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This is the first installment of TMCnet's "Executive Suite," a feature in which leading executives in the Voice over Internet Protocol/communications industry will discuss their company’s latest developments as well as providing analysis on industry news and trends.

Technology Marketing Corporation President and Editor-in-Chief Rich Tehrani and assistant editor Ted Glanzer interviewed TalkSwitch (nee Centrepoint Technologies, Inc.) CEO Jan Scheeren last week. Ottawa-based TalkSwitch manufactures affordable, all-in-one telephony systems for small and multi-location businesses. Products from its award-winning TalkSwitch line, which includes a hybrid PSTN/VoIP PBX, range between $695 and $1,795.

  Jan Scheeren   
 
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TalkSwitch Proves What's In A Name

After a 30-minute conversation with Scheeren, an Australian native who is given to peppering his analysis with surfing analogies, one thing is clear: he understands the big picture.

Indeed, there is a refreshing pragmatism about Scheeren, which he revealed while discussing myriad topics, which ranged from the difficulty in identifying TalkSwitch’s competition to his philosophy on hardware manufacturing.

Scheeren’s down-to-earth approach is reflected in his company’s recent decision to change its name from Centrepoint Technologies, Inc. to TalkSwitch (www.talkswitch.com).

To be certain, the decision was not taken lightly, considering that Centrepoint was founded in 1990 — well before the prevalence of the Internet and search engines — to provide small businesses with affordable telecommunications services.

"At the end of the day, in the last 20 years, there had been no drop in price and zero improvement in terms of capability"

Traditionally, Scheeren said, such solutions were beyond the reach of small and multi-location businesses for two reasons:

1. They were difficult to install, configure, and maintain; and
2. They were cost prohibitive.

Scheeren said that at the time of the company’s founding, ILECs appeared "apathetic" to the small business telecommunications market, while almost everyone else viewed it as "saturated."

Nevertheless, Scheeren said that he saw an underserved market. Specifically, Scheeren honed in on the lack of innovation in the small business telephony space.

"At the end of the day, in the last 20 years, there had been no drop in price and zero improvement in terms of capability," Scheeren said.

Enter Centrepoint.

"[The name] represented what the company did — voice communications for small offices," Scheeren said.

However, once the Internet exploded and the Yahoo!s and Googles of the world took over how people obtain information, Centrepoint had a major problem. More accurately, the company had a major problem with the name Centrepoint.

"People had a hard time finding us," Scheeren said, noting the difference between how "centre/center" is spelled in the English-speaking world.

Also, according to Scheeren, changing the company's moniker made sense because the vast majority of resellers and consumers identified Centrepoint more through its popular TalkSwitch product line.

"One of them is companies, from a vendor perspective, recognizing that ... it's not enough to provide a good phone system," he said. "A good ACD is not enough. You must be able to handle dealing with business people, not just telecom people, and dealing with solving business solutions. Dealing with the whole disruption caused by VoIP is obviously going to be a challenge as well [and] consolidation in the industry will present some challenges."

"Eighty-percent of the market saw us as TalkSwitch anyway. There is nothing unique in what we did."

What is unique, however, is how Scheeren identifies TalkSwitch's competitors. The way he sees it, TalkSwitch’s biggest competitor isn’t a specific entity, but the market in general.
"Eighty-percent of the market saw us as TalkSwitch anyway. There is nothing unique in what we did."

"There are all kinds of competitors and it's an obvious question," Scheeren said. "The bigger factor is that our opportunity and specialty has been small businesses with 2 to 32 phone users per company."

Until recently, Scheeren viewed the competition as whoever was providing single-, two- or three-line connections to small businesses, and, perhaps, Panasonic Wireless.

Then along came a little thing called VoIP, which is turning telephony as we know it on its ear.

"The biggest thing...[VoIP] is doing is opening up the dial tone business to competitors," Scheeren said. "It creates all these new channels, and that's enormous. In the past, our competition was Panasonic or the phone system companies. Currently, it's hard to see the competition because it hasn’t opened up yet. In the VoIP space, multi-location competition and opportunity are related to a point."

Regardless of their identities, Scheeren said that TalkSwitch separates itself from its competitors — present and future — with its longstanding market presence.

"We are a lot more established," Scheeren said. "We've got many thousands of customers [approximately 20,000], with resellers signing up at a rate of 150 per month. It's just enormous."

To continue to build on this success for the future, TalkSwitch must figure out when the migration from the PSTN world to IP will be completed or, as Scheeren puts it, "when switches will actually go away."

"For any business, there is the need to get from here to any mark. We still need to get to the next quarter, and the quarter after that and the quarter after that. It won't happen overnight."

Just don't try to pin him down to a time frame. Five years? Ten years? How long?

"Pick any number, the forecast will change; I don't know," Scheeren said. "For any business, there is the need to get from here to any mark. We still need to get to the next quarter, and the quarter after that and the quarter after that."

"It won't happen overnight."

Which leads us to his surfing analogy.

"We picked our beach, we are working with our surfboard, we're paddling out, looking for the breaking wave," Scheeren said, adding that TalkSwitch is similarly looking for that break in the market. "For us, it's timing and structuring."

As for the immediate future, Scheeren offers a pragmatic view.

"The challenge right now is making money in the short term," Scheeren said. "We've been successful. We've created a hybrid solution that works equally well with VoIP and the switched world."

"Our challenge has been a lack of distribution channels."

Currently, TalkSwitch distributes its products through resellers and directly to end-consumers through its Web site.

"TalkSwitch has a service provider department mandated to go after that business," Scheeren said. "Timing is a big question regarding the incumbents and the ITSPs. We haven't seen which way that will play. We work with all of them. The incumbents of course are a tough nut to crack and, to a large degree, are not fully committed yet [to migrating to IP] or at least not publicly yet."

For TalkSwitch to continue to thrive in the small business market, Scheeren said that the company also must continue to tie the customer to the vendor and vice versa.

"The secret to me is, at the end of the day, in the small business market, churn is going to be a big thing. Customer retention will be [the] key. That’s a channel we want to be plugged in to."

Toward that end, TalkSwitch does not cut corners on the production end. Indeed, the company designs from scratch its own hardware; it does not license anything from its competitors.

"It might cost more and take longer in developing," Scheeren said, "but at the end of the day, you have control, and control over your hardware is important."

Also, Scheeren has shied away from bottom line, cost-saving manufacturing measures, choosing instead to produce TalkSwitch's wares in North America and Malaysia.

Proof is in the pudding. TalkSwitch, according to Scheeren, boasts a return rate of less than one percent on its hardware.

"At the end of the day," Scheeren said, the consumer is "going to get the best rate of return on the hardware."

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