This morning I had the pleasure of chatting with Dmitry Goroshevsky from Popular Telephony. While our plan was really to discuss the latest Peerio Biz v.1 release, our conversation explored some other areas around telephony in general that I'd like to share.

Background on Dmitry (excerpted from his bio on Popular Telephony)
Dmitry Goroshevsky, a leading Internet Telephony pioneer , incorporated Popular Telephony Inc. in 2001. He has over a decade of expertise in IP telephony. From 1996 to 2000, Mr. Goroshevsky was CEO of Internet Telecom Ltd.Mr. Goroshevsky has guided Internet Telecom through innovation, growth and sale in 2000 to Terayon Communications Systems (NASDAQ: TERN). Trained as a media communications producer and director, Mr. Goroshevsky was influenced by the expansion of the Internet in the early 90s and became one of the first to recognize and develop the potential of voice over IP. In 1995, he co-founded and managed Delta Three (NASDAQ: DDDC), the first global VoIP service provider. During the late 80s, Mr. Goroshevsky co-founded the First Open University in St. Petersburg, Russia.

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Confessions from Ken
To set the stage, I entered this interview with some preconceived notions. I'm even willing to admit they're biases. But I'll be up front with them here because they left me somewhat skeptical before I spoke with Dmitry. And I think readers should have some indication of from where I bring some questions and viewpoints.

1) I spent 17 years working in the traditional telecommunications market. I've designed PBXs and worked on Centrex services from the central office point of view. I understand telephony better than a lot of data people, even VoIP people. It comes with the history of a career in the field.
2) I did enough research to learn that Internet Telecom Ltd. was purchased for $40 million in stock, then shut down by Terayon, who changed their minds and took a $44 million charge.
3) A huge portion of my time is invested in network security. I view peer-to-peer technologies somewhat askance, and tend to view them first as a security threat, and second for the good things they might bring.
4) I've read a number of interviews and stories on Popular Telephony, Peerio, and things Dmitry has said in the past about where he saw things moving. It's fair to say I questioned some of the things that he's said in the past. Some of his predictions seemed wild and overly optimistic.
5) As I told Dmitry, I have downloaded, but not yet installed or tested the latest Peerio solution.

I've done my best to set my biases aside and be fair and open-minded about where Dmitry sees their solutions fitting into the telecom environment. Given his extensive background and knowledge, I knew there had to be more depth than the interviews I found indicated. I have to say I was pleasantly surprised, and I'd like to again thank Dmitry for taking the time to speak with me.

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Dmitry spoke to me from his car via mobile phone.

KC: Disruptive technologies are rampant in the marketplace. P2P has certainly demonstrated tremendous disruption through a number of communications and media delivery mechanisms. P2P telephony has been widely accepted among consumers, especially those involved in the tech sector (Small innovative companies, consultants, PR and marketing teams). Tell me a bit about your view of the market.

DG: Peerio is not targeting residential customers or the consumer market at all. Peerio is a business market and business application. It's different than Skype. We are targeting small and medium businesses as the prime opportunity for Peerio to break into the market. There are no limitations to go to larger businesses or even a  very large enterprise. There are marketing barriers to a small company against larger marketing efforts like a Cisco or Nortel can bring to bear.

We know this technology is not yet mature. It's in the beginning of the technology life cycle. We think we are the only company providing this technology today. It will take lots of change and improvement to deploy successfully to the very large enterprise.

In terms of small and medium businesses, what we are doing is filling a gap by providing the cheapest solution. And it's the easiest to use alternative to the PBX at first. The real benefit is not just replacing the traditional PBX but in creating a working space that can bring new applications to busines -  integrating in ways that can’t be done today. Collaboration of application space is crucial. The traditional PBX doesn’t integrate well with applications. Collaboration  between the PBX on a traditional platform and applications is challenging.

KC: Peerio isn't really new. It's been on the scene for a couple of years now. Can you describe the evolution Peerio’s gone through and what’s changed over the past two years?

DG: We've put a lot of effort into the core and continue to invest in research in that area. Everything we do is basically application-driven,  based on the product core. We believe we have real innovation technology in the core, which is changing and improving constantly. We've seen lots of improvements and architectural changes every month with continued research. The first Peerio Biz application was released in June of last year, allowing peering calls to Skype.  Our goal at that time was not to gain widespread adoption, but to get the product thoroughly tested.

We realize this is a new approach to technology, requiring a change in thinking and acceptance. We were not overly confident that a complete new model would be well received and understood. We received an enormous amount of feedback and spent 6 months of intensive testing leading to complete product redesign.  Feedback led to advances in the interface, usability and features in both the interface itself and the supported feature set. We are now nearly ready for rollout once the beta is finished. This free version is both a Softphone and IP PBX, in a way still in evolution.

When it comes to the IP hardware phone side, we've learned a lot about what people want, what should be done, and positioned. Peerio supports both hardware and a softphone approach, but it is not just end point solutions.  Connectivity is a large part of the solution. There is no gain from Peerio internally as a VoIP solution. Users need connectivity to be able to get to the outside, the PSTN.  Peerio can currently connect with almost any SIP gateway. Peerio hardware phones have gateway functionality built in. The phones have a 4-port switch and PSTN connection both in the phone. The phone can become an IP distributed gateway.

KC: Who do you see as the primary target market today?

