For Subscribers

Get the complete article now!

TWST: Could we begin with a brief overview and historical sketch of Arelnet (ALNTF.PK)?

Mr. Sobol: Arelnet started as a company that develops software for historical systems called Arcom and telex and fax back in the mid 80s. The company delivered 30 systems to the main postal service branches of the following countries: Israel Egypt, Netherlands, Germany, and Poland. In addition we also delivered equipment to smaller companies located in the Caribbean. In the mid 1990s, the Company moved towards the Internet and PC markets and started to deliver a product called i Fax, which had the same functionality but gave the customers an opportunity to use fax services over the Internet. In 1996, Nortel came to the company and discovered we had the latest technology in the areas of telecommunication, communications, and the Internet. They chose to invest in our company and encouraged us to develop a VoIP carrier-grade gateway. A year later, another huge investment house called Elron, invested in the company after seeing that we had the knowledge and the capability to develop carrier-grade VoIP products. A year later, Keppel Communications and huge investment and communication operational house in Singapore, came in and also invested. These investments combined with the encouragement from international groups, culminated in the announcement of our flagship product, called the i-Tone Prime, two years ago. The i-Tone Prime is our third generation product. The predecessors were the Arcom and i-Fax, which were based on PC. i-Tone Prime is a carrier grade machine. The carrier market is our focus and since the announcement we have sold 100 such machines. With regards to functionality, the machine is available as a class 4 and a class 5 switch. It is applicable for the long distance or the incumbent operators. We have some loyal customers.

TWST: What are some of the developments you expect to see in this space and how will you be positioning the company to take advantage?

Mr. Sobol: We believe the market is going to utilize the huge amount of bandwidth that is pushed to the businesses and to the enterprise – more specifically ADSL and SDSL. We are finding that if there is an operator that wishes to utilize ADSL capabilities, we can provide him with the ability to offer a new level of services to his clients. For example, the client can build location-less calling centers based on voice over IP technology. Instead of putting a switch and 1000 people in one room to answer phone calls, using VoIP over ADSL the company only needs to provide a location-less computer center. This means the calling agents will be able to monitor all calling activities from their remote location. This technology is valuable for physicians, insurance agents and for different kinds of service operations who do not want to have all of their staff in one location. Another application is for multi-branched businesses with PBXs installed in their facilities. Using VoIP technology they can easily create a virtual private network where the PBXs for long distance are connected into one IP cloud, resulting in a more affordable solution. This is an application we are pushing right now. We are not directly selling to the enterprise. We are selling to the operator, who in turn, installs our equipment and delivers our services to the enterprise.

TWST: What do you need to focus on to ensure you can ramp up sales and grow in this space?

Mr. Sobol: First of all, reaching the breakeven point is our main financial goal and we are very close to it. Our breakeven point is less than $5 million in annual sales. By the end of the second quarter in 2002 we have a backlog of $3.7 million, which means we are very close to achieving this goal. Second, the new versions of our hardware and software that we have introduced give us a cost advantage. Our products are offered at a lower price than our competitors. All our technology comes from Israel, including our partners. Arelnet woks very closely with AudioCodes, a supplier of a CODECs technology; RadVision, a protocol stack provider; Galileo, who have recently merged with Marvell, providing switching technology. Each partner is located within a 100-mile radius. This allows us to use all the technologies that are available. The integration process is done internally resulting in a technologically sound product.