1:1 Michael Gotalsky, TrueConf, CEO

November 19, 2014 Source

Andrew W. Davis, andrewwd@wainhouse.com

It’s been more than two years since we interviewed TrueConf in the WR Bulletin (#1316). The company last week released a new version of its client application for Windows, now on release 6.5.0 and which now supports desktop and other applications capture and sharing, along with a new interface and avatar support. Our focus here, given all of the ugly geopolitical developments surrounding Russia and Ukraine, is to catch up with Michael with a couple of targeted, focused questions.

WR: Remind the readers please, of what TrueConf is all about.

MG: We split our sales teams and statistics by CIS boundaries because we sell directly to most of the CIS countries except Ukraine, which is not part of the so-called “Customs Union.” Russia is the largest (>90%) source of income in the CIS of course. 15% of our income was generated by outside-CIS countries during the first half of 2014. This figure is double that of 2013, but we don’t expect that to continue since Q4 is a big quarter in Russia.

WR: Ukraine-Russia situation is of course all over the news here. How is this situation affecting your business?

MG: Well, there are two aspects:

  1. Economic issues, not political issues, significantly reduce our sales volume in Ukraine (10 times less compared to the first three quarters of 2013). Our distribution network in Ukraine is active and wasn’t affected at all; we still deliver a lot of trial subscriptions which generate constant lead flow. However the deal closing ratio is just slightly above zero. Right now video conferencing is not a business critical solution for the local companies (like telephony) and the locals have pretty much stopped investing. I would assume the situation is the same for Cisco, Polycom, and the other vendors. The whole situation in Ukraine is horrifying on many human and other levels. On the other hand we are seeing very good results in Kazakhstan and Central Asia markets.
  2. As you might remember we have an office in Donetsk, the center of much fighting, for web development, QA, support and marketing. The office is still open but only a few people remain in the city and visit our office on a daily basis. To help our team and to create safe conditions we&ve opened another office in Kharkiv. This happened over the summer. We are hiring mostly in Kharkiv now. In addition, some of our people moved to Moscow where the core team is located. On the political side, another thing we’d like to mention is a software import replacement program initiated by the Russian government.

Most probably it will prohibit non-Russian companies from competing in government IT purchases, including video conferencing solutions. The program will limit competition in the government sector (which is the largest of VC & UC sales, with 20% share based on our data) and significantly affect Microsoft / Cisco / Polycom / LifeSize sales in Russia in 2014- Q4 and 2015. What we see lately in government tenders is that Cisco network infrastructure is actively being replaced by Huawei solutions, so Huawei’s position in Russia is expected to become even stronger. This also reflects a new trend set by our IT & Communications minister, Mr. Nikifirov, towards creation of alternative OS, database engines, and other critical software together with BRICS countries and China in the first place (to brake monopolies set by U.S. companies globally). We can even label these things as the start of a Cold War in IT.

Published on 19 November 2014 by Wainhouse Research