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January 2008 | Volume 11/ Number 1
The VoIP Authority

SMB Open Source in 2008: A Virus of Goodness

A recent report from the 451 Group has found that “while many vendors consider small and medium-sized businesses (SMBs) to be a ‘hot market’ for adopting open source software, the SMB market opportunity for open source software vendors is actually limited.”

The report’s authors must not have posed their questions to the leading open source communications companies, Digium and Fonality, because in separate conversations with these two solutions providers, I found them to be positively bullish on the potential for open source in the SMB market as we plunge into 2008.

In several exchanges with Digium’s Bill Miller, VP of Product Management and Marketing at the company that started it all by offering the Asterisk software IP PBX, it became apparent the Miller and the Digium team are excited by the prospect of the coming year.

“Asterisk open source-based products and solutions continue to penetrate the SMB markets,” Miller told me. “SMB buying drivers and habits are different than larger enterprises for their phone system as they look at the phone system as a basic business tool. SMBs are attracted to open source solutions such as Asterisk and Asterisk-based solutions because of affordability, flexibility, and the emerging ease of use/installation/administration/control thanks to solutions such as Digium’s Switchvox SOHO and SMB advanced unified communications-based systems.”

Leveraging their recent acquisition of Switchvox, Digium is offering a Free Edition of Switchvox.

In an earlier interview, Miller told me how this latest offering includes the familiar telephony features of Switchvox SOHO edition and further cements Digium’s commitment to delivering full-featured telephony systems to enterprises and SMBs at low price points.

Miller spoke of the inherent flexibility and benefits of open source solutions for the SMB. “Today’s open source-based solutions are more advanced in features and the user interfaces have become easier and more powerful than traditional solutions. Mix in web-based services and web-based mashups and open source has become the most logical and effective choice for small businesses.”

Fonality’s CEO Chris Lyman is also looking forward to 2008. “My outlook is strong,” he told me. “The SMB shops with their wallet — meaning that ‘price’ is the critical component to their purchasing decision. Also, open source naturally lowers the cost of any product in two ways: first, it lowers the cost of software development – the community pitches in; second, it lowers the cost of the hardware because open source is designed to run on low-cost commodity PC hardware. These two elements, in conjunction, create compounded savings, which are passed along to the SMB.”

I asked Miller to share Digium’s plans to serve the SMB market in 2008. He replied, “Several elements of Digium’s business are focused on the heart of the SMB marketplace. Digium’s recent acquisition of Switchvox will be a primary focus of our initiatives for turnkey IP PBX solutions. With an advanced unified communications-based user interface powered by the world’s leading Asterisk open source software, Digium is growing its worldwide channels to deliver unmatched value to customers.”

“Digium’s partnership with 3Com for Asterisk and the 3Com Asterisk Appliance will also bring open source based solutions to the masses at a very affordable price for a powerful set of features through 3Com’s voice and data channels. A host of Digium’s Asterisk ecosystem partners also serve this market successfully with vertical market solutions and with advanced telephony applications. Many inroads have been achieved into new markets because of Digium’s growing ecosystem built around Asterisk. Digium will announce more details on SMB initiatives early in 2008,” he concluded.

Lyman’s response to the same question pointed out that Fonality too is not resting on its laurels, but will be active in the SMB market next year. “Open source is allowing a company like Fonality to compete with much larger companies like Oracle and Microsoft. We can use open source to join together seemingly disparate projects to create a Unified Communications platform for the SMB.”

“An example is that last month we bought an open source CRM company in Australia,” says Lyman. “We are in the process of combining that CRM product with our telephony product to offer the market a ‘Unified Agent’ telephony+CRM product next quarter. This product will have more features than the established players at a fraction of the cost. Plus, because it uses Open Standards, the SMB buyer can naturally weave it into their existing business process. Open Source makes Unified Communications an affordable reality for the SMB.”

Miller says open source will play a significant role in the SMB market in 2008. Reasons for this, says, Miller, include “Cost, features, powerful VoIP and converged applications and easy migration. For a small business owner, it’s simplicity to install, support, administer, and operate, all at affordable costs.”

Lyman agrees with the concept. “Yes, the role of open source will continue to be significant. Firstly, it will have heavy adoption because of its natural price advantage, as described above. Secondly, open source is based on open standards, which induces natural IT federation in the SMB back-office. So, open source organically germinates more open source. It’s like a virus of goodness.”

Greg Galitzine is TMC’s Editorial Director.

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