Genband Perspective 2010 Live Blog

Rich Tehrani : Communications and Technology Blog - Tehrani.com
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Genband Perspective 2010 Live Blog

CMO Mehmet Balos takes the stage and gives overview of the day - the goal is to better explain the company's goals and future.genband-mehmet-balos.jpg

genband-mehmet-balos1.jpg

President and CEO Charlie Vogt takes stagegenband-charlie-vogt.jpggenband-charlie-vogt2.jpg



2/3 of marquee SPs in 80 countries use Genband.
We are the single largest private company in telecom.
Takeaways from this event:

  • We are innovating more than anyone else
  • We are growing
  • We are global

Class 4 and Class and 5 switches were not forklifted as fast as we thought - but we see an opportunity as switching in the core becomes a bigger deal for carriers.

We consolidated 2,000 COs for Verizon to 200 - same features and functions with 10x less central offices.

Traffic and policy management will become big area of growth for us as well as:

  • switching
  • networking
  • services

Other areas of focus are network tranformation, convergence and broadband.

We have already shipped 200,000,000 IP ports!

Company founded 1999 under name General Bandwidth. We still ship original G6 gateway - has evolved into VoIP.

Packet line gateway - allows you to take all traditional interfaces and connect it to a softswitch. We acquired legacy technology from Siemens. We developed relationships with TEMs in tier 2-3 market.

There still needs to be more consolidation.


In 2008 we acquired ReefPoint - put us in networking business - we were in switching business before this.

We spent the last 18 months working on S9 - SBC - and it has twice the density of anything on the market.

We acquired the gateway division of NSN.

All the media gateways NSN uses in fixed world are from Genband.

We also have relationships with Ericsson and Alcatel-Lucent. We are shipping gateways through both - Ericsson as they upgrade BellSouth.

We spent 20k staff hours looking at Nortel transaction. We spent twice as much time looking at this than anyone else according to Nortel.

We had to raise $400M in a recession - a challenging time to do a significant transaction.

This put us in a unique switching position.

the CS2K has been transformed and is a subset of our new Genius platform. We have market leading app server and softswitch and we are proud of this.
130% growth compounded annually for last 6 years.

We secured 99% of employees we offered jobs to and we are adding more people than we are subtracting.

Nortel had 700 legacy IT systems - we had invested in a state of the art IT system and we needed one that made it easy for us to make acquisitions. Similar to Cisco we are a company that fully integrates on day one.

Operating in silos like other companies make it very challenging. We have made a strategic investment in Oracle - and this will be a case study for them. We integrated 700 legacy IT systems in nine months - and we'll do it spending $20-$25 less than we thought we would. That is the culture of Genband we want you to get to know.
  • We will grow orders 10-12% this year and we did $700M in sales last year. We think it can growth 8-10% long-term.
  • Genband is in a unique place.

We have a total of 2,200 employees - made some tweaks to business.

We are leading the market in cable We will have a renewed interest in tier 2-3. the C15 is a Nortel product and we have a great opportunity to compete with Metaswitch via this offering.

Prior to CVAS 70% of our products were sold through channel - via large equipment providers. CVAS acquisition allows us to fulfill directly 80% of what we sell.

This gives us global reach to service and support our customers. Our DPI and other products such as SBCs can be pulled through now.

We feel over 18 months carriers want an end-to-end solution and Acme Packet has most of their sales via the indirect channel 70-80%.

$265M in R&D spend - we think we spend twice what anyone else does on innovation.

Fred Kemmerer CTO takes stagegenband-fred-kemmerer.jpg


Most exiting time to be in telecom over last 25 years.

4G, WiMAX, etc will allow broad deployment of IP-voice across mobile network. Washington and regulatory agencies are seeing that we should sunset PSTN.

Networks become seamless and IP oriented.

PSTN will disappear in North America. Carriers and over-the-top companies (Google, Skype, etc) will collaborate - Verizon and AT&T have strategic relationships with Skype.

They see this collaboration is essential to meet end-user's needs.

It is essential that SIP be used to allow for converged services platforms - same services with similar user interaction and features - the stable common denominator.

FMC becomes more important - need to use these services wherever they go.

Google and Apple have the first two developer platforms locked up and there is room for three - will carriers react quickly enough to be the third?

Carriers must court development communities to make their networks more valuable.

Customers want to go a-la-carte and not have bundled software like Microsoft Office.

Dedicated apps will change computing.

Genband is adding APIs to work with over-the-top and carriers - are reaching out to Skype and others to help carriers get to where the developers are.

Carriers will likely move to tiered pricing models and carrier profits will likely grow when this happens. Why?

Occasional users will eventually pay less - and heavy users "like me," he said will pay more.

