Multimedia and cloud communications software developer GENBAND has acquired Internet-based mobile communications service Fring, it was announced on Thursday.
No financial terms of the deal were officially disclosed. The deal was reportedly worth $50, according to what sources told Reuters, but the companies themselves are not commenting on that.
"As a private company, it is GENBAND's policy not disclose those details," Roy Timor-Rousso, CEO of Fring, told me in an interview.
As per the deal, Fring will remain as a business division in GENBAND's research and development center, though there "there are no immediate plans to integrate fring and GENBAND’s existing cloud-service or UC offerings," Joe McGarvey, Director of Strategic Marketing for GENBAND, told me.
"Fring and existing GENBAND properties are all IP service solutions, so interoperability and interworking them is not a challenge. However, GENBAND anticipates leveraging the intellectual property acquired with fring in numerous ways in the future, such as leveraging the smartphone battery usage efficiency of the fring client."
For Fring, this deal will allow the company to bring its services directly to carriers, which is the way the company has recently been transitioning.
"While the company was growing in terms of usage, there were several realities we had to deal with," he said.
One of those was the oversaturation of the market with competitors such as Skype, Viber, Line, WhatsApp and other.
"There is very little technical difference between all of these different companies," he said. "Plus, there was no real business model behind that. We were burning money every month, and not generating signifant revenues."
Carriers, on the other hand, have started to deal with new technology, including webrtc.
"We looked at vectors and the realities, and we realized that was our opportunity to pivot and to leverage our core capabilities."
That new strategy was a big motiviation for the selling of the company.
"We understood that by taking on this new strategy that we would need strategic partership with a player that had resources as well as the ability to scale," he said. "Pivoting from a consumer strategy to telecommunication, we knew that there would be a learning curve. By gaining a strategic partner in GENBAND, we are able to avoid that learning curve."
Fring is a relatively small company, with only 20 employees, said Timor-Rousso. "As talented and hardworking as they are, we needed the resources to make an impact worldwide."
Founded in 2006, the Israel-based Fring was one of the first companies to offer OTT, or Over-the-Top, messaging, as well as video services. The company raised $30 million from investors including Pitango, North Bridge and Veritas.
A $50 million return on a $30 million investment doesn't seem like very much, but Timor-Rousso told me that "our investors are very happy with the deal."
Despite the pivot toward the carrier end of the business, Fring will stll be offering its free, consumer-based app.
Founded in 1999, GENBAND supplies IP gateways, session border controllers and FMC security solutions to fixed and mobile networks around the globe. The company has raised $384 million, including a $343 million round in April.
As for what GENBAND gets from Fring, it will give the company access to the consumer space, which the company is attempting to enter with Fring as the gateway.
"While no one is suggesting that the current headliners of the telecommunication market are on the verge of becoming footnotes in the annals of the communications industry, it doesn’t take Nostradamus to see that more and more consumers are turning to the Web -- the so-called OTT or Over-the-Top community -- as a viable option for much of their real-time communications and messaging," David Walsh, CEO of GENBAND, wrote in a blog post on Thursday.
"With the writing on the wall inscribed in large font, it’s clear that network operators of all types need to respond in some manner to this OTT threat by incorporating a Web-based communications offering into their service portfolio."
"Fring is a great fit for GENBAND in that it is perfectly aligned with our strategic objective of arming our customers with whatever is required to assist them in maintaining their dominant position in the communications value chain," said McGarvey.
"It’s also a great fit in that it is extremely complementary to our existing solutions portfolio, as it provides an expansion of our Communications as a Service (CaaS) portfolio into the consumer realm."
Plus, Timor-Rousso told, there is another benefit for them.
"They are also getting a very talented, eager, fast moving team, with strong culture that can flourish the Genband name," he said."
VatorNews has reached out Pitango, North Bridge and Veritas, in order to get their perspectives on the acquisition. We will update if we hear more from them.
(Image source: http://www.fring.com)