Interview: Chris Lyman of Fonality

Fonality started in 2003 as a residential VoIP provider. As its business grew, the company went shopping for an enterprise PBX system -- and came back with a serious case of sticker shock.

Luckily, said Chris Lyman, Fonality's founder and CEO, the company discovered Asterisk -- along with a promising new business opportunity. The company's management, Lyman stated, decided to "make this open-source project into a product -- meaning stable, easy-to-use, and feature-rich. We changed the focus of our company in 2004. Now, two years and over 1,000 customers later, we have a heck of a business on our hands."

Lyman spoke with TechWeb about Asterisk's impact on the enterprise PBX market and about the challenges Fonality faced turning a relatively unproven, open-source application into a product capable of competing in one of the IT industry's most demanding, expensive, and traditionally highly proprietary market segments.

TechWeb: What do you think has been the appeal of Asterisk? Why has it done so well in the PBX market?

Lyman: In short, it's cheap. The PBX industry is a big one -- over $6 billion in the U.S. alone. Traditionally, this industry has made its living by gouging businesses on the purchase of a new phone system, typically costing between $1,000 and $5,000 per employee. Asterisk has changed the price dynamics of the PBX industry forever.TechWeb: Price is important, but it's not the only consideration, as we've witnessed over the years with Linux. When companies consider an open-source PBX solution, what other concerns does Fonality typically have to address in order to close the deal?

Lyman: Enterprises will deploy open-source software as long as there is a commercial company that has created a supported product around it. Asterisk is the open source project; Fonality is the commercial product. Think of Red Hat, which is a $5 billion company, as an analog -- they are built on top of Linux, which is inherently 100 percent free.

To be honest, there has not been a lot of resistance about the open-source component of our business. More than anything [the SMB market] wants to make sure that the product is affordable, feature-rich, and reliable. Then they want great technical support. If they feel that a company can clear these hurdles, they are ready to buy.

TechWeb: Technically, what does Fonality's solution do for Asterisk that Asterisk alone cannot provide its users already? Frankly, why does a customer even need your product?

Lyman: Asterisk is not a product; it is a project. It is meant for Linux hobbyists, not average business owners. Specifically, Fonality has done four things to turn Asterisk into a commercial product, known as PBXtra: We have stabilized the code, added numerous enterprise features, made it easy to deploy and manage via the Web, and finally, we have a built a top-notch, 24-hour technical support team.Let me put our value-add into geek-speak: The version of Asterisk that we use has 169,000 lines of code. Fonality has added 250,000 lines of code on top of that.

We have also added a long list of features that enterprises need: great reporting, zone paging and intercom, [Microsoft] Outlook integration, CRM integration, desktop call control for Windows, Mac and Linux systems, telecommuter support, presence management, branch office linking, and much more.

Also, consider the relationship between Linux and RedHat when deciphering the Asterisk and Fonality relationship. Linux is free, but Red Hat has a $5 billion valuation. Why? Every open source project needs parental guidance. Fonality has been that "parent" for the last two years.

TechWeb: So how closely does Fonality work with the developers of the Asterisk project, if at all?

Lyman: If the Asterisk community comes out with a bug patch that we think will help our customers, we will roll it into our next maintenance release. But to be honest, after 1,000 systems sold, our own internal engineers are the real contributors to our stability and feature- sets. I think that at this scale our engineering requirements have moved beyond the hobbyist level that most developers are able to contribute at.

TechWeb: Can you explain to us some of the challenges or interesting intricacies that Fonality encountered with Asterisk while working with its code base?Lyman: There have been lots of challenges -- mostly around scale. Asterisk tends to work great when you deploy it with a few phones to test it out. But, when companies roll it out to 25 employees or a 200-seat call center, then scale-related issues start popping up everywhere. We have encountered and solved numerous issues, such as memory leaks, internal data-locking problems, channel bugs, CDR [call detail reporting] oddities, lots and lots of crashes, timing problems... You name it. We have even had to fix stability issues inside the Linux kernel.

TechWeb: What do you have planned for your product in its future releases?

Lyman: We have a bunch of great new products and features aimed at the SMB market (10-300 seats):

Fonality has just released our newest version of a tool called HUD, which stands for "Heads Up Display." HUD functions as a desktop control panel; it supports Windows XP, Mac, and Linux systems. It includes a mouse-driven operator panel, drag-and-drop call control, call barging (a barge call connects automatically to the other party) and on-the-fly recording, a complete chat system using IRC (so that the enterprise can disable external instant messaging and still have employees be able to communicate), and more.

We have also been making strong moves into the contact center space with our recent PBXtra Call Center Edition, which has full call center reporting, CRM integration, and advanced queue systems. None of these are features found directly in Asterisk. They are external applications that we built to enhance Asterisk significantly. That should help answer your earlier question about our value over free Asterisk.TechWeb: In what areas does Asterisk obviously still fall short, compared with closed, proprietary solutions, despite Fonality's efforts? Has Fonality been actively helping to compensate for this?

Lyman: Asterisk is a relatively young platform compared to legacy PBX products on the market. For this reason you sometimes won't find as much horizontal or vertical feature maturity in certain areas. Fonality's engineers have spent the last two years aggressively maturing the product for just this reason. We've extended Asterisk far beyond its base feature set, added tons of stability code, and provide our customers with 24-hour support.

TechWeb: Do you think that the PBX market is going to be dominated by open-source solutions, as opposed to proprietary ones? Or a mix of the two?

Lyman: I think that Open Source has changed the PBX market forever, not necessarily ousting [proprietary solutions], but certainly elbowing its way into a seat at the table. Ultimately, I think you will see cost-driven, open companies like Fonality dominating the small-medium segment of this market, and you will continue, for a time, to see strong closed companies like Avaya and Cisco keeping a lock on the enterprise segment.

TechWeb: It certainly looks like a niche industry has been growing around Asterisk, much like the way businesses spawned to offer solutions based on Linux. In what ways are is the enterprise PBX market similar to the mainstream desktop and server software markets, and how do they differ?Lyman: Unlike most data products, a PBX has many moving parts. There is the server, the operating system, the PBX software, the VoIP, the PSTN interface, the phones, the phone's firmware, boot code, dial-plan code, etc., ad infinitum. Because a PBX requires such close interrelation between hardware, software, and network, the level of complexity becomes heinous. Hence, a "software only" model is challenging to pull off in this space. It was precisely this complexity that forced Fonality into a complete solution, where we sell the appliance, the software and the phones all together.

TechWeb: Your company Fonality got out of the VoIP business. Any interest in getting back into it someday -- perhaps via Asterisk somehow?

Lyman: The VoIP business, while carrying the allure and exit multiples of recurring revenue, is a commoditized, low-margin business. So, while it is tempting to "do it all," we realize that being a fine-dining restaurant with a few great things on the menu is better than a deli. In short, we want to focus on what we do best -- building an affordable feature-rich PBX -- and leave the service to the service folks.