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MARCH 8, 2005
By Olga Kharif Hello Peerio, Goodbye Servers? A startup's peer-to-peer software enables phones and PCs to communicate with one another -- a tool that could have some tech titans in a cold sweat
Dmitry Goroshevsky, CEO of tiny startup Popular Telephony, is about to declare war on the information-technology industry's heavyweights. Even though Popular Telephony has only several trial customers and virtually no sales, no one is laughing. If its product works, "this would be clearly a disruptive technology," says John Kelley, chairman and CEO of McData (MCDTA ), which makes data-storage equipment and software. While that may sound a bit extreme for an unproven company, Popular Telephony may well possess the capability to change the way info-tech and communications networks are built. The company, with offices in the U.S., France, and Israel, has developed a flavor of peer-to-peer software that, just maybe, could make the big tech players nervous in the same way Napster stressed out the recording industry. Basically, Goroshevsky hopes to obliterate the need for such gear as servers. QUICK RETRIEVAL. To understand why the man who runs a little company is thinking so grand, you have to think back a few years, before PCs, when corporate data was stored on a mainframe and distributed to "dumb" terminals. Then, corporations moved to servers that fed information to individual PCs. Goroshevsky proposes doing away with those servers, as well as other network middlemen like private branch exchanges (PBX), which perform a role similar to servers on telecommunications networks. His company's software, called Peerio, enables phones and PCs to communicate directly with one another, without going through an $80,000 PBX or other similarly expensive products, Goroshevsky says. Peerio can perform other jobs, too. Popular Telephony plans to release 11 new pieces of software based on its core technology this year. The first is expected to hit on Mar. 9. Called Peerio Data, it will manage unused space on individual PC hard drives, not a bad idea since hard drives are typically only 30% full. When you save a file, Peerio Data will distribute bits of it onto multiple computers' hard drives. To retrieve the document, your software will ask the various PCs storing the file's bits to cough them up, pronto. RINGING THEIR BELLS. With that, savvy computer whizzes can manage Peerio from their PCs or from phones equipped with special administrative software. The benefits: Peerio removes the need to spend money on a costly server or related maintenance. "We cost 10% to 20% of a server-based application," says Goroshevsky. Peerio sells for $15 per client. It's this cost advantage that Goroshevsky hopes will spread Peerio far and wide. One of Popular Telephony's first test customers, a French bank called IFEX, has just begun field trials of the technology. IFEX will deploy Peerio in its offices in Amsterdam, London, and Sophia-Antipolis, France. And Matt Harrison, chief operating officer of distributor Commoca, which provides software for calls made over the Internet, says that "there's significant interest in the solution," particularly among hospitals and hotels. And eight phone manufacturers, like France's Logicom and Taiwan's Atonics, have already incorporated Peerio into their phones. Popular Telephony has much proving to do, though. "The hard part [about] getting into the enterprise space is the creation of a brand and the ability to convince large companies why they should risk something so important on the technology of a startup," says Jeff Pulver, creator of the Pulver 100, which lists the hottest companies that provide phone services over the Internet, and who also owns and runs VON, a popular telecom trade show. "TOO RADICAL"? Nonetheless, corporations are right to proceed with caution. Quality of service and security are a concern. Plus, "enterprises are very reluctant to have any mystery code running on their clients," says Kevin Tolly, CEO of tech consulting company Tolly Group, in Boca Raton, Fla. "Anything having to do with P2P, enterprises are a little bit scared of." Plus, there's competition. Later this year, Skype plans to come out with a version of its peer-to-peer telephony service for small businesses, says Janus Friis, co-founder of the Luxembourg-based Internet telephony outfit. And existing tech companies are constantly pushing down prices on servers and storage. Finally, a realistic transition to P2P architecture could take a long time. "You don't overhaul a century of technology overnight," says Joe Laszlo, an analyst with Jupiter Research in New York City. "It's too radical." Perhaps so much so that companies won't go for it at all. CAUSE FOR ANXIETY. Goroshevsky is all for making drastic changes, though. At 19, he emigrated from the former Soviet Union to Israel. Thirteen years later, he migrated again -- this time to France. And who's to say he won't lead a migration to a whole new kind of computer network? The man behind Peerio might not drive today's tech heavyweights out of business, but he's likely to have them glancing nervously over their shoulders.  Kharif is a reporter for BusinessWeek Online in Portland, Ore.
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