Tuesday, June 06, 2006

Back to the future, again

Om has noticed the Ericsson acquisition of Netwise in Sweden, and asks for views on whether it's a good deal. Not knowing the company to any extent (beyond the fact that it’s a significant player in Europe in contact management, call center solutions and enterprise VoIP) I’m not really in much position to say. The SEK 300m consideration is roughly two times historic sales and 13x historic EBITDA, so not extreme on the face of it, though I don’t immediately have any comparables to hand to definitively say.

What I do find really interesting is the historical perspective. It wasn’t so many years ago that Ericsson’s VoIP skunkworks in Norway had an amazing range of talent, which it "downsized" when financial distress set in. (I am also told that Ericsson flubbed an opportunity to acquire Opera at a knock-down price, but that is a story better told by those who were there - and very ironic, considering the connection of Opera with JAJAH, which is pretty much nowhere...) These people all went on to do some pretty impressive things – including Alan (later with GIPS, then Telio), Thomas Anglero (the original CEO of Free World Dialup - check him here describing what was basically the Skype business model two years before Skype emerged on the scene), the HotSip crew (I think they were part of Ericsson Sweden) and the other key GIPS staff who went on to form Camino Networks, now part of Skype. What sort of place would Ericsson occupy in the fabric of the VoIP world today if it had kept these people together and let them fly? We will never know, and to be honest, this deal looks to be aimed at something a lot less visionary. It does, however, raise for me the question of lost time/opportunity and the cost of playing catch-up.

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