RADVision (RVSN) recently signed a wide-ranging cooperation agreement with Korean company Samsung. At the SuperCOMM 2000 exhibition in Atlanta in the US, RADVision presented a series of new products in cooperation with Vsys, HP and congruency. HP's Open Call MultiServe Controller plan is based on RADVision's gatekeeper core technology, and is designated for the development and deployment of next generation services on global voice and data networks.
Vsys deals with the supply of software, specializing in services for mainframe computers building next generation services and revenue sources. The company's soft-switch software enables voice, data and image to be transmitted from the Internet to the public telephone system, and is also integrated with RADVision products.
Congruency supplies communications applications services. The company developed a next-generation IP for voice transmission for traditional and advanced communications applications on broadband data networks. congruency's i.Picasso business telephone is equipped with RADVision's H.323 technology.
In view of all this, RADVision, founded as a start-up within the RAD group, has stepped up a rung in the ladder. In the lineup of Israeli companies presenting at the world's largest communications exhibitions, the company's prominence equals that of ECI Telecom, Comverse, Orckit, and recently, TTI Telecom too.
RADVision founder and general manager Amos (Ami) Amir has already joined the elite club of Israeli high tech managers. People listen to Amir when he speaks about the telecom world in general and Israeli telecom in particular. "I was in high tech before the phrase was coined. Nowadays, you have to run faster just to stay in place."
"Globes": Give me an up-to-date definition of RADVision.
Amir: "We arrange the building blocks required to transmit voice and video over IP. We have software products, and other software-hardware products. We currently have 3,000 customers in the communications market. There isn't a major global communications company that isn't our customer."
Why is that?
"We sell the technology everyone needs for VoIP (voice over Internet protocol). Like data banks and Oracle, anyone working with VoIP uses us. We have an 80% market share. I feel that I'm the leader, nobody else comes anywhere near us. We won the war in this field against IBM and Lucent."
What sort of software do you sell?
"We have two types of software. Gatekeeper is for Internet call management, and the other is a protocol called H.323, which everybody needs and has been accepted as the world standard.
"There's a third software needed for managing gateways, named MGCP, which constitutes about 30-35% of our business. Its biggest advantage is that a large audience is exposed to our other products."
What are they?
"Gateways or bridges for telephone or video conference calls over IP networks. We're unique in that we're practically the only ones supporting both voice and video, and here too, we're the global leader. I always believed that in order to succeed, a company has to be the leader, even in a small market. The smart thing is to choose something small which will grow. The video market we targeted did not grow for many years. Growth was insignificant. Only in the past year has it become a huge hit."
Are you going into cellular like everyone else?
"Not at the moment. We're standing by. We're entering another field with Korean company Samsung, which is very prominent in the wireless and ADSL field. Samsung wants to provide solutions for private exchanges, based on ADSL or Wireless LAN, or a combination of both. We're currently at the stage of defining the joint system. We have many capabilities in the area, and they have tremendous marketing capability."
How was contact made?
"They visited us for the first time in February and we signed an MOU, accompanied by a $17 million investment in us, valued according to an issue which took place later. The products will not be released on the market before the end of 2000."
Intel and ECI Telecom are also invested in RADVision, but were not mentioned during the issue.
"That's correct. Each has 3-3.5% and is not a party at interest. At the time, they invested $1 million, which is now worth $25-30 million. Cooperation between us hasn't yet been worked out."
Siemens also invested prior to the offering.
"They discovered that so many of their divisions were using us that they were dependent on us technologically. They wanted to influence the technological direction of the company. Siemens wanted to invest 20%, but we approved only 10%. They currently have 9.5% of RADVision, and a director on the board."
Creating a standard is no simple matter.
"We have an amazing number of customers. I've seen how the theory works. Our largest customer was Netscape. Then the great war with Microsoft started, and it had an interest in other companies using the same software. They were our best salesmen. We have almost no salesmen. We have three in the US and two or three in Europe."
So who is selling?
"Sales arrive of their own accord. Samsung decided it wanted to enter VoIP, looked for someone to work with, and then came to us. I did not seek them out. I'm also very involved in standards committees, in organizations defining future trends, out of all proportion to the company's size."
Do you have an advantage as an Israeli company?
"Israeli companies have an advantage. There's no local market, so we didn't have to build products for a local market. We began with US and European markets."
You hardly do any selling. What about marketing?
"Yes. We spend more than 8% of our turnover on marketing. This includes public relations, exhibitions, lectures and conventions. We do much more than other Israeli companies, most of which invest a great deal in R&D and very little in sales. Don't get me wrong, we have over 100 employees in R&D, out of a total of 210. But when it comes to marketing, I don't invest in manpower, I invest in positioning the company."
Do all of the 210 employees have options?
"A significant majority has options - over 70%."
What can you say about the company's future strategy?
"It is based on the assumption that the market will be ready for data and video transmission on IP networks. I'm referring to organizations, not major telephone companies. Organizations are currently investing large amounts in high-capacity data communication infrastructure and in telephony infrastructure, so it's worth their while converting all their communications to IP. Therefore, our focus is on positioning products for the organization, meaning conversion of switch networks of private exchanges to IP data networks.
"In the longer term, I'm preparing the infrastructure and building blocks for products to enable telephone companies to deploy large VoIP networks. It will take a year or two. We're investing now in what we anticipate will provide significant revenues, possibly not even in 2001. We're cooperating closely with HP on this. It's a foothold in the telephone company market."
Finally, what challenges do you face?
"We must maintain our company's dynamism and energy, as we're still in start-up mode, even after growing to $800 million, with $90 million in cash assets, and 200 employees from 80. This involves some significant growing pains."
Published by Israel's Business Arena on 27 June, 2000