Nearly a month has ticked by since Alianza decided to shake up the telecom world, scooping up Metaswitch assets from Microsoft’s tech treasure chest, and in this article I’d like to dig deeper into this acquisition and what it’s likely to mean for service providers who use Metaswitch in their voice networks today.
Who is Alianza?
Alianza is a private company, based in Utah, that was founded in 2009. They built their own cloud-based voice platform and originally used this to provide service directly to small businesses but then pivoted to focus on offering their cloud voice platform to greenfield service providers. Alianza has taken on significant external investment over the years and they currently have a team of about 350 people (pre-acquisition).
Much of their growth spurt can be credited to broadband service providers, weaving new fiber webs across the country. There have been a variety of government grant programs focused on fiber networks in recent years, so this space has seen a lot of growth, and Alianza has been successful offering a cloud-based voice platform that can easily be sold over-the-top to these fiber customers.
What do we know about their existing products and strategy?
Alianza’s core platform is cloud-based and managed by Alianza on Amazon Web Services (Ouch! Imagine the raised eyebrows in the conference room when the Microsoft Azure negotiators heard this…). They offer both residential and business services, and in 2020 Alianza acquired CounterPath (maker of the X-Lite and Bria soft-clients) for $25M to bolster their UC client expertise and product.
While companies like NetSapiens have traditionally had a strong focus on PBX / UCaaS functionality for businesses, Alianza has been less focused on UCaaS, and has marketed itself more as a residential replacement offering. Over the past few years they have been whispering sweet nothings to Metaswitch and Ribbon customers, suggesting that they should Ditch the Switch and elope into the cloud. Of course, this isn’t as easy as it sounds, particularly given the regulatory requirements on ILECs and the full set of features required of a Class 5 switch. While many service providers are curious about this idea, our research suggests not many have actually migrated.
For traditional service providers using Metaswitch products, it’s worth highlighting two elements that are core to Alianza’s DNA. They offer “a modern, cloud-based platform with a consumption model” to quote Dag Peak (their Chief Product Officer). In other words:
- Their vision has always been focused on moving voice into the cloud
- They have always had a subscription-based business model. In fact, one week before the announcement they published an article on FastCompany sharing why SaaS is the best business model for vendors and customers.
If you’re an existing Metaswitch customer, with on-premise equipment and a perpetual license, then obviously this is quite a contrast. They have promised to offer “choice and flexibility” in your network modernization journey – but it’s clear that they are envisioning a journey that ends in the cloud.
What do we know about the acquisition?
The acquisition was announced on December 11, 2024 and the transaction is expected to close within a couple of months. This deal encompasses all the traditional Metaswitch products for wireline service providers including CFS/UMG, application servers, the Perimeta SBC, plus a variety of products that were part of the Metaswitch portfolio but may not be so directly useful to Alianza (e.g. network protocols, the Qcall STIR/SHAKEN product, VoLTE etc.). We have also heard that the previously announced MaX UC end-of-life is now on hold.
No price has been announced, but we assume this is a substantial deal. We know that Microsoft acquired Metaswitch for more than $270M and while the value will undoubtedly have gone down, we do understand that there were multiple bidders and so the acquisition will likely have a big financial impact on Alianza.
[Side note: I keep seeing journalists quote the $270M figure as the price Microsoft paid for Metaswitch, but that’s absolutely not true. We know from Microsoft’s financial disclosures that they paid $270M in stock as “a portion” of the transaction price – so all we know is that the total was more than that.]
What does this mean for the product roadmap?
Alianza and Metaswitch both bring large product suites to the table, with significant overlap, yet their strategies and underlying technologies have distinct orientations. Alianza’s products are deeply rooted in cloud-native services, emphasizing flexibility, scalability, and integration with modern cloud architectures. On the other hand, Metaswitch has a strong presence in more traditional telecom environments with a mix of premise-based and virtualized solutions.
Given the significant product overlap, Alianza faces some really interesting challenges and decisions about the future.
