" Xeround Systems is the most successful company we have here now, it's market is just infinite," said one of the investors in the company, with whom we spoke while preparing this report. The investor is of course an interested party, but he is not the only one who identifies extraordinary abilities at Xeround; "Red Herring" magazine chose the company as one of the top 100 private technology companies in Europe for 2006, when the company was only a little more than a year old.
Xeround provides a solution for a problem that comes to light as part of the move from traditional telephone systems to advanced systems based on the IP protocol. With the increasing use of IP-based systems among the telecom companies, the data which accompany the actual dialing become more and more important. In fact, in order to provide customers with expanded video, telephony and data services (triple play) on telecommunications networks, the companies need to administer an extensive database of all the users and their use of services in real time. Xeround answers this requirement of the telecom companies for a real time database for the management of customer data.
The company provides a flexible database which will cope unchanged with the growth in the number of customers. This database allows telecom companies to make use of data on the services being used by the customer in real time, the address from which the service is being accessed, the status of the service, the customer's profile, data on telecommunications routing, and of course integration of all of the data with applications such as CRM, billing and many others.
The telecom companies need these solutions because of the huge growth expected in the number of users. According to estimates from the large telecom providers, they will need to support tens of millions of users simultaneously and provide them with a variety of IP-based services. The market, says Xeround, is expected to grow to $1.2 billion by 2010.
Xeround was founded in February 2005 by Sharon Barkai and Dr. Gilad Zlotkin, both of whom had previous experience; Barkai was a founder of Sheer Networks, which was sold to Cisco Systems (Nasdaq: CSCO) in 2005, and Zlotkin came from Class Data, which in 1998 was also purchased by Cisco. The company's first and only fundraising round, totaling $6.5 million, took place immediately after the company was founded, in March 2005. The funds - a relatively large amount for a first fundraising round were raised from Giza Venture Capital and Benchmark Capital. The company, which operates out of Yehud, has some thirty employees and will soon open branches in London and the US.
"Our product provides a solution to the demands on databases by telecom companies, and the need to manage large amounts of data on large numbers of customers, and to react quickly. These systems require very fast databases. Our system allows this, instead of having to use large numbers of much smaller subsystems which can only handle up to two million users. These systems are very expensive, because of the need for many software and hardware systems to handle a large number of users, and of course to synchronize them. Our system reduces the hardware costs by some 90%, because it runs on computer clusters on grid networks.
Xeround's customers are the largest telecommunications equipment manufacturers in the world: Ericsson, Alcatel-Lucent, and Nokia Siemens Networks. The route to customers such as these is very demanding and usually very long. Last year Xeround carried out a large number of test installations at large telecom suppliers with the aim of combining its product with the telecommunications switches sold to end users telecom giants - next year. The company will end this year with revenue of tens of thousands of dollars from consultancy and services. "The connection with the big companies came much quicker than we planned. They are under pressure to find the solutions and to get to know the company," said Zlotkin.
What did you do right in founding the company?
"We raised money from the right places. The two funds advise us and help us with all of our business and strategic dilemmas. Today, all of the big players are interested in our technology. In our case, the biggest players in the market have the biggest problems with increasing their user base, and therefore they are showing the greatest interest and are becoming early adopters. We have made a great effort to manage our relationship with these companies and we have received a lot of help from our investors.
"Also, there are some very experienced people in the company's management, most of them with a successful start-up under their belt. One of the great things that we have managed to do is to build the company from the top down; in other words, we didn't start with the workers and then think about the management, but rather the opposite."
What is your next milestone?
Today we are at the stage where we visit the customers and run our application at the customer's offices, the customer being a telecommunication equipment provider. The next milestone is to run the application at the end user's offices, i.e. the telecommunications providers. Towards the beginning of next year we expect to see our product in the next version of our customers' equipment which is supplied to the end users."
Where do you see the company in five years?
"The market is expected to grow by some $400 million this year to $1.2 billion. Today most of the market is composed of dedicated systems produced by our customers themselves, but there is a trend to move these applications from systems developed by the manufacturers to systems which are separate computers, and this is the trend that we are joining. We believe that we will be able to reach a large part of this market. Ericsson, for example, is a big customer of ours, and it has sales of tens of billions of dollars a year. As soon as our system is assimilated into the system that Ericsson sells we will be able to reach a large part of the market and we hope to be there."
Published by Globes [online], Israel business news - www.globes.co.il - on September 20, 2006
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