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Monday, August 25, 2008

Voxeo: A Textbook Case Study for Voice 2.0 and Telecom Partnering

When fellow blogger Dan York joined Voxeo Corporation last October, very few of us in the IP-based communications blogging space had heard of this rapidly growing service provider. Over the next few months, sometimes with Dan's assistance, Voxeo has become a familiar name identified with a self-financed startup, a profitable business and a very large enterprise customer base focused on supporting voice applications through third party development activity. Revenue generation comes solely from their "cloud" hosting and VoIP/SIP communications server software business. Last week, in following up on a couple of press releases, I had the opportunity to interview Voxeo's CEO, Jonathan Taylor, and to learn much more about their success story.

Fundamentally Voxeo provides hosting environments for telephony applications, whether hosted on their in-house server "cloud" or on a customer's premise-based servers. Developers write applications to their Prophecy platform creating XML files and SIP connections that are understood by the Prophecy-enabled servers. The Prophecy 9 client used by developers to create and manage these applications is now available for Mac OS X and Linux in addition to their legacy availability for Windows. Originally Voxeo only offered a hosted service but two years ago, in response to customer demand, they also provided the capability to support customers' premise-based servers. Key elements of their program that have led to their success (and profitability) include:

  • No charge for downloading, and use of, their software
  • A focus on ease of development and deployment
  • Charging customers only when a service is launched and providing business value
  • Option to use either Voxeo's hosting "cloud" or customers' premise-based servers (usually based on the overall business case for supporting the application)
  • Licensing based on a "per port" or "per minute" business model, as appropriate
  • Providing Prophecy as a suite of components for SIP implementations
  • A platform based entirely on open standards
  • Including solutions for supporting conferencing, voice mail, call recording, speech recognition and auto-attendant requirements
  • A strong channel and developer focus recognizing the role of third party professional developers as their key to implementing their enterprise customers' services
  • Lowering their customer support requirements through innovation in their software.
Two recent press releases covered:
  • Launch of Prophecy 9, providing support for OS X and Linux clients to their platform as well as a new management console that not only reduces the complexity of development and associated deployment costs but also provides increased scalability.
  • Acquisition of Beijing, China-based Micromethod, not only complementing Voxeo's Prophecy suite of modules with their SIP-focused products but also providing a base for expanding Voxeo into serving the Asia-Pacific markets.

When I asked Jonathan about representative applications beyond the flexible yet effective IVR applications they can support, the list of several thousand applications includes:

  • Intelligent call routing (using their call control features)
  • Voice mashups providing access to, say, email or Google Calendar
  • Emergency notification services due to weather or business disruption
  • Anonymous calling services
  • Facilitating calling services for children's websites such as Nickelodeon.
Jonathan summed up their application support as providing a "services innovation platform" that operates "at the edge", bypassing any carrier dependence beyond acting as a pipeline for their services. A final key feature is their provision of a highly accurate billing infrastructure, critical to their ability to support both their own invoicing and receivables management as well as their customers'.

Last Wednesday Voxeo issued a third press release discussing some of their business success with revenue growth of 99.7% (no rounding allowed - who would believe 100%, they say), 18 successive profitable quarters and a very high customer retention rate. Not being a public company they do not need to release any detailed financials. But building and supporting a community of 31,000 developers probably says it all.

In conclusion, Voxeo's business represents a practical, successful and profitable implementation of Alec SaundersVoice 2.0 Manifesto, emphasizing that the value-add for voice conversations going forward lies in the applications.

Note 1: Tomorrow morning (August 26) Voxeo CEO Jonathan Taylor will be the guest for Alec Saunders' daily Squawkbox conference call. Dan York provides more details on how to participate. Update: If you missed the call, you can hear the recording posted on SaundersLog.com.

Note 2: Voxeo's hosted "cloud" also supports connectivity to Skype for inbound calls.

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