- Product Evaluation and Selection: Alianza will need to conduct a thorough evaluation to determine which products from each lineup are more technically advanced, better received by the market, and more financially viable in the long run. It seems most likely that in the long-term they’ll keep their own voice platform, but I think in many areas the Metaswitch products are more advanced so there are some definite downsides to this approach. The effort involved in mixing-and-matching different products and integrating them together would be vast – so I assume the core product set will be Alianza’s existing products, with some Metaswitch products around the edges, but that’s purely speculation. This is a hugely important and complex task, and I don’t envy the Alianza product team!
- Investment Focus: Allocating resources effectively between maintaining and integrating Metaswitch’s products and advancing its own technology will be crucial. If we look at Microsoft’s product roadmap for Metaswitch over the past 4 years they’ve actually achieved very little in terms of new features, and it will be interesting to see if Alianza is able to cope with the overhead of the integration while also improving one or both product sets.
- Customer Migration Strategies: If Alianza decides to phase out certain Metaswitch products in favor of its own cloud-based solutions, it will need to manage customer migrations carefully. We’ve been involved in a lot of switch migrations over the years, and even with an experienced team it’s challenging and time-consuming – so it’s going to take a long time to migrate a significant number of Metaswitch customers over to the Alianza platform, even assuming service providers want to move.
One note of caution: Microsoft acquired Metaswitch because they believed that they could convince telcos to move voice into the cloud and grow their Azure business through significant telco workloads. Microsoft laid off hundreds of people and then sold Metaswitch because they no longer believed in that vision. Alianza seems to be betting big on succeeding where Microsoft didn’t quite stick the landing.
Organizational Integration
Merging two large organizations involves numerous challenges, from aligning corporate cultures and systems to integrating diverse technological platforms and operational strategies.
In this case, the Alianza team is around 350 people, and the Metaswitch team being acquired is around 300 people. I’ve also seen comments about hiring another 50 people to invest in Metaswitch sales, support, engineering and services. So we’re talking about two organizations of roughly equal size, spread across multiple continents, merging together.
When Microsoft acquired Metaswitch, the organization could basically continue to function, with some management changes at the top – but in this case there will be parallel teams across the entire organization and they’ll somehow all need to be merged together while also making huge decisions about the roadmap, and creating a shared culture. This will surely be a very challenging process, and it’s likely to take years to execute fully. Also, don’t forget that hundreds of Metaswitch people were laid off in June, so this team of 300 is a fraction of the original organization – so there are already significant holes in that team, which adds to the challenge.
What short-term impact should Metaswitch customers expect?
I genuinely don’t expect much to change in the short term. Alianza have signaled that they want to steady the ship before making any big changes, and they’re planning to go on a “listening tour” to get feedback from the customer base about what is needed.
That approach, combined with the inevitable focus on integrating the organizations, will hopefully result in a pretty stable situation for the next year. We also have the welcome news that MaX UC is no longer end-of-life, which again adds to the stability of the situation.
What about the long-term?
There’s a lot of uncertainty here. Alianza is a company focused on cloud-based voice offerings with a revenue model based on recurring monthly fees; whereas most Metaswitch customers purchased a perpetual license for an on-premise voice platform. The Alianza team has some big decisions to make in the coming months/years about what they offer to Metaswitch customers.
As someone who has worked with the Metaswitch product set for 20 years, I think it’s a really strong platform, and I very much hope that Alianza chooses to keep supporting it, and maybe even developing it into the future. However, from a business strategy point-of-view, I think it’s more likely that they focus on their existing cloud voice platform – it would be wasteful to invest in two competing product sets for an extended period of time.
Conclusion
Regardless of what Alianza decides to do, our plan at Award Consulting is pretty simple. We are focused on serving our clients. That’s the north star in all our decision making. We love helping you with technical projects.
- If you want to keep using your existing Metaswitch for the next decade, we’ll support your team to make the most of your investment.
- If you want to migrate to a cloud-platform like Alianza, or a hybrid on-premise and cloud solution, then we’ll happily help you with that migration.
- If you want to keep what you have, and deploy a second platform just for business services, then we can help you configure and launch that product.
We know that all our clients are different. You have different priorities, different values and different goals. – and that’s what makes our work together fun.
If you want to have a personal discussion about your future plans, feel free to reach out, and we’ll be happy to chat further.
