Interview with: Donovan Jones, MBA, President and COO - featuring: their carrier-grade VoIP and Video over IP SIP softphones for telecom and Internet telephony service providers, cable operators, IP-PBX manufacturers and infrastructure manufacturers.

CounterPath Solutions, Inc. (CTPS - OTC.BB)

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CounterPath Solutions, a leading provider of SIP based applications, is executing on its strategy to assist service providers and OEM’s worldwide transition from legacy-based telephony to IP allowing them take advantage of the growing opportunities in the VoIP, Video and Communications over IP space

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Internet Telephony

CounterPath Solutions, Inc.

Suite 300, One Bentall Centre
Vancouver, BC, Canada V7X 1M3
Phone: 604-320-3344

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Donovan Jones, MBA
President and COO

Interview conducted by:
Lynn Fosse, Senior Editor
Published - February 15, 2007

Donovan Jones, MBA, President and COO

Donovan leads global Sales, Marketing, Development and Operations activities and is responsible for strategic and financial initiatives to drive CounterPath's overall growth.

Donovan comes to us from a boutique Investment Banking firm where he was responsible for sourcing and executing transactions for mid-market private companies. Prior to this during eight years with TELUS Communications, Canada's second largest Telecommunications company with over CDN$7 billion in revenue and 24,000 employees, Donovan held increasingly senior positions in Corporate Development and Client Solutions, which had him involved in planning and executing a series of merger, acquisition and divestiture activities in the Telecommunications, Application Development and Data Network Integration space. Additionally, Donovan was involved the strategic planning process for businesses focused on Application and Web Development, Hosting, Human Resources, Supply Operations and Sales Efficiency; Donovan’s efforts with TELUS culminated in his position of Director/COO Marketing with P&L responsibility for a CDN$200 million business unit focused on the selling, implementing and management of Enterprise voice, data and IP infrastructure.

Previous to this Donovan has consulted on strategy, process improvement, human resource strategy, and funding for several software and high technology companies. Donovan holds a Masters in Business Administration from the University of Calgary and an Economics degree from the University of Alberta

Company Profile:
CounterPath Solutions, Inc., formerly Xten Networks, Inc., is a developer of award-winning, carrier-grade VoIP and Video over IP SIP softphones for telecom and Internet telephony service providers, cable operators, IP-PBX manufacturers and infrastructure manufacturers. CounterPath's SIP softphones and softphone SDKs (Software Development Kits), which provide VoIP, Video over IP, IM (Instant Messaging) and Presence functionality and can be preconfigured to our customer's VoIP service, are predominantly licensed on a per-seat or per-subscriber basis either co-branded or private labeled. CounterPath's technology is deployed by over 210 customers in more than 49 countries.

CEOCFO: Mr. Jones, what attracted you to the company?
Mr. Jones: “I was with a small investment banking firm in Vancouver when I ran into this little company focused on building VoIP applications. I did some research on the company and met the founder and the co-founder. I was interested in the story, the technology and the tremendous opportunity in front of the company. Less than a month later, I joined the team. We changed the strategy somewhat and have continued building SIP based applications for service providers and OEM’s.”

CEOCFO: How do you do that and how are you doing it that is perhaps different from others?
Mr. Jones: “We first had products in the market more than 3 years ago, focused around the SIP protocol, which means Session Initiation Protocol. This protocol has now been widely adopted by companies like Cisco Systems (NASDAQ: CSCO), Microsoft Corporation (NASDAQ: MSFT) and Motorola Inc. (NYSE: MOT). We have 60 people focused on delivering the technology. Our adherence to standards allows us to deploy quickly and to have a very strong interoperability story. What this basically means is that out of the box our Softphone will work with many of the network elements and devices that you would find in a VoIP network using SIP. Other companies have adopted a more proprietary approach, which means that there is a lot of rework involved when you involve different network elements, such as a PBX with a Gateway with something as simple as a USB headset. They will operate slightly different in different ways, whereas from a standards approach there is minimal rework. The second differentiator comes down to strategy; we focus on working with very large carriers, large OEMs (Original Equipment Manufactures), and large ITSPs and we have a unique approach to working with them. We have a customer-engineering group that gets very engaged in the deployment, our application is very flexible and we work many of the service providers value proposition into the application, customizable to unique characteristics of how they are going to deploy a solution.”

CEOCFO: Tell us more about how your product fits into the grand scheme.
Mr. Jones: “Our application is what the end user would use to communicate using either voice, video or instant messaging. A softphone would either replace a traditional desktop phone or act as another medium for communicating in parallel for example, using say a camera to have a video call while having a call on the desktop phone. You could do both with our software but you might feel more comfortable with your desktop phone.”

