This isn't a huge acquisition, dollar-wise, but it is a noteworthy example of how competition is heating up in the enterprise session border controller (E-SBC) market: Sonus Networks announced today that it is acquiring NET for $42 million in cash.
And while the SBC element is clearly the key part of the deal, there may be almost as big a benefit to Sonus in the opportunity it offers them to leverage NET's strong play as a gateway vendor for Microsoft Lync deployments.
The deal looks like a very good fit. In terms of the product portfolio, NET helps Sonus on the lower end of the SBC market, a needed addition for a company that, like its SBC rival Acme Packet, is attacking the enterprise market from above, i.e., the carrier space. Sonus released this chart to show the product line fit:
Sonus quantified the opportunity, saying that the lower-end (sub-1,800 sessions) market represents 56% of the addressable SBC market--a share previously inaccessible to Sonus.
Note also on this chart the Microsoft Lync component of NET's offerings; Lync is an extremely important topic for enterprises today as they plan their migrations to Unified Communications, and NET had a strong partnership with Microsoft for providing Lync gateways. (No Jitter last year carried an extensive Q&A featuring Microsoft and NET representatives on some detailed issues around Lync deployment.)
Given Lync's rapid growth in the enterprise, having a Lync element to your story is likely to be table stakes for vendors at the edge of the network who sell products like survivable telephony gateways and SBCs. Acme Packet announced Lync session support at Enterprise Connect last March.
NET reported total revenues of $50.2 million for its fiscal 2012, which ended March 31 of this year; $35 million of that came from enterprises and government accounts. The company has strong customer relationships in the government sector, but not surprisingly has seen that portion of its business decline as government spending falls. At the same time, NET's enterprise revenues grew from $15.64 million in fiscal 2011 to $22.4 million in fiscal 2012.
Sonus expects the deal to close in 3Q2012.
