Digium CEO Mark Spencer has spent a lot of time over the past few years politely turning aside the advances of VCs but he has finally caved in by taking $13.8-million from Matrix Partners. For open-source supporters, it's another sign the "movement" has gone legit. Of course, Red Hat buying JBoss for $420-million earlier this year was a pretty good sign that open source was entering the mainstream. So why did Spencer, who I once described as the Linus Torvalds of IP-PBX, taking the cash? Well, it's not exactly clear because he says Digium, which oversees development of Asterisk and sells related hardware and services, doesn't really need it. In talking with Spencer, it sounds like he's aware of the growing competition from small and larger rivals, and wants to make sure Digium has the cash it needs to strategically respond. "This is really about trying to make sure we do the right things going forward," he said. "When you start out, there is a lot of room when you are making a new industry to make some mistakes and get away with it. As you get farther along and get people on your tail and paying attention to what you are doing, you have a lot less room, and we need to make sure we preserve a lot of the things we have done that are good."  Spencer said the deal with Matrix, which financed JBoss, is not a traditional VC arrangement. While declining to provide a lot of details, he said it "preserves the spirit of the company and leave the company in control" - nice terms if you can get them. Of course, Digium had some clout given it's been profitable since 2002 and growing revenue by 100% a year.
Note: For more, check Red Herring and BusinessWeek.

The telecom equipment market is under siege - at least in this part of the world where Nortel is trying to slowly restructuring itself back to health. So it is seems, well, strange to hear Redback Networks's ambitious plans to double its workforce to 1,200 from 600 over the next year. In an interview, Mimi Gigoux, who heads up worldwide human resources for Redback, said the company is looking to hire in Canada and the U.S., rather than going off-shore to low-cost regions such as China and India. So what's behind the bullish hiring plans? Redback believes the "explosion" of Web-based services such as IP-TV, VOD and VoIP means huge demand for its edge-routers - a market where the competition includes heavyweights such as Cisco, Juniper and Alcatel. An interesting comment by Redback is their belief the telecolm equipment market is dividing itself between the large players, who are becoming system integrators, and smaller, niche players focused on specific types of technologies. Investors appear to have not picked up on Redback's optimism as the stock has dropped 40% in the past three months.
Update: Speaking of bullish, Cisco CEO John Chambers provided an enthusiastic outlook for the company's fiscal 2007 prospects yesterday with an expectation of 15% to 20% revenue growth. "We are gaining market share against nearly all our peers in the service provider segment," he said during a conference call after Cisco posted better than expected fiscal fourth-quarter results.