Asterisk and Digium

Shaking Up the Telecom Industry by Harnessing Customers’ Creativity

August 31, 2006

The Digium/Asterisk story provides a good example of one way to build a viable for-profit business leveraging the open-source model while fostering customer-led innovation. By involving customers/developers and partners in the co-creation and evolution of the Asterisk PBX software platform, Digium is able to gain traction and credibility well beyond what could be normally expected for a small technology firm.


When you ask software developers which open source software projects are attracting the most buzz, they mention Asterisk. I found this a bit bizarre because Asterisk isn’t the kind of software application most corporate developers typically care about. It’s not a database program. It’s not a customer relationship management application or a business intelligence tool. It’s a telephone system, for Pete’s sake. You buy a telephone system from a telecommunications supplier, who installs it. Your in-house telecommunications manager administers it, adding users, moving users, changing voicemail prompts, and so on.

That’s the point. Asterisk has broken the mold. Instead of purchasing a PBX system--a combination of telecommunications hardware and proprietary software--you can now purchase, or download for free, the software to run your own phone system. Then, you can buy the telephony hardware from any of a variety of companies, including Digium, the company behind the Asterisk open source software phenomenon. Your costs are likely to be 30 to 50 percent lower than the expense of purchasing a standard PBX system. What’s more, you can customize and extend the software to meet your company’s specific needs.

And that’s what many Asterisk customers are doing. By early 2006, close to four hundred software developers around the world had customized the software and contributed their own customizations and extensions back to Asterisk’s functionality. At the same time, about a dozen dedicated collaborators were busily extending the core software platform. These active customer contributors represent approximately 0.1 percent of Asterisk’s total customer base.

We estimate that there were 400,000 Asterisk-powered phone systems installed around the world by the first quarter of 2006. Some of these phone systems are in small businesses, and others are supporting large enterprise networks. Many had been purchased from any of the hundreds of system integrators and resellers who have sprung up to provide installation, service, and support for these roll-your-own phone systems. A number of voice over IP (VoIP) service providers, including Vonage, had incorporated software modules from the Asterisk suite into their offerings.

The customer-led Asterisk insurgency is the sort of disruptive innovation that traditional suppliers hate. “The big incumbent vendors [like Lucent, Nortel, Cisco, and Alcatel] are all trying to figure out what their Asterisk play is going to be,” Mark Spencer, Asterisk’s creator, explained in early 2006. “Some of the big vendors who clearly understand the direction this is going, who recognize the open source trend, are actively working with us to figure out what the best way would be to better adapt to the new reality.”[1]

“The broad telecom space was ripe for open source,” said Mark. “The customer base consists of a very technical audience. There’s a huge cost differentiation between proprietary solutions and what you can do if you roll it yourself. Telecom solutions demand extreme customization. All of these are the factors that make the telecom space a good market for open source products.”

PBX Software Created to Solve a “Lead User” Problem

Mark created the initial code for Asterisk in 1999, as a matter of necessity. At the time, he was a computer engineering student at Auburn University in Alabama, running a software consulting firm, Linux Support Services, from his dorm room. It was a smart business model, run by smart volunteers. At a time when Linux knowledge and support services were hard to come by, Mark was able to recruit other Linux techies to provide support for his growing list of clients. He was successfully harnessing the cooperative spirit of the burgeoning Linux community.

As the business grew, Mark needed more than his dorm room phone to put a professional face on the business. In an interview with Howard Wren, Mark described the origins of Asterisk, “‘I had about $4,000 to start it out with, and I wasn’t about to buy a phone system, so I figured I’d just make one.’” Howard Wren wrote,

“He created Asterisk, a software platform PBX system, and open-sourced the code in 1999. Asterisk was not particularly useful to others outside of Spencer's own needs for his company, until a few years later when community contributions added support for more industry-standard telephony hardware, and modern Internet voice communications technologies, like voice over IP (VoIP), to succeeding versions. As the user base of Asterisk grew, Mark Spencer founded Digium, Inc. to capitalize on providing support for the software and to ensure development of it at a professional level. Written in C, Asterisk remains free to use and open-sourced.”[2]

What’s the Business Model for Open Source PBX Software?