Mass customization will ensue and create a stickiness between you and the carrier - to ensure you have it set up so it is tailored to your preferences. "The last thing you want to do is switch carriers when you set this all up."

Carriers must work with social networking companies because that is where developers are.

Carriers must sell advertising to be competitive.

The business model in the long-run is to be an enabler of ads and apps and take a small piece of each transaction.

Internet ads are not saturated - local is a huge market.

Subscriber growth and time on internet is growing faster than Internet ad spend - there is more opportunity.

Keith Landau Chief Product Officer Takes Stagegenband-keith-landau.jpg


What we're known for is: High-scale, high-capacity fault-tolerant platforms

A series platform is about applications
C series is call control C15, C20 - class4 & 5 capabilities
G series: media gateways - G6, G2, & G9 - next gen IP media gateways
Generation one was ATM based
Many put IP on top of ATM
G9 was based on IP
P series: packet - DPI-based packet technology
S series SBC - market leading - high capacity - tie into femtocell
D series TDM - less than 10% of business - less than 5% of R&D is here - all support is out of Istanbul

Genius - unifying force in these platforms - unified apps on Genius platform
Security gateway is a product but IPSEC is a functionality which will reside on Genius platform.

In old days - there were few telecom companies - things moved at coordinated and organized pace - allowed levels of quality and control.

When Internet came along - data became king.

More start-ups, more innovation - gave SPs headaches

IMS was to allow best-in-breed products to be mixed and matched

Networks need to be simplified

Genius: high availability middleware

Linux based

ATCA based - rackmountable and blades in future

We needed to finder a better way to deal with software, faults, etc. At its core - unified management framework - too many systems try to cover up sins of products with element management layer. We are trying to eliminate differences at platform layer.

Open-slot - allows us to integrate other solutions on our products. A light integration - allows them to take advantage of software loading and alarming. Likewise they can integrate their products with Ericsson and Alcatel-Lucent, etc. Great for product mix and matching.

Application development to become easier.

Genius has been deployed in CDMA and GSM networks - under a different name for four years so far.

We will reduce costs for us and customers while accelerating time to market and time to money for partners.

C20 and A2 application server will have it first.

CS2K became C20 - in a single-shelf of ATCA equipment - simplified element management - double capacity, footprint and power reduction - and can now integrate other products via blades - no new box needs to be added with new management etc.


40k simultaneous IP calls at one time in one chassis - put two together and double this. We are adding video - and now you can take video in large screen format and adapt it for end-to-end sending without bandwidth waste. We are adding intelligence back into network.

P series - traffic and policy management - look at header and payload at edge of network and helps you to manage the traffic - allows consistent QoS - user and application aware - looks for anomalies in network - you don't clog up network - finding traffic should have gone to the Internet in the first place.

This is where portfolio comes together in a converged network.

Mobile broadband - G9 - 80% are GSM and UMTA - also in femto space - Samsung and NEC and Alcatel-Lucent are integrators - 30% of commercial deployments and trials run on our security gateways and G9s.

Last thing in femto space which is needed - is a way to hide complexity - when you realize these solutions can be deployed in communities - you can deal with security at edge or upgrade packet infrastructure.

Our solutions are mobile aware - we take it off at edge of network - we don't wait for it to hit the middle of network and then find it should have gone to the Internet.

By using user and content aware - we can personalize services based on TPM technology - we can look at content and location to show ads for example.

Mobile-data offload solution will be based on this - a new product.

Summary:

  1. Hardware independent - use COTS technology - we ride processor technology from Cavium, Intel and others
  2. We are software-centric - individual apps on Genius platform - common look and feel, patching systems - and simpler way to deploy complex systems.
  3. Flexible architecture - seamless interconnection - faster solutions and time to money for customers.
Jeff Townley, President of Operationsgenband-jeff-townley.jpg
  1. Breadth and depth of services organization
  2. Ability to innovate
  3. Ability to transform and migrate network
We have support people in Shanghai, Mexico City

Professional services and maintenance services - customers include AT&T, Telefonica, Verizon and Cox

15,000 IP projects have been completed to date.

40M lines converted to IP so far

We help customers save CAPEX - do extensive analysis - we can rebrand our website to look like theirs - and perform services on their behalf.

Traffic and policy management - is a services play as no two customers will use it the same way.

Earlier this year Hurricane Alex - got on the phone with customer - talked about how to disengage equipment in lower racks - they flooded bottom units. Walked them through process to dry equipment - they did and 95% was still working. they had supply chain ready to ship replacements if needed.

Supply chain is critical - "We sell solutions" you really have to have world class supply chain and our performance delivery is 95% - this means 95% of time 100% of material gets there on time. The other 55 a day or two late - they work to get it there as fast as possible.

