BroadSoft Acquires Sylantro

After just posting that I'm not a news guy, you might be surprised to see this one!

Well, it's a hot story and has been talked about in the blogs few a while now. I've followed this space and these companies since 2001, so it's familiar territory. I'm not here with the breaking news, but the story is simple - today, BroadSoft finally announced its acquisition of arch-rival Sylantro Systems.

For sake of expediency, I'll steer you to Andy Abramson's post from this morning, which sums things up nicely. Since then, Telephony has come out with a more detailed summation, and they were nice enough cite me a few times.

Way back when, this used to be a 4 horse race, with NetCentrex and VocalData being the other two players of note. VocalData was always the smallest, and after some setbacks and twists, they ended up in BroadSoft's stable in August. NetCentrex became part of Comverse in 2006, and while never much of a player in North America, some metrics show them to be the overall global market leader, largely on the strength of their residential VoIP deployments in Europe.

For North America, that just leaves two standing, and now they're one. I was fortunate enough to attend this year's BroadSoft Connections event, so I can tell you first hand that BroadSoft has a good thing going. It was also clear at that time that Sylantro was becoming a weak #2, and the signs were there that something had to give.

I really could never see the logic of acquiring Sylantro, but it's a classic consolidation move, and I suspect it didn't cost them a cent. On that basis, I guess, it's hard not to do this, especially since the last thing you want is to see their assets turn up elsewhere. Early on, Sylantro had the edge on BroadSoft for Tier 1 relationships - AT&T, IBM, Microsoft, etc., but that's not so much the case any more.

Taking them out of the market under these conditions ensures market dominance for BroadSoft, so kudos to Mike Tessler and his team for getting this done. We're going into a tough market, but BroadSoft's Web 2.0 focus is going to help service providers get through these times, and their story becomes that much stronger when you hold almost all the cards.

Just like Mitel and Inter-Tel last year, the next step is integration, and I'm sure they've got this pretty well thought out, especially after a modest staff layoff recently. As with Avaya going private, these things are much easier to do than being a public company, and eventually, markets will improve, and the long-awaited BroadSoft IPO should be the payoff many loyal employees have been working towards.

Looking ahead, I see this setting the stage for healthy competition with another strong company I'm a big fan of - MetaSwitch. It's too early to tell how that will play out, but that's going to be a good story to watch in 2009.