Vertical Networks was one of the early pioneers of enterprise voice over IP. Their CTO, Scott Pickett, was a regular on VoiceCon panels in the late '90s/early 2000s, and they had some of the early case studies among recognizable corporate adopters, such as CVS pharmacies. But Vertical seemed lose focus as the market matured, and though it would still turn up in the sea of vendors in the low single-digits of market share for enterprise VOIP, they definitely fell off of most people's radar screens.
But with some key acquisitions now integrated into the company and a new approach to the market, Vertical is trying to make a comeback. Recently, I had a chance to talk with Peter Bailey, president and COO of Vertical, to learn about the company's strategy for re-introducing itself to the market and battling back into contention in a field that's at least as crowded as it was in the early days.
Bailey has a history in investment banking, but he's been a key executive in technology and new media companies, and was key in putting together the "new" Vertical, which came together in 2004 with the merger of Vertical Networks, Artisoft, Comdial Corp., and Vodavi Technologies.
In our conversation, Peter Bailey described the early Vertical products, which were built on some 200 patents, as "bombproof," but "very expensive" and said Vertical "failed on the channel execution." By 2004, he said, Vertical may not have been in bankruptcy, "but was sort of heading that way." So the current ownership came in, combined Artisoft with Vertical, then acquired Comdial in 2005 and Vodavi in 2006. Artisoft provided high-end softswitch technology, while Comdial and Vodavi brought in strong channel relationships and customer base.
"It took us a couple years longer to execute on the plan than we thought," Bailey told me. By 2008, they'd taken the combined company private again and felt like they had the right strategy in place. Of course, that was just about the time the world economy crashed, leaving Vertical to struggle through the same market challenges that everyone else was facing.
So now, two years later, Vertical is ready to make a new splash. Here's how they plan to do it.
The strategy is built around Vertical's core product, Wave IP, a SIP PBX with integrated applications server. Wave IP is tightly integrated to Microsoft; it runs on a Windows OS, with .NET-based UC client and Exchange integration.
Available applications include conferencing, contact center, desktop client with call rules and personalized routing, call recording, SIP services, reporting, voice gateway and fax. Partners will be able to build additional apps and integrations via APIs.
Leveraging Artisoft's strengths in call routing/contact center applications, the Wave IP product has applications geared toward delivering contact center-like screen pops/database-driven call handling rules. Vertical is also releasing its own Wave IP desktop telephones.
Vertical's strategy is to make all of these applications available with the Wave IP PBX in one bundled license. "Our play here is from an app and content perspective: Put a ton of applications and contet into that base user license," so that the customer gets the functionality without more cost.
"We're trying to drive as much value into that base user license as we can," Bailey went on. "We think every user should be using UC, every business should be using contact center applications." Going forward, Vertical will continue to "get more and more aggressive about putting content into that base license," which he called a "very very big differentiator."
Most of Vertical's competitors can't do these things without adding infrastructure and licenses that drive price up, he added. Vertical is targeting a MSRP of $500 a user; he claimed competitors' solutions cost almost 2X that for the same functionality.
Vertical's re-emergence comes at a time when the competing players are bigger and more aggressive than ever, and are getting more creative with their own pricing and licensing schemes. Still, the company claims some big-name customers, including CVS, which has stayed with Vertical. Other customers using Vertical products include Pizza Hut, Toys R Us, Wells Fargo, the U.S. Department of Treasury and the City of Chicago, Aramark, and several K-12 school districts.