Summary:

This is about an evolution not revolution in network - networks will keep transforming. We are in business to transform networks. We have expertise to understand interop to deploy and support netyworks with 100% reliability.

  1. Experts in IP Evolution
  2. Leaders in Transformation
  3. Innovators in Services Practices
Customer Panelgenband-customer-panel.jpg

  • Bob Finely, AT&T
  • Alon Glasman, Hot Telecom
  • Hai Turner, pac-West
  • Don Poe Telepacific
  • Mark Ianuzzi, TelNet Worldwide
  • Tim Dwight, Verizon
Lots of discussion about replacing other equipment from Acme Packet, Siemens and others with Genband. Pac-West - Announced Telastic - based on Genband - they seemed very happy. Other talk of replacing Acme and Broadsoft with Genband equipment from Telepacific.

Genband has good relationships with customers according to Poe.

Ianuzzi said TelNet is an MSP and CLEC - over 100,000 voice paths being processed on monthly basis. Everything will be IP, mobile and personalized. 

Verizon and AT&T careful not to get themselves in trouble by promoting any vendor - smaller carriers seem more free to speak their minds.

Audience of financial and tech analysts begin to ask questions:

End-to-end solutions are great but so are solutions based upon best-of-breed solutions from smaller vendors. Glasman says time to market is crucial - and end-to-end is easier to integrate but you need to also get the services and features you are looking for.

Turner says Genband is best-of-breed and end-to-end and their video vision is important to them in a  converged mobile and app strategy for end users. professional services are very important to them - especially as they move to SIP.

AT&T mentions they are moving to IMS. Verizon says that new services need to drive new infrastructure. They aren't building IMS to offer POTs but new services and at some point it becomes the single fabric for legacy services as well.

Need to build IMS core before you can add services - this is what Verizon is doing now according to Dwight - and we're moving pretty fast - a point he reiterated which he also said in response to an analyst question as to why network transformation is taking place so slowly.

Genband Executive PanelThumbnail image for genband-executive-panel.jpg


MSO operators are looking at mobile now that voice is eroding in share. One consortium group in US is deploying A6 for FMC - our IMS solutions play well in this space. Traffic and Policy management gaining traction at one MSO - replacing a marketshare leader.

We are enhancing softswitching base. C20 - smaller footprint, higher scale.genband-charlie-vogt-3.jpg



Voght:

Network transformation is happening first and foremost in North America. Verizon and AT&T have 6,000 TDM switches - need to collape 600 TDM switches per year. This is why Nortel CVAS was a good acquisition as this transition happens.

At some point the network collapses and the old network goes away. We are seeing this with a lot of carriers.

We are in a unique position to elegantly transform switches to IP over ten years.

Question about antitrust "When will you have to deal with this issue?" - Vogt says he would love [to be so big] to see that happen. "We are a little sub-billion dollar company from Texas," we have a way to go before we become as big as Alcatel-Lucent, Ericsson, etc. Still, we are very focused and want to dominate our part of the market.

Vogt:
Margin profile increasing 1-2% every quarter. Low to mid 50% gross margins is target. Want EBITDA profile to be 16-18% long-term and we have a path to get there.
 
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In summary the event was high-energy and much-needed as Genband has become a mini Alcatel-Lucent for all practical purposes. And most of the analysts in the room found it a beneficial meeting as they are able to much better understand how all the Genband pieces fit together for customers. The company is more like a TEM 2.0 - all the patents and history associated with a legacy company through acquisitions but the agility of a much smaller and more hungry organization.

Perhaps the most similar companies are Cisco and Oracle - which is the highest form of praise. Moreover the company is laser-focused on a number of areas but taking share from Metaswitch and Acme Packet seems to be high on the priority list and one can imagine that taking these companies on while improving margins will be an interesting challenge.

If Genband has an IPO and it is very successful it could with the assistance of a strong Skype IPO help add even more fuel to the fast-growing tech sector and bring even more investment into the space.

The next few months and years will be interesting to watch as the company is one of the few strong acquirers in telecom and tech and they have a global platform which enables them to quickly add on new products and solutions.

Similar to Cisco, the company is in a position to quickly acquire a company for a relatively low valuation and instantly increase sales via global distribution. Just the arbitrage game they can play by doing this repeatedly can add tremendous value and help them grow their carrier relationships worldwide. In short, kep watching this space and company.

I am off to the Metaswitch Forum in Orlando next and then to IT EXPO in Los Angeles - conference registrations for the expo today were off the charts and we have sold out every hotel block we have booked. It should be a solid few weeks of education and networking and I can't wait.


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