- Metaswitch is one of the OG softswitch vendors from the early 2000s
- Softswitches started the shift to software-defined networking and virtualization
- Microsoft bought Metaswitch in 2020 for at least $270 million in stock
Remember Metaswitch Networks? One of the OG softswitch vendors from the early 2000s? Microsoft bought them in 2020 around the time that they also bought Affirmed Networks hoping to cash in on the “monetizing 5G” mission. Then poof! They were gone. Eaten up by the Microsoft blob. Now, Alianza is buying the Metaswitch biz from Microsoft for an undisclosed sum.
My colleague Diana Goovaerts covered the nitty gritty details of the deal in her own exclusive but here’s what makes this deal super exciting to me personally.
One: While Alianza didn’t disclose the value of the deal, Beutler told us the deal includes all of Metaswitch’s legacy products, as well as the new ones developed at Microsoft except for the Nexus portfolio. The legacy products had been languishing at Microsoft and Beulter nerded out with us about the significance of the tech.
“From one to 10, I'm like an 11 on how excited I am about this. We’ve actually been working on this for a couple years,” he said. “We made an unsolicited inbound to Microsoft a couple years ago to try to make this happen. Because we just, we just had this, like, conviction that Microsoft was not fully utilizing the Metaswitch software in a way that benefits service providers.”
Two: Alianza sought outside funding to make the deal happen according to Beutler. He could not disclose the investors right now but said we’d find out when the deal closes. So it’s not just us that thinks this is a big deal — Alianza had backers that thought the same thing.
Three: Like Beutler said, the “market opportunity still sits on service providers networks today.” They just have to see the forest through the trees to make it work. Microsoft tried but got distracted by the artificial intelligence opportunity and then Metaswitch tech languished.
Four: Alianza gets 300 Metaswitch people — most of which are in product and software development. This is something service providers notoriously suck at.
Said Beutler, “Service providers are really good at building network. They are not really great at software development and delivering world-class services over the top of that network. And we think a world is coming where service providers, yes, their core competency will still be a network, but what will set them apart and differentiate is how they engage a partner ecosystem to deliver cloud services on top of that network and monetize it.”
Five – The BIG reason: Service providers keep investing in their networks and they have to figure out a way to monetize that investment. The OTTs are there but they don’t own the market the way the CSPs do — and CSPs certainly don’t own innovation and product development.
Like Beutler said, “They've essentially invested $3.6 trillion to maintain the status quo. And I think executives, board members, investors, are looking at saying, ‘Hey, when are service providers going to stand up and reclaim their right to win services on top of their network?’”
Getting meta about Metaswitch
But let’s back up for a moment – and cue the nostalgic music.
Depending on when you entered the industry, you may or may not remember Metaswitch. In case you had forgotten (probably), the company was one of the original vendors of this new technology called the softswitch, which started the revolution that eventually led to software-defined networks and network function virtualization — and replaced Class 5 switches.
In 2000, Metaswitch’s softswitch was considered cutting-edge technology and the folks that ran the company were legit Silicon Valley hot shots with a sprinkle of super cool. In the heyday, the company used to take their employees on ski trips in the French Alps.
Meanwhile, fledgling telecom reporters groveled for their exclusives and tidbits of tech news from our sterile, gray-walled cubicles. No ski trips for us. We had to settle for that fake ski “mountain” built from an abandoned quarry nearby on our own dime and time.
Twenty years later, Microsoft bought Metaswitch for at least $270 million in stock. The official blog from Microsoft stated the acquisition would help “deliver the promises of 5G” to operators. It was a grand plan followed by nary a peep about Metaswitch until last year at Mobile World Congress when Microsoft announced a product called Azure Operator Call Protection, which is based on Metaswitch technology.
Linda Hardesty here at Fierce Network described this new tech as “a service that uses real-time artificial intelligence (AI) to analyze voice calls and alert people if the call might be a scam.”
This was seriously depressing news for mega Metaswitch fans. All that Metaswitch innovation and product development ended up being a product that could analyze voice calls to detect if they are a scam? (Insert multiple ???? and a few !!!! here.)
It didn’t seem like “delivering on the promise of 5G.”
Alianza and the telco pivot
Imagine our excitement a few weeks back when we heard rumblings that Microsoft was going to sell Metaswitch. We put our ears to the ground and tried to find out more but alas, no one would fess up until we got the heads up from Alianza.
You may have heard a little about Alianza. Originally a cloud VoIP provider out of Utah, last year, they switched things up moved more into developing solutions to help communications service providers (CSPs) move to their businesses to the cloud.
With the Metaswitch buy, the goal is to help those CSPs profit off of the 800 million business fixed voice lines they still own. Yes, that’s 800 million lines.
“Service providers still own the enterprise, own the market, which provides an amazing opportunity for them to keep and grow their customers if they have modern products to power those solutions,” Alianza CEO Brian Beulter told Fierce Network. “At its core, this acquisition is 100% around providing service providers with the path to grow, to win, to innovate, and really do something that they all need to do, which is monetize those massive network investments they've made over the last decade”
With Metaswitch in the mix, Alianza says it will now have 1,000 telco customers using its voice and communications software services, including 19 of the top 20 global telecoms. Now, we wait to see if they can succeed in a tough market – and where Microsoft failed.
Op-eds from industry experts, analysts or our editorial staff are opinion pieces that do not represent the opinions of Fierce Network.