M5 Networks Branches Out

Growing New York-based provider of outsourced VoIP services for SMBs takes aim at the Midwest.

By Ted Stevenson | Posted Feb 22, 2007
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VoIP provider M5 Networks, headquartered in New York City, yesterday announced the opening of an office in Chicago, Ill.—"our first new major market outside of the New York metro area," according to CEO Dan Hoffman.

The move to establish a foothold in the Midwest caps a banner year for M5, a leading supplier of outsourced VoIP phone systems for small and mid-size businesses. "We made the Inc. 500," Hoffman told VoIPplanet.com. "Deliotte Touche ranked us the 54th fastest growing tech business in the country."

There's no question that M5 has an enviable growth record: a staggering 4,500 percent over the past five years (which averages out to about 900 percent per year)—even while largely concentrating its operations on the East Coast region in general and the New York City environs in particular.

"We’re not trying to be the biggest out there," Hoffman told VoIPplanet, "we're trying to be the best." Accordingly, the company is very conservative with market launches, Hoffman explained. "We continue to dominate New York metro. Now we're trying to do the same thing in Chicago." By contrast, Hoffman pointed out that competitor Covad Communications is active in about 70 markets.

Hoffman sees Chicago as a natural location for M5's next step. For one thing, the company "already has a number of clients there—as well as a strong partner community," he said.

Indeed, M5 has for some time been quietly laying the groundwork for its first regional expansion, testing the waters beyond the East Coast by taking on New York-based clients with branch offices scattered across the United States—including Midwest, of course.

Initially, the Chicago location will be a business office, handling sales, project management, and installation operations. However, "in early '08 we're going to launch a third data center in the Chicago area," Hoffman told VoIPplanet. (M5's two existing data centers are both in Manhattan.)

The timing of this infrastructure expansion is informed by M5's basic conservative philosophy: "Data-center fail-over is a tricky, tricky thing," Hoffman explained. "In our business, you don't want anything too complicated because that can increase down time instead of achieving a goal of increased continuity, increased reliability," he said. "We've been working at having our two New York facilities really work nicely together. '

The obvious next step is to do that in another market. "We have a lot of folks in the middle of the country," Hoffman observed. "It's a natural place for us to put that."

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