorithms and so on. Our license model allows us the flexibility that a lot of other open source projects don’t necessarily have, allowing us to take patented technologies, like U729, and make them available. So, we actually have the ability to bring patented technologies to open source as paid-for add-ons

RT: You mentioned the patent situation. What would you say are the the top threats to open source telecom, or just open source in general?

MS: I think a lot of the challenge of open source is you’ve got to keep the right balance in terms of being able to deliver products that customers want, being able to respect and work through developer community, and to balance the speed of your development with the requirements that customers are going to have for having a stable product. They’re all pretty standard challenges that the community has been facing for quite some time. So far, I think we’ve done a pretty decent job at it.

RT: Can you describe briefly the differences between Digium and Asterisk?

MS: Digium is a company behind Asterisk. We are the original creator of Asterisk, of course, but, unlike a lot of other companies, Asterisk really has a very, very significant community of people behind it even as a product that extends even beyond Digium. So we are the primary company, but there are a lot of other companies that are involved in Asterisk in one way or another.

There are also a lot of people who are trying to make their money in different ways. Some people are trying to make it in ways that are good for their community, and they’re doing very creative integrations and they’re participating in the open source process. And some people are sort of trying to use Asterisk basically as a tool to extend the old school business models. It will be interesting to see how it all pans out.

RT: A common question that people ask is, “How do open source companies plan to make any money?” What is your solution?

MS: Anytime you have value that you bring to the customer, there are two kinds of customers right. One kind is going to take your open source and they’re never going to want to pay you, no matter what. They’re always going to want find a way not to pay you anything right? Or at least they’ll try to limit their costs. Basically, you can’t select those customers.

The big opportunity is that, when it comes to other customers, especially bigger companies, that understand there is no such thing as a free lunch, that they need to pay someone to be able to have that sort of security blanket and to have the expertise, the knowledge, and the sort of whole product around it to make sure that they’ve got everything they need for their business.

RT: There are a few different groups that are looking to use Asterisk. How can your potential customers in each of those categories benefit from working with Asterisk or using Asterisk or reselling Asterisk?

MS: The value, to some degree, depends on your end customer, as far as whether they can directly use the fact that they’ve got access to source code. But then, even if it doesn’t directly fit, if an end customer doesn’t directly have the ability to modify source code, there’s still the value that he or his reseller may be able to acquire that capability or to purchase it from someone else.

In other words, the value for the end customer is really choice. To a great degree the value for the reseller and the service provider is sort of the same choice, in that they’ve gained a greater capability to differentiate their products going to the end customer.

RT: Do you want to go into a little more detail based on constituency?

MS: The plus for a reseller is that they have the ability to better differentiate their product and when they put a whole solution together for a customer. They don’t have to worry about that customer going to the very next reseller down the road and getting exactly the same thing, because, while all those components are potentially available, the reseller can put a lot more thought into what kind of service selection he’s providing.

There’s a lot more opportunity for the reseller to really define and take ownership in the product that he sells to the customer when it comes to open source. That’s their benefit.

For us, we get a lot of attention and we have the ability to compete with a series of competitors, like Cisco and Avaya (News - Alert) , that we would never be able to compete with as a traditional proprietary company. If we’re competing with Cisco, we don’t want to have to try to play catch-up, in terms of features or anything like that. We want to totally change the rules of which features are important, and open source not only lets us win the features game, it also means that we can provide value, like open source and the ability to extend code and the ability to have your features all included for the same low price, that Cisco simply would have a tremendous amount of trouble trying to provide.

RT: How do you see the companies that own the major market share in the PBX space competing against you?

MS: We haven’t seen a whole lot yet. The good news for them is that, if you look at companies like Avaya, a lot of their revenue is really services driven, and that’s something that does not go away just because you become open source. So, I think there still is a tremendous opportunity in the PBX space, despite the fact that people will say PBXs aren’t going to exist anymore. Whatever you want to call it, that sort of extended IP communications product… if you don’t want to call it a PBX, you don’t have to call it a PBX. But let’s face it, it’s basically a PBX with more features and applied to more technologies.

RT: Where do you see the communications market going in the next five to ten years?

MS: I don’t even know if I would try to guess for the next year. It’s something that’s highly in flux, and I think you have to be very willing to adapt to what the situation is. So I’m not going to claim to know what’s going to happen, I just want to do the best that I can to adapt to whatever is happening as quickly as possible. One thing that open source does for us is that, when you start looking at the open source tree, you start seeing where contributions are coming from.

Sometimes, that’s kind of an early sign of what people are going to be doing, where the new technologies are going to be going, because you’ll start seeing people developing. There are several reasons that people run Asteriskt, but one of them is that the technology that you want simply doesn’t exist and Asterisk the only game in town when it comes to being able to incrementally develop that technology in an easy way.

RT: Where do you want Asterisk and Digium to be in the next five to ten years?

MS: I want it to be fun, and that’s an extremely important part of this whole thing for me. At a personal level, I want to continue to build a company that people like to work at, where we can come to work and feel excited about the work we’re doing, knowing that we’re really making a difference in the world. It’s really amazing to think that these technologies that we’re putting together are not just making a lot of people in the industry richer — they’re actually making people’s lives richer in really significant ways.

Rich Tehrani is President and Editor in Chief at TMC.

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