Don Marti

Sun 17 Apr 2005 08:33:50 PM PDT

Open Source Telecom

Rich Bodo, the man responsible for Linux-based "Your call is important to us" systems, answers his own phone. And, unlike a late-90s CEO long on publicity but short on customers, he actually tells a reporter to wait while he confers with a sales rep about a deal.

Bodo is founder of Open Source Telecommunications Company ( of Sunnyvale, California. His business plan is straight out of the 1985 GNU Manifesto: charge customers to create custom installations based on a core of freely available software. In the telephony market, Bodo has discovered, he's competing with high-margin proprietary systems and beating large vendors such as Lucent and Nortel on price and service.

In one current 192-line project, he says, "we're replacing a system that was being leased, and we're able to make a good profit charging what a few months of lease time would cost on the system we're replacing."

OST has a product offering, a 1U rackmount server with a 4-24 port Pika Inline GT voice card and a development environment. That product is mainly selling to expert developers, but his long-term goal is for a future generation of products to be ready to sell to telephony VARs, small companies of people in vans who install company phone systems.

But VARs are picky, "What the VARs want is a product that meets their specs at a price they need and they want high-level support. What they want from us is products drop-shopped in a box such that you pull out the red card and replace it with the green card when you need to do an upgrade," he says. That's still in the future, but the high prices that proprietary telephony vendors charge the VARs makes the VAR market a promising target.

In the meantime, there's no burn rate to worry about, since custom development projects are more than paying the bills. "We're uncovering vertical markets in banking, and there are lots more," Bodo says. "Most phone systems actually do involve a lot of custom developments. Nobody has the same menu tree as the next guy." Since every customer's legacy systems are different, OST does a lot of large custom development projects. And with a flexible platform to develop on, OST can deliver good projects fast at a competitive hourly rate of around $150.

"What's really cool about having an open source system is not only can you get this custom development done and get a system done at considerablt cost savings, but you can get supprt without worrying about being locked in. Most of our really big customers view this as the big advantage of our systems."

Customers aren't scared of free software or of Linux. What scares them is PC hardware. "PCs have a bad rep, Linux doesn't," Bodo says, "We've got to overcome that by providing the best components we can find. That's not easy for a small company to do. It's taken us years to develop our software and get our suppliers."

What Bodo calls the "purging of the VC-funded companies with high expenses" is helping OSl's ability to pick up not just a coveted Sunnyvale location, but also some Linux talent.

"We've been able to get what I consider to be real experts that a year ago or 2 years ago I had no chance to get. Now they realize dot-coms have no staying power and they're ready for a business with a more conservative business plan," he says. Now employed as OST's kernel hacker (and head chef for company cookouts) is Dragan Stancevic of /usr/src/linux/drivers/net/eepro100.c troubleshooting fame.

This CEO may have a little trouble with the terminology of high finance, though. I asked if OST was profitable, and the answer was, "We still owe about $8000 but we should be able to pay that off in about a month." Dude, that means you're profitable. Paying off the eight grand will mean you're profitable and debt-free too.