And then there were three…

With BroadSoft's in-progress acquisition of Sylantro, there are three dominant players in the next-generation network (NGN) space. I am reminded of what a wise Bellhead once told me - "A monopoly is a good thing if you can get it."  

What's next? Let me relate a conversation I had today on how the NGN space is shaping up.

BroadSoft dominates the VoIP applications services market. Assuming there's no last minute lawyer derailment of the impending Sylantro deal, BroadSoft will have customers in 9 out of the top 10, and 20 out of 25 of the top service provider markets. Short-term, BroadSoft will have the task of supporting, integrating and/or migrating Sylantro customers - we haven't had heard any leaks yet on how BroadSoft plans to handle that task.

Over in the SBC space, there's Acme Packet with over 50 percent of market share, and there's everyone else. Acme has solid performance and a healthy track record, and it's publicly traded, so there is transparency into current and future performance. It's also carefully focused on expanding from the service provider arena into wireless and larger enterprises. No worries there.

Sonus Networks has a good chunk of the switching market. Currently, it is undergoing a changing of the guard as CEO Richard Nottenburg comes in to transform and restructure the company. There's also the pesky matter of the public feud with Legatum Capital, Sonus' largest investor - serious bad blood, it appears.

Regardless, the VoIP applications service, SBC, and switch segments now belong to three dominant players. Each of the individual players, while large, is nowhere near the size of the crumbling legacy monsters of old.  

Do they stay independent? Not likely if the assertion of carriers wanting to deal with bigger companies holds.

Get bought out? Maybe in a year or two, after the global economy stabilizes. But then the question is who would buy them? Cisco? Juniper? Maybe a more stabilized Alcatel-Lucent? Just don't know.

Or do the three unite, forming the NGN powerhouse of the future? I think this is an outside possibility given the management and business case that would have to be made. Acme and Sonus might have an easier time of joining together, since both are publicly held and both reside in Boston - but we don't have any rumors that either would consider such a move.

- Doug [1]