Atlanta based cloud phone provider Vocalocity has been acquired by Vonage for $130 million. Vocalocity provides voice over internet protocol (VoIP) services to businesses with up to 50 employees.
Vonage is a popular choice for residential VoIP services, and the purchase of Vocalocity gives it an entry point into the market for hosted VoIP services for SMBs.
Vocalocity’s revenues in the first half of 2013 project to $56 million, up 39 percent over the same period in 2012. The company posted a statement announcing the acquisition on its website, which provided the revenue figures, as well as market projections. Vocalocity believes the SMB voice services market in North America to represent 32 million lines worth $15 billion, 85 percent of which is still served by traditional carriers, despite the cost to customers being 40 to 50 percent higher.
“As business VoIP moves from the early adopter phase to the mainstream, a Vocalocity and Vonage combination delivers the scale, quality and feature set to best serve customers and create phenomenal opportunities for growth,” Vocalocity CEO Wain Kellum said in the statement.
“Entry into the SMB segment is a key element of the growth strategy we outlined last year,” Marc Lefar, Vonage CEO said. “Vocalocity accelerates our entry with a comprehensive, high-quality product suite and scalable platform.”
Vocalocity’s competition in the business VoIP market include tech giant Cisco, but Cisco’s offerings are run through in-house networks. Vocalocity and Vonage are betting that the SMB market will prefer to avoid paying upfront for, and then housing hardware by using hosted solutions.
Their competition in the cloud VoIP market is mostly made up of newer and smaller companies (compared to Cisco), like Telanetix, which was acquired by Intermedia in August. Another competitor, RingCentral, filed for a $100 million IPO in August.
The hosted voice communications market was described as having high growth potential in a 2012 study by Insight Research.