As he looked at the telecom market, all Mark could see was opportunity. “There are two steps to deciding whether an open source model makes sense for your business,” Mark explained. “The first step is to decide whether open source is going to hit your industry, whether you’re involved or not.” As mentioned earlier, the conditions were certainly ripe for the telecom industry.

“The second step is to decide what business models exist that allow you to make money if open source is going to hit your industry,” he explained. As a lead user who had already developed his own telecom solution, Mark saw several opportunities: 1) He could develop and sell hardware components that were optimized to work with the Asterisk software. 2) He could sell Asterisk support services to customers, just as he was currently doing with Linux support. 3) He could develop, test, and certify a commercial quality version of the software and license it to companies and resellers who didn’t want the bother of having to evolve and maintain their own software. So he set up a business--Digium--to do all three things.

By the end of 2005, Digium had grown to 50 people. It has been profitable since its second month, according to Mark, with much of its revenue coming from hardware sales. Digium sells Wildcard telephony interface cards and adapters to connect traditional analog phone systems as well as newer digital voice over IP (VoIP) systems to servers running the Asterisk software. Mark expects the hardware component of his business to decline over time, as companies move away from older analog telephony to newer Internet-based telephony. So in 2005, Digium introduced its own packaged version of Asterisk, called Asterisk Business Edition, which is thoroughly tested, documented, and includes technical support. Digium also licenses Asterisk to vendors who want to resell it and for whom the noncommercial terms of the open source GPL license aren’t appropriate.

Built an Open Source Community

When he realized that there was quite a bit of interest in his open source PBX code, Mark put his considerable promotional skills to work to grow the developer community (lead customers) and the solution provider community (suppliers) in order to build an ecosystem around Asterisk. For Digium and Asterisk to be successful, Mark and his small team needed to attract developers, corporate customers with a stake in the game, other hardware providers, telephony system integrators, and other companies that could build businesses around Asterisk. “We couldn’t be the only player in the ecosystem,” Mark explained. “We had to be one of many players.” That’s what made the PC successful. “Because of its open architecture, hundreds of companies sprang up around it, selling everything from video cards and sound cards to application software.”

Mark and his team created a separate Web site to host the developer and user community. By 2003, there was already a small community of avid developers who were modifying and extending the code to add the functionality they needed. Mark Spencer and Kevin Fleming, both Digium founders, are the co-maintainers of the code base, although there are several people who are authorized to commit code. The first production version of Asterisk, Version 1.0, was released in September of 2004. It included basic PBX services, as well as IVR, three-way calling, call conferencing, voicemail with directory, and caller ID. It's also a gateway for VoIP interoperability.[3]

PLEASE DOWNLOAD PDF FOR THE ILLUSTRATION. is the original home page for the open source Asterisk PBX software. Here you can see information about the latest software releases of the enterprise level PBX software. also has an active Asterisk community but that mostly revolves around the Asterisk@home consumer version of the product and the single user version of the GUI client.

Asterisk@home--a set of extensions to Asterisk that are used to configure a home PBX--took on a life of its own at the SourceForge open source collaborative development site. By late 2005, Asterisk@home had become one of the top ten projects on SourceForge (a barometer of popularity in open source land). Asterisk@home is a project that is completely independent of Digium.


A description of the open source Asterisk PBX software can be found at This site appears to have the most up-to-date information about the Asterisk software. Asterisk is the name for the open source project. Digium is the original company "behind" the Asterisk software. Digium actively supports the Asterisk development community and the Digium developers are the key people who decide what goes into each build.

The 400 or so active contributors include a few corporate developers who are extending Asterisk for their own use, lots of developers from system integrators, value-added resellers and solution suppliers who are solving problems or adapting the platform to meet the needs of their clients, and several academics. Like all developer communities, these people answer other developers’ questions as well as contributing to the code base....


1) Interview with the author, February 14, 2006; all other unattributed quotes in this section are from the same author interview.

2) Howard Wren, “From Analog to VoIP: Asterisk Brings Telephony Together Under One Open Source Platform,” (Diggable, posted January 12, 2006)

3) Interview with Mark Spencer, by Sean Michael Kerner. Developer Column on, May 13, 2005.

4) Wren, “From Analog to VoIP”


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