8x8 2001 Annual Report Download - page 14

Download and view the complete annual report

Please find page 14 of the 2001 8x8 annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 93

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93

HOSTED IPBX SOLUTIONS
CUSTOMERS --
During fiscal 2000, the Company announced its iPBX server software product and a limited external deployment of its hosted
iPBX services through Dialink, a competitive local exchange carrier (CLEC) based in the San Francisco Bay Area. In addition to the Dialink
customer trial, the Company is in laboratory trial testing with several other service providers.
In fiscal 2001, the Company decided that the long trials and time-to-
market constraints of the CLEC and service provider market, as well as the
decreasing availability of cash to certain CLECs in the North American market, required that the Company provide a hosted business
communication service offering to PBX resellers in addition to the existing service provider offering. In March 2001, the Company formed
Centile to conduct the operations of the hosted iPBX business and announced a reseller agreement with Millennia Telecom. Centile is still
actively marketing the product to service providers in Europe. In April 2001 Centile announced a licensing agreement with Telecom Partners
and in May 2001 announced a licensing agreement with Tele1 Europe Holding AB.
SALES AND MARKETING -- Centile markets the hosted iPBX software product through a direct sales force. In addition, Centile has
established a relationship with Exodus Communications, a hosted service provider partner, and intends to establish relationships with PBX and
other system integrators that can serve as resellers. The sales force operates primarily from the Company's headquarters in Santa Clara,
California.
COMPETITION -- Centile currently competes with suppliers of traditional PBXs, Centrex equipment, and newer generation IP-based PBX or
Centrex solutions that seek to sell such products to telecommunication service providers or to the small and medium-size enterprise (SME)
marketplace. The main competition includes Avaya, Cisco, Commworks Corporation, Lucent, Mitel, Nortel Networks, Sylantro Systems,
VocalData, Inc., VocalTec Communications, and several other providers of traditional and newer generation IP-based solutions, such as
Broadsoft, Inc. (which is being acquired by Unisphere Networks), IP Centrex, Shoreline Communications, Sphere Communications, Tundo
Corporation and Vertical Networks.
As an IP-based solution, the hosted iPBX product competes by leveraging the innate efficiencies of IP architectures and combining those
efficiencies with certain required features from competitive legacy products. The principal competitive factors in the market for hosted iPBX
solutions include product feature parity, interface design, product reliability, time-to-
market, adherence to standards, price, functionality, and IP
network delivery/design. The Company believes that the market for iPBX solutions is currently in the initial adoption phase and that growth of
the market will be driven primarily by three factors:
the ability of iPBX products to meet the advanced feature requirements of end customers; the lower costs of IP-based solutions; and a general
trend toward the replacement of circuit-switched networks with packet-switched ones.
SERVICE CREATION SOFTWARE
CUSTOMERS -- In May 2001, the Company announced the first customer license of its SCE to Lucent. The SCE will be used in Lucent's
data networks within Lucent's PacketIN intelligent network service control point. The Company has established a royalty-bearing licensing
agreement with Lucent whereby Lucent will sell the SCE under Lucent's eSAE branding. Under a maintenance clause in the agreement, the
Company may also provide support, training, and professional services directly to Lucent's customers, at Lucent's option.
SALES AND MARKETING --
As a result of the cessation of the Company's Canadian operations in the fourth quarter of fiscal 2001, sales and
marketing efforts related to the SCE and related products, including UM, have been drastically reduced. The Company does not currently have
any in-house or third party sales efforts dedicated to marketing its SCE and related products to customers other than Lucent nor does the
Company presently have plans to increase such efforts. Sales and marketing activities in the foreseeable future may include demonstrating the
SCE product to other potential OEM customers if opportunities arise and providing sales literature, demonstration platforms, and pre-sales
support in pursuing such opportunities.
10