Intel invests in open-source telephony firm Fonality

Fonality said that it has taken in $7 million in funding, led by Intel Capital which will be used to expand Fonality's operations in the U.S. and internationally.

Fonality sells PBXs to small businesses, using standard PC hardware and the Asterisk open-source voice-over-IP software.

The company builds voice applications, such as integration with Microsoft Outlook and Salesforce.com, on top of the Asterisk software, said CEO Chris Lyman.

Fonality competes with traditional PBX providers, such as Cisco and Nortel, by offering cheaper products, Lyman said.

Although there is no arrangement in place, Lyman said that having Intel as an investor opens the possibility of selling Fonality through Intel's value-added reseller (VAR) channel.

"Intel sees telephony as quickly becoming the realm of data VARs versus the phone guys," he said.

The company was founded in early 2004 following Lyman's experience buying a sophisticated phone system for a five-person operation, Lyman explained.

At the time, Lyman was trying to establish a residential voice-over-IP company, but when he got the bill for the phone system--$15,000 without installation--he decided to change course.

"When we saw that price and we heard about Asterisk, we said 'This is our business,'" Lyman said. "That's ridiculous."