Intel Capital Invests in Fonality, Leader in Open Source Telephony for Small Businesses.

Open Source is Changing the Old PBX Game for the Better

LOS ANGELES -- Fonality[R], the leader in open source IP telephony for the small-to-medium size business (SMB) market, has secured $7 million in a Series C round led by Intel Capital with participation from existing investor, Azure Capital Partners. Fonality was founded in 2004 to fill a vital need for enterprise-class telephony at price points within reach of SMBs.

The IP PBX market is expected to grow at a compound annual growth rate of more than 23 percent and reach $8.9 billion in 2009 (Source: IDC). Fonality has already demonstrated significant business success and the company achieved profitability in 2006. Fonality is growing at monthly rate of ten percent and call volume has grown by 400 percent per year over the past three years. The company now serves more than 1,600 businesses in 25 countries with 40,000 individual users who have made over 65 million phone calls over the company's PBXtra[TM] hybrid-hosted business phone system.

"Pairing industry standard hardware, such as Intel server and communication platforms, with open source telephony software can create a unique ecosystem that results in lower cost, high-end features, better ease-of-use and the potential for richer telephony environments down the road," said Lisa Lambert, managing director, Software and Solutions Group, Intel Capital. "Fonality is positioned to deliver this solution to the global mid-market and increase PC penetration in the emerging market for open source telephony."

"Businesses are learning that they can finally afford the enterprise-class phone system they have always needed," said Fonality CEO Chris Lyman. "Fonality is able to change the cost dynamics of the PBX market so radically with the one-two punch of open source telephony and commoditized PC hardware."

Fonality's award-winning PBXtra business phone system delivers more functionality with significantly improved ease-of-use at 20 percent to 50 percent of the cost of comparable systems from established PBX vendors. PBXtra supports, out of the box, advanced auto-attendant features, telecommuters, branch offices, drag and drop call controls, conferencing and cross-office intercoms, as well as a host of other easy-to-use advanced features. Fonality provides 24 x 7 technical support and its patent-pending hybrid-hosted architecture ensures reliability by allowing real-time monitoring and remote system management.

Fonality is a recognized leader in bringing a wide range of open source solutions to the market. PBXtra is based on the open source IP-PBX platform Asterisk[R], hardened for reliability and layered with feature-rich applications. Fonality also manages the trixbox open source telephony platform and community, with over 75,000 downloads of the trixbox application per month. The powerful combination of PBXtra, which has more commercial Asterisk-based deployments than any other provider, and trixbox, home to the largest and fastest growing Asterisk-based and open source telephony community, allows Fonality to be a leader in open source telephony across the spectrum, from fully supported commercial solutions to a free, flexible open source project and community.

Fonality will use the proceeds of this financing to increase product innovation for both the trixbox open source platform and the PBXtra commercial product line. The company will also aggressively grow its channel presence, with a strong focus on international distribution, with support from Intel.

About Fonality

Fonality, www.fonality.com, is a leader in open source, Asterisk-based IP telephony systems. PBXtra, Fonality's award winning IP-PBX product line for small and medium businesses, includes a modified version of the popular open source Asterisk code base. Fonality has modified Asterisk to add reliability, stability and enterprise-class features, and is the world's largest commercial Asterisk-based deployment. PBXtra uses Fonality's patent pending architecture to deliver all the advanced features of an enterprise-class phone system and call center at 40 percent to 80 percent less than traditional offerings, and is deployed to more than 40,000 business users in the U.S. and other countries. Fonality's trixbox, www.trixbox.org, the world's largest and fastest igium Inc.