SuperNet: Sales Demand a Plan
If the telecommunications industry is in a funk, you wouldnt have known it by attending the SuperNet show in Santa Clara, Calif., Jan. 14 to Jan. 17. Here was a trade show that by all rights should have tanked, and yet it proved successful and even charming.
About 5,000 people were expected, and more than 6,000 showed up. Conference sessions and the exhibit floor were crowded. Some exhibitors complained that there were too few customers, but thats a regular gripe.
That this success occurred at a time when money is extraordinarily tight is an indication of the critical role that next-generation technologies, such as softswitches, broadband access systems and optical networking, will play in the future of the service provider industry. For the most part, the organizers, the International Engineering Consortium and the Telecommunications Industries Association, had a credible first-year product.
The theme that emerged from SuperNet is that newer equipment vendors are being much more cautious about their connections to service providers. Makers of service creation systems, softswitches and optical gear say they pumped resources into trials with network operators that no longer exist.
At Accelerated Networks, Fima Vaisman, vice president of marketing and product management, admits the company has turned down some service providers asking for his companys Integrated Access Devices and network gateways for packet-based voice services.
"If they dont have a business plan, they dont have the expertise to deploy the system, we dont want to sell it to them," he says. "Every sale requires resources and we cant afford to put those resources in companies that arent likely to succeed."
Other vendors echoed those comments, saying they are scrutinizing their potential customers more closely than ever. In some ways, the newer start-up companies were lucky. While they were desperate to land any service provider customer, in order to show investors and, in a post-initial public offering world, Wall Street, most could not compete with the industry giants in offering financing at levels greater than the value of the equipment sold. They often turned to third-party companies to help their customers finance a large equipment sale, and those parties in turn did due diligence that kept some deals from going through.
A Digital Subscriber Line equipment vendor who requested anonymity admits to publicly complaining about how hard it was to compete with Cisco Systems and Lucent Technologies, because of their financing ability.
In the heyday of vendor financing, Lucent, Cisco and Nortel Networks committed $7 billion, $3.1 billion and $2.4 billion in loans, respectively, to customers. Only a little more than half was drawn out by service providers.
But service providers need to be more careful in making technology leaps with new equipment vendors. The name of the game isnt having the hottest new technology, but having the technology that most easily integrates into an existing network to offer new services with high potential revenue.
Thats why some players are building integration tools and software into their systems. For example, Appian Communications is trying to stand out from the rest of the metro optical folks by selling a service element manager along with its systems and, lately, by partnering with Operations and Support Systems folks such as Imperative, Micromuse and Portal Systems.
"Its very important that service providers have the tools to offer dynamic service provisioning to lower the cost of ownership and help them generate revenue," says Karen Barton, Appians marketing vice president.
Service providers are also looking for systems integration and other support from their vendors, and thats not going to change as new technology gains a foothold. The bottom line on all sides is a greater wariness by all partners and greater honesty in assessing barriers to deployment.