Sonus Networks growth to be driven by mobile Internet, acquisition
By Goh Thean Eu May 14, 2014
- Company growth to be partly driven by increasing adoption of mobile Internet
- Sees industry experiencing a shift in the way networking is delivered
SONUS Networks Inc, a supplier of Session Initiation Protocol-based )SIP) communications equipment, expects another growth year in 2014, partly backed by the increasing adoption of mobile Internet.
SIP is a signalling communications protocol usually used in communication involving voice and video calls over Internet Protocol (IP) networks.
Sonus Networks, which develops SIP communications networks for mobile operators and large multinationals, will also be banking on its recently completed acquisition of Performance Technologies Inc for growth.
Late last year, Sonus announced that it will acquire Performance Technologies for US$3.75 per share in cash, or about US$30 million.
According to Sonus Networks Asia Pacific vice president and general manager Pierre-Jean Chalon (pic), the acquisition will help Sonus accelerate its mobility strategy as it adds 'Diameter signalling' capabilities required in all-IP, IP Multimedia Subsystem (IMS) 4G/ LTE (Fourth Generation/ Long-Term Evolution) networks.
Diameter is an authentication, authorisation and accounting protocol for computer networks.
“This acquisition is aligned with Sonus Networks’ strategy to offer a portfolio of solutions that enables cloud-based, real-time, multimedia communications across wireless and wireline networks,” Chalon told Digital News Asia (DNA) in a recent interview.
Citing data by Exact Ventures, Chalon said that the Diameter market is rapidly expanding and projected to grow by an average of 42% a year between 2013 and 2017 to reach nearly US$1 billion.
“This would allow the company to expand its addressable market by 50% to nearly US$3 billion in 2017. To leverage the opportunities available, we will expand and diversify our portfolio with an integrated, virtualised Diameter and SIP-based solution,” he said.
Based on the company’s first quarter financial results, it appears that Sonus Networks is on track to achieve its growth aspirations.
During the quarter, it posted revenue of US$70.7 million, a 12% improvement over the US$63.3 million it registered in the first quarter of last year. However, it also registered a net loss of US$3.9 million – a significant improvement compared with the US$13.7 million net loss same period a year ago.
Chalon said that the networking industry is experiencing a shift in the way networking is being delivered.
“Networks are evolving towards cloud-based infrastructure, and migrating network elements to standard server hardware is an increasingly important component of efficient network build-out,” he said.
He added that some of the changes Sonus Networks is witnessing include:
- The growing role of virtualisation in accelerating cloud-based UC (unified communications) and rich communications services;
- Service providers’ business models evolving and mobile networks moving to LTE/ small cells;
- The BYOD (bring your own device) trend driving complexity and opportunity in the enterprise; and
- The emergence of the intelligent network layer.
“Well-placed at the intersection of programmable network and the application layer, Sonus Networks is embracing change by delivering innovation that aligns with the trends around the virtualisation of network functions and the cloud," Chalon claimed.
"We expect our two most important growth markets, Session Border Controller (SBC) and Diameter Signaling Controller (DSC), to show continued strong growth in 2014 and 2015,” he said.
For the full year, Sonus Networks has provided a guidance of US$300 million in revenue. From that amount, US$168 million or 56% of total revenue is expected to come from its SBC and DSC business.
The company recently launched the software based SBC 7000. Starting at 20,000 sessions, the SBC 7000 is designed to address scalability requirement for real-time, multimedia communications with the capability to license up to 150,000 sessions. This allows service providers to scale when their customers need it, Sonus Networks said.
Citing a report by Infonetics Research, Chalon said that for the past five years, session capacity and scalability have been consistently rated among the top requirements for service providers deploying SBCs.
“Racking and stacking smaller SBCs is not only inefficient, it slows time to revenue, creates additional operational expenses and wastes energy and real estate.
"Industry-leading density and capacity enables the SBC 7000 to grow with customers, thus reducing ongoing grooming and reprovisioning efforts as customers’ insatiable demand for capacity continues to expand,” he added.
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