A surprising change is underway at the top of Zoom Telephonics, as the maker of Motorola-branded cable modems and gateways announced Tuesday that cable industry vet Joe Wytanis has stepped down as CEO.
Wytanis's time at the top of Zoom was brief. He joined Zoom in October 2018 to help the company pursue a strategy focused on sales directly to service providers and expand on a business that had largely been focused on retail sales. Wytanis, a cable industry vet hailing from Cisco Systems, Scientific-Atlanta and SMC Networks, succeeded Zoom founder Frank Manning as CEO a mere five months ago.
Despite efforts to gain ground with sales to service providers, Zoom, which tangled with Comcast and Charter Communications several years ago over their respective retail modem testing policies, has not announced any significant wins in the cable MSO market.
Meanwhile, the service provider market for cable CPE vendors also has not been a kind place of late for much larger, well-established original equipment manufacturers (OEMs), such as CommScope and Technicolor, that do have close ties to major cable operators. They're also being pressured by original design manufacturers (ODMs), such as Sercomm and Sagemcom, that are increasingly eager to work more directly with cable operators as core software is disaggregated and hardware becomes increasingly commoditized.
It appears that retail sales have remained the key growth engine at Zoom, and that played a role in Wytanis's decision to exit and seek out opportunities in the cable arena.
"We've seen outstanding growth in e-commerce and storefront retail, inspiring Zoom to focus its product development and marketing initiatives," Wytanis said in a statement. "Accordingly, we have decided Zoom needed leadership more specialized in those areas as I pursue career opportunities closer to my home location and in the cable MSO space. I look forward to my continued involvement."
Jeff Heynen, senior director, broadband access and home networking at Dell'Oro Group, noted that the retail market for cable modems and gateways has grown considerably as consumers upgrade their operator-leased devices to better-performing modems available for purchase. He also points out that CommScope saw a lift in retail sales of broadband CPE in Q1. Due to pandemic-related issues, Heynen expects the DOCSIS CPE market to be, at best, flat in 2020, but likely down in the "high single digits."
Zoom sales rise on retail wave
Wytanis, meanwhile, is departing as Zoom reported record sales in the first quarter of 2020 of $12 million, up 49.3% year-over-year, citing "robust demand in its e-commerce and retail channels." Zoom also achieved revenue growth despite disruptions to supply chains caused by the pandemic and its ongoing efforts to mitigate the financial impacts of tariffs fueled by the US-China trade war.
In its Q1 earnings release, Zoom noted that it was able to ensure continuity of supply in the Asia Pacific region in January 2020, and characterized current supply chain conditions as "returning to normal." Meanwhile, it also expects its initiative to shift manufacturing operations out of China to sidestep almost all tariff expenses by the end of the third quarter of 2020. Zoom cancelled its scheduled first quarter earnings call.
Though Zoom is small when compared to cable modem rivals such as CommScope/Arris and Netgear, it does wield a big brand at retail, having recently extended and expanded its agreement to license the Motorola name for a family of cable modems and gateways, DSL modems, MoCA adapters and cellular sensors through 2025.
Zoom's board has formed a CEO search committee led by chairman Jeremy Hitchcock, who is also CEO of Minim, a maker of cloud-managed Wi-Fi and IoT security technologies and, as of last summer, a "premier OEM partner" of Zoom's. Wytanis will act as advisor to the board during a transition period.
Given its renewed focus on retail and e-commerce, it's expected that Zoom will focus its efforts on an exec from that part of the field.
- Zoom Telephonics CEO steps down
- Zoom Telephonics extends and expands deal to use Motorola brand
- Zoom Telephonics, Mega Hertz team to sell modems, gateways, Wi-Fi gear to midsized cable ops
- Zoom transitioning production from China to Vietnam to sidestep tariffs
- Joe Wytanis to Succeed Frank Manning as Zoom's CEO
- Zoom Taps Former Cisco/SA Exec to Target Service Providers
- Zoom, Comcast Settle Cable Modem Spat
— Jeff Baumgartner, Senior Editor, Light Reading