DG: Our focus is small and medium businesses as our launch after the beta cycle. We believe Peerio fits a set of needs that small and medium businesses struggle with. It is very cheap. It is very easy to use. Target customers will find it's powerful for those companies that don't have the depth of internal resources to deal with configuration, admininstration and maintenance issues associated with large phone systems. For companies like these, lacking in resources and expertise, even open source solutions like Asterisk can be a  daunting task.

KC: As a clarification, you've mentioned PBXs several times during our conversation, but it sounds like what you're describing is what has more typically been referred to as key systems.

DG:  The key system market is a very real target. I use the term PBX because it's familiar, but we are really looking at both.

KC: So you can describe a longer term strategy beyond the initial deployment?

DG: Yes. Peerio is very comprehensive application architecture. For us, this v1.1 release is another step on the roadmap to Peerio 2. Peerio will enable users to add features and enhancements in the future by pressing a simple upgrade button. Users will be able to choose to upgrade, then accept new applications. Our vision is that a Multilevel IVR solution will be the first one offered. Others could include CRM (Customer Relationship Management) or ACD (Automatic Call Distribution. We envision this all built on something very similar to the I-tunes model. For example users might be able to add an upgrade feature for $1.99 when accepting the new application feature.

KC: You've mentioned integration with business applications. Do you offer and API set for integrating with existing business apps?

DG: If you have applications running on the server, we prefer not to do anything with that. We are not focused on APIs to integrate with those applications. That would be an effort to merge something very beautiful with something very ugly. Web based solutions can integrate calling services effectively. We will work hard on integrating with web-based applications.

We are a small company. We don’t have a lot of resources to support integration to every different application and configuration.To attempt that scale of integration would be impossible. Our focus will be on web services applications and features integrate to the Internet world.

KC: How do you plan to counter the stigma of peer-to-peer technology and the security concerns it raises in enterprise networks? Do you have a plan to address those concerns?

DG: We can’t really do much about the stigma. It will take time to cure.that.  We don’t see a clear way to explain why we believe this is a more secure solution. We believe our approach is more secure in small to medium businesses who don’t have the resources to fully maintain security. We believe this is far more secure than outsourcing and gives a stronger security approach to SMBs.

KC: What about the customers and partners you've been working with?

DG: Some customers embrace that change enthusiastically and some express concern. We try to address peer-to-peer questions honestly. Reluctance is becoming acceptance in some segments as end user customers learn and experiment with our solution.

Just yesterday someone told me that our solution is about ten times cheaper than anything that comes close. Customers are not stupid and will figure it out sooner or later. Growth is coming. Customers will want value for their investment. Security is a factor of quality that customers will weigh against costs. Call quality is one factor. Mobility is another factor as we learned with cell phones. Price is another factor. We (will) also have a mobile phone client.

KC: Any last thoughts you'd like to share?

DG: Apart from interconnection with existing gateways and the internal gateway with phone, we will introduce service with Level 3 for connectivity with PSTN telephone numbers in the United States. We'll support business class numbers, E-911 and directory services support. All destinations  will be covered onsomething like a 2 cents-per-minute sort of price range (like Skype). The access to PSTN is  exclusively driven through the wholesale globally available Level3 VoIP services platform. We believe this relationship will be crucial for people who can’t do Skye because of sound quality (Note - Reference to some recent observations of poor quality of outbound calls from Skype the the PSTN)

            Note: See http://www.peerio.com/peerio1+1pr.pdf for some older documentation on the Peerio/Level3 relationship.

Compared to key system, PBXs or Centrex services, we are aiming for the best part of all worlds . With Centrex you pay for each stations and/or phone number. Peerio users can have as many stations as they want. They can also have as many outgoing calls as the network can handle. You'll only need to buy incoming phone lines as you need them. There will be no monthly fee per station on inbound calling like there is with the Centrex model.

We think we will be the only VoIP company who will give this kind of service for the foreseeable future.

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Wrap-Up from Ken

First and foremost, any errors herein are mine. Dmitry and I conducted this interview via mobile phones. It wasn't recorded, so what you read is my best combination of typed notes, hadn written notes and memory of a very enlightening conversation. If there are errors here, they are mine, and I apologize.

Our conversation delved much deeper into the cultural shift that must take place for widespread adoption of P2P technologies.  Dmitry made be think about P2P more as a disruptive technology that as a security vulnerability. I'll have to think about it further, but I have a renewed appreciation of how we may well evolve. I'm developing a picture of slow disruption as people embrace the weaknesses that P2P technologies may bring in balance with the tradeoffs scalability and efficiency solutions like Peerio can bring. That's a vision that my security self will have to embrace and adopt over some time.

Given some of the past interviews I'd read in preparation for our interview, I found Dmitry to be thoughtful, forward-thinking, and pretty realistic about some of the challenges ahead for Peerio. I will be testing Peerio myself, and watching progress closely, I believe he's found a realistic approach and a measure of patience in building over time that will lead to a strong success.

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I'd like to thank Andy Abramson for helping facilitate the opportunity to chat with Dmitry, and Brooke in his office for all her work in coordinating the logistics. With Dmitry in France and me in Washington, getting us together took some extra effort, and I appreciate the help. I anticipate some other interviews with some of Andy's other client partners in the near future.

For archival and reference purposes, a PDF copy of this interview write-up will also be available in the Realtime VoIP Community Reading Room.

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