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Digium points Asterisk toward enterprise VoIP

Digium, profitable since 2002, is pushing into the enterprise for deployments of its open source PBX. A $13.8 million cash infusion from a high-profile venture capitalist may give it the boost it needs.

Perched on a chair above the VoiceCon show floor, in a dimly lit loft just right for quiet chats, Digium's vice president of product management and marketing was surprised by the vantage point. "Wow, I never knew this place existed," Bill Miller said.

The position above the crowd pretty much represents where Digium is sitting today. The seven-year-old original maker and primary developer of open source PBX, Asterisk, has been profitable since 2002. And the company just received a whopping $13.8 million cash infusion from Matrix Partners, a high-profile venture capital firm that funded open source company JBoss (which was recently acquired by open source Red Hat).

Like most startups, Digium has humble beginnings. Founder and CEO Mark Spencer had launched a small company to provide Linux support services, and the story goes that he wrote Asterisk to save money on his phone system. "It wasn't like he had this grandiose opinion of open source," Miller said.

Spencer made all of Asterisk's technology available to the open source crowd. Today it boasts a community of developers 400 to 500 strong, and Asterisk receives about 1,000 downloads per day. "It's … unique," Miller said, "in the fact that we have such a following whose entire lives and businesses revolve around Asterisk."

In fact, echoing that phone system strategy, startup Switchvox, before it began making its own Switchvox PBX, changed from cell phones to a phone system based on Asterisk because it was a low-cost solution. The question was: What advantages does an open source PBX provide? The answer -- other than the usual one of lower cost of ownership -- was: New features make it into the product faster.

"We are able to leverage the open source community," said Joshua Stephens, president and CEO of Switchvox. "If someone wants to put in some crazy feature, we take it and make it presentable."

Digium has accrued 130 partners that have production-class solutions around Asterisk. For its part, Digium sells Asterisk Business Edition, the Digium-certified, professional-grade version of open source Asterisk, along with hardware and software products that enable telephony applications including legacy PBX, IVR, auto attendant, gateways, media servers and application servers.

The company also offers a full range of professional services, including consulting, technical support and custom software development services. In addition, Digium leverages VARs to help distribute its products.

Digium's challenge today is to move into the enterprise, where it hasn't yet done much damage. SIPBox, a Digium VAR located in Tinley Park, Ill., primarily counts education and municipalities among its customers.

"I don't have anything at the enterprise level right now," said Chad Agate, co-founder and CEO of SIPBox, a provider of end-to-end telephony solutions for companies with 200-plus users. "Asterisk is a good option for SMBs [small and midsized business] or branch offices."

One of Digium's most recent customer wins was the University of Pennsylvania, which is deploying a campus-wide unified messaging system using Asterisk.

Digium has its eye on the enterprise prize, however. According to Miller, Matrix's stake will be used for developing applications and enhancements to Asterisk to make it more appealing to the enterprise audience.

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"We took [the investment] on because we want to take the company to the next level and use that cash to fuel our growth and to scale into the enterprise," Miller said. "It will create more of an opportunity for enterprise-class applications like email."

To that extent, Digium faces a challenge among picky enterprise shoppers who want to shop by brand and also match products to technology skills within the company, according to Yankee Group's Vanessa Alvarez.

"Only the most tech-savvy companies can do open source, otherwise the cost structure is too high," Alvarez said. "But the question is: Has Digium achieved enough customer base so that if you're not a brand shopper, but you are the type to do due diligence, should you also consider Asterisk?"

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