CEOCFO: You have over 200 customers in over 49 countries; will you give us a sense of the market opportunity?
Mr. Jones: “The market opportunity is significant. Household broadband adoption is growing at more than 50% per year in the US. As broadband adoption becomes more prevalent, the ability to have a high quality of voice and video experience over the internet, as you communicate, becomes more possible. All of the large service providers are migrating from TDM to IP. We are focused on delivering our solution to global carriers and OEM’s. As we build upon the success we have achieved by deploying with leading brands like British Telecom, Deutsche Telekom and AT&T, we will continue to ramp up our deployments. In our last quarter, 50% of our revenue came from Europe and we generally see Europe as two to three years ahead of the US. The market for our solution is just now taking off in significant fashion and we are prepared to take advantage of this growth.”

CEOCFO: What is the revenue model?
Mr. Jones: “Our year-end is April 30th, we had $4.6 million in revenue. We have recently disclosed our first quarter 2007 results of just under $1.8 million. We have had slightly more than 20% revenue growth consecutive quarter-over-quarter for five quarters. We work with customers in three basic ways; a perpetual license typical in software, with support and upgrades being an extra charge. An annual support or a subscription model, which is a user fee per year, which includes support and upgrades. We also do revenue shares.”

CEOCFO: Do you need to add personnel?
Mr. Jones: “We have more than doubled the size of our team in the last 5 quarters. We have kept the complexion of the people of the team in similar fashion, predominantly focused on R&D and engineering. We are going to be slowing the acquisition of additional headcount as we continue to grow and accelerate our revenue. We will still be increasing on the R&D on side and the reason we do this is because we need to stay at pace or ahead of the market in terms of innovation but we also have  a tremendous amount of opportunities internally that we are looking at maximizing.”

CEOCFO: Why is this a good time for potential investors to be interested and what do people often miss about the company that they should focus on?
Mr. Jones: “I think investors see us as a very small company. When you think about the kinds of relationships we have, the question that often gets asked is how come this hasn’t translated into hundreds of millions of dollars in revenue, because these are the largest names in the world. The answer is that the relationships that we are developing are not short-term relationships and as a result we do not ask for tremendous amounts of money upfront; we are starting with our customers on an evolution into VoIP. We are building relationships by putting substantial qualified engineering resources deep into these accounts to help develop opportunities and to help work with our targeted customer set to take their customers which would be the end users like you and me into this new space which is VoIP and Video over IP and Communications over IP. Our customers haven’t deployed in big numbers yet, for a few reasons; customers are not necessarily ready to embrace the technology, but they will once the feature sets, the quality and ability to have it change life really takes hold, which it will over the next few years. As well, they are in the middle of legacy infrastructure change out where they have existing infrastructure that they need to replace with IP. This is the beginning of something large in terms of the market. It is not a question of if, but when from a market perspective. We are well positioned in the market because we picked SIP very early and built a practice area around it. As a result of picking SIP early, we are very much ahead of competition from the very small competitors to the very large ones. We are attracting some very high-quality engineering resources who believe in what we are doing. Sixty people are a reasonable large software company particularly focused on this space. The next thing I think they might miss from an investment perspective is the ability of our existing management to execute on what we say we are going to do. Five quarters ago, we said we were going to focus on developing relationships with service providers and OEMs; we since announced some of the largest brands in the world. It is the result of a targeted focus, and knowing what these kinds of customers want and need, and then executing relentlessly on meeting and achieving these results. When prospective customers ask for referrals, any of our customers that we are working with are glad to give referrals to these customers. It is a testament to work that the whole team does; it certainly has less to do with one individual than the whole team. We are very committed to delivering on the vision we have which is to help take customers and our customers, customers into VoIP.”

CEOCFO: Therefore, someday we can expect CounterPath to be standard in all voice over applications!
Mr. Jones: “You nailed a lot of what we see as our mission statement. Our whole team is commited to designing, building, deploying and supporting robust carrier grade SIP applications globally. To evidence how far we are along that path, several members of the Counterpath team were just at a fairly large industry trade show and AT&T was actually in our booth launching their softphone. Walking around the tradeshow floor, there were more than 18 booths demonstrating their technology using our Softphone. These would be some of the largest brands in this space, demonstrating the capabilities of their technology using our Softphone. The fact they use our phone, is a testament to our team, the strength of the product, and the quality of the relationships we have both on the partner side and sales side.”


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“We are well positioned in the market because we picked SIP very early and built a practice area around it. As a result of picking SIP early, we are very much ahead of competition from the very small competitors to the very large ones. We are attracting some very high-quality engineering resources who believe in what we are doing. Sixty people are a reasonable large software company particularly focused on this space.” - Donovan Jones, MBA does not purchase or make
recommendation on stocks based on the interviews published.