NOW FOR AN END RUN AROUND LONG-DISTANCE BILLS . . .
VOICE MAIL FIRM TURNS TO DATA LINES

The following article appeared in The Sacramento Bee on December 28, 1998.

It's a company that made its mark in phone mail systems, but Voice Systems Research has ambitious plans to go beyond those seemingly inescapable electronic greetings. The 9-year-old Rocklin firm has developed technology that lets companies tie far-flung offices together with a phone system that completely bypasses the public telephone network. Instead, companies such as banks, hotels, retail chains, real estate offices or other organizations linked by data lines can run their internal phone systems over the same lines. By piggybacking on the electronic conduits that already carry data among offices ... like cash register transactions, credit information, inventory reports and corporate e-mail ... VSR can create a virtual phone network within a company. That could save a firm hundreds of thousands of dollars in long-distance charges a year, said Mark Cederloff, president and co-founder of VSR. "We want to take voice and route it over existing networks," Cederloff said. "That way people can be sure of a fixed cost per month for their service." The company is about to launch testing on such products and will have them for sale by late spring, Cederloff said. Cederloff used the example of a customer calling a consumer electronics chain and being told a certain model of TV isn't in stock. Rather than ask the customer to call another store and risk them dialing a competitor, the sales clerk can easily transfer the would-be buyer directly to another store in the chain. Such a move would possibly secure a sale and save toll charges at the same time, he said. In another example, branch offices of insurance companies could communicate via phone over their internal network without incurring a single penny of long-distance charges. Other large companies, such as Cisco Systems, have competing products but require complex dialing codes to make the transfers, Cederloff said. The VSR product, dubbed iPBX Gateway, is designed to be as easy to use as any standard office phone system. And as the reliability of the Internet improves, Cederloff said, companies eventually could use the same technology to route their phone calls through cyberspace. "We've been focusing on voice mail, but we want to give people the ability to communicate through whatever medium they choose," he said. The market for systems to transport voice over data lines will grow rapidly because of the cost-savings associated with bypassing long distance charges, predicted Brett Azuma, vice president and chief analyst at Dataquest in San Jose. "This is the sweet spot (in the networking market)." But Azuma said VSR faces a tough challenge because scores of companies offer competing products. "This is a commodity market, and the competition will be a little bit brutal," he added. If that's the case, VSR, which expects revenues of close to $10 million next year, has plenty of other products to cushion the market shocks. Cederloff and two partners started the company in 1990 to make PBX and voice mail systems based on standard PC technology. Since then, the company has developed voice-mail related products focusing on small and medium-size businesses. For instance, the company is installing its voice-mail and call-routing systems in more than 700 Prudential branches nationwide, including its securities brokerages, real estate and insurance offices, Cederloff said. Other voice-mail clients include the U.S. Coast Guard, Union Bank and the state of Texas. In addition, it has developed systems for hotels ... with voice-mail, automatic wake-up and guest billing ... that are used by scores of lodgings, including Hampton Inns, Hilton Gardens and Best Western hotels. The company has about 30 employees, including 24 in Rocklin. Its devices are manufactured, assembled and shipped from its modest offices in a Rocklin business park. "For the next two to three years, widespread use of the voice-over Internet-style networks will probably be restricted to large corporations that have their own dedicated data lines," Cederloff said. But as Internet connections get faster and more reliable, consumers could eventually enjoy glitch-free online voice conversations instead of the halting, distorted dialogues that are now the norm. "We're looking at different things," Cederloff said. "Who knows where this (technology) might show up?"