May 1, 2002

4 Min Read

By Khali Henderson

Posted: 05/2002

Appliance Maker Offers Alternative to Outsourcing, Proprietary Hardware

Khali Henderson

DAVID FRIEND WANTS to redefine how conferencing solutions are deployed. The 20-year telecom entrepreneur hopes to do that with his latest venture – Sonexis Inc. Before co-founding Sonexis in 1999, Friend was chairman and co-founder of FaxNet Corp., a supplier of messaging services to the telecom industry, which was sold to Critical Path Inc. for $240 million.

The new venture has raised approximately $75 million through three rounds of funding, led by Zero Stage Capital, Venrock Associates and UBS Capital Americas. Formed in 1999, Sonexis started out as an IP platform provider offering outsourced services, such as conferencing, to wholesale customers under the name eYak. A little more than a year ago, the company flipped its model to focus on the development of what it calls “conferencing appliances” in contrast to the predominant modes of conferencing deployment — service provider contracts and proprietary hardware.

“Right now what’s going on is a service business,” says Friend, citing the examples of AT&T Corp. for audio and WebEx for webconferencing. “The usual trend is for services to come in house.”

Friend, chairman and CEO, and his colleagues at Sonexis are anticipating this migration and seeking to speed it up with the introduction of its first two products — audioCollaborator and netCollaborator, which are expected to be commercially available in May and June, respectively.

audioCollaborator is an on-demand audioconferencing solution featuring web and IVR controls, security levels and web administration. NetCollaborator delivers features for online meetings, including scheduling, e-mail invitations, document sharing,
whiteboarding, co-browsing, poling and more in a single window. The company expects to integrate the appliances duiring the second half of the year.

The appliances are small and flat — the size of a 1U server — and sit behind the firewall. They plug into existing PSTN or IP/LAN telephony systems as well as IP or traditional PBXs. The appliances can be installed in minutes and require no specialized IT administration skills. All users need are phone lines, Ethernet and power.

“It’s not unlike the migration of Centrex to PBX,” he says. “From an economic standpoint it makes sense except for the smaller users.”

Chris Shipley, producer of DEMO 2002, IDG’s invitation-only event for technology innovators, says “Sonexis puts teleconferencing in a box and makes it available to any business at a fraction of the cost of competing solutions. The simplex Sonexis appliances offer a 5:1 price reduction over companies systems, providing payback in well under six months.”

AudioCollaborator is available in PSTN and IP models. For PSTN, suggested retail pricing for a 24-port unit is $28,800; a 48-port unit is $48,000; and a 96-port unit is $81,500. For IP, a 30-connection model is available for the suggested retail price of $25,000 with available 10-, 50- and 90-connection upgrade packs. NetCollaborator comes in a 30-connection model for the suggested retail price of $25,950 with available

10-, 50-, 100- and 120-connection upgrade packs.

Besides cost savings over subscription-based services and proprietary hardware, security is another driver toward conferencing CPE, Friend says, noting that companies worry about loading financial statements over the Internet and prefer to have their data behind the firewall.

Sonexis is targeting the small- and medium-sized enterprise market, which represents 90 percent of the PBX unit sales, according to The Yankee Group.

Sonexis estimates that 75 percent of conferencing service revenues are derived from this segment, which largely has been ignored by equipment vendors targeting service providers and large enterprises.

The Collaborator products are based on Sonexis’ patent-pending SoftTelephony architecture that allows general purpose microprocessors to handle call and media processing. Al Balasco, Sonexis’ director of product marketing and market development, says the move from proprietary digital signal processors to general-purpose Intel processors has enabled Sonexis to provide what he calls “software with a power supply.”

Balasco says Sonexis has a small sales organization to support major accounts but is investing in a channel strategy targeting interconnects and data networking resellers. Sonexis’ has been working with PBX makers to ensure compatibility with their systems and to sell through their channels. He says the company sees a greater opportunity with interconnects that are feeling the pain of the economic downturn more strongly than the data networking resellers who’s services are less

“In the interconnect space, the traditional PBX churn is five to seven years. With this economy, it’s more like seven to nine,” says Balasco. “They are looking for value-added capabilities to increase the size of the order.”

Sonexis also is working with consulting firms that recommend deployment to ensure they have the tools to specify its systems.



Critical Path Inc.

Sonexis Inc.

Venrock Associates

UBS Capital Americas

The Yankee Group

Zero Stage Capital


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