Optical/IP Networks

Appian Scores Deal With NTT

For the past several months, the news in optical networking has been saddled with stories about layoffs, falling stock prices, and bankruptcies. The few good stories have came out of Asia, where experts believe near-term growth is still to be had.

Startup Appian Communications appears to confirm that belief, as it has announced a major win with NTT Corp., Japan’s largest carrier and one of the top five carriers in the world (see Appian Wins Big NTT Order).

NTT is the first and only major customer win Appian has announced to date. Few details about the contract are available. Appian officials are tight-lipped about where and how its gear will be used within NTT’s network. And they are even tighter when it comes to the actual figures involved.

“Let’s just say it is many, many, many millions of dollars,” says Mick Scully, president, CEO, and co-founder of Appian.

Appian sells a multiservice provisioning platform (MSPP), or a switch that sits in a carrier’s regional office to provide Ethernet voice and data services to subscribers over a Sonet or TDM infrastructure. Although he wouldn’t name names, Scully says that Appian beat out large equipment providers for the deal. Most likely these included Cisco Systems Inc. (Nasdaq: CSCO) and Nortel Networks Corp. (NYSE/Toronto: NT), which both sell next-generation Sonet equipment.

Mayan Networks Inc., another startup with a similar story of converging Ethernet, IP, TDM, and Sonet onto one platform, announced last spring that it had signed a deal with NTT (see Mayan Finds a Customer). But it turned out the deal was nothing more than a reseller agreement with no actual revenue attached to it. Mayan has since cancelled product development and filed for chapter 11 bankruptcy protection (see Mayan Down for the Count?).

Scully emphasizes that this is not an announcement of a future deployment; but, rather, the gear has already been shipped and Appian is recognizing revenue from it, something that can’t be said for a lot of startups in this economic climate. In March, Appian set up a distribution deal with Sumitomo Corp. in Japan, which Scully says was key to closing the NTT deal (see Appian Wins Big Japanese Deal). Scully says he expects other orders to follow.

This contract announcement is one of only a handful of deals that has been announced in the past few months between a startup and a major incumbent carrier, signaling that carriers may finally be ready to adopt next-generation optical technology into their networks.

Originally, startups looking to solve the metro bottleneck with Ethernet targeted new service providers like CLECs (competitive local exchange carriers). But many of these carriers ran out of money and went out of business, leaving startups with the incumbent carrier market, which has longer sales cycles and more stringent requirements. The sale can be further complicated by the fact that these carriers are also generally less willing to gamble on new technology.

”NTT is a huge company and a tier-one, worldwide carrier,” says Michael Howard, principal analyst and co-founder of Infonetics Research Inc. “It’s an absolute great win, not just for Appian, but for the whole sector.”

But does a small startup like Appian have the werewithal to follow through on the contract? Scully says the 118-person company is doing fine financially. He says they still have cash remaining from the $60 million third round it closed last December (see Banks Pile Into Appian). And with revenues now coming in, he says he doesn’t expect that the company will need to raise funds anytime soon.

“We’ll see what 2002 brings,” says Scully. “But at this point we aren’t looking for money, and what we have should take us through the mid-point of next year. The next round would go more towards building inventory and broadening our sales channels.” As for the future, he says that he and the other founders are in this for the long haul.

“The only way to build a company is for public exit,” he says. “You never know what will happen, but we didn’t build our business based on the idea of being acquired.”

— Marguerite Reardon, Senior Editor, Light Reading
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realdeal 12/4/2012 | 7:30:35 PM
re: Appian Scores Deal With NTT "Many, Many, Many Millions"

I guess 1mil + 1mil + 1mil could be considered many millions.

But how substantial is this? Just ask Ennovate how important it is to sign up that first customer...

But I guess some is better than none.

Did LR ask MS the following question in order to get a response?

LR: So how much did you charge them for one of them boxes?

MS: GǣWeGll see what 2002 brings,Gǥ says Scully. GǣBut at this point we arenGt looking for money..."

lightmaster 12/4/2012 | 7:30:35 PM
re: Appian Scores Deal With NTT Don't get me wrong. I think this is a significant deal. However, Appican is doing this deal through a distributor, Sumitomo. They can claim revenue just for shipping to the distributor.

I don't question the reality of the deal, but I would question the timing.. Maggie, you should ask them if the revenue is from the distributor or if NTT-Comm is already paying for the equipment.
HarveyMudd 12/4/2012 | 7:30:32 PM
re: Appian Scores Deal With NTT There are over a dozem MSPP vendors whose products are hardly distiguishable.

It is also very strange that a provider loke NTT would accept products from a start-up without as major trial.

There is nothing terrific about the Appian's MSPP products. MSPP companies have not doing very well.

Appian can hide a lot of things but NTT sooner or later will have to disclose the details.
Optitude 12/4/2012 | 7:30:32 PM
re: Appian Scores Deal With NTT Give me a BREAK!!! How many now-defunct or near-defunct metro optical companies "announced" deals with "Asian customers" - Mayan Networks, Zaphire, Alidian - the list goes on.

C'mon Maggie - where is the scrutiny you used to apply to these announcements? The window of opportunity closed on all metro start-ups who finished the last round of musical chairs early this year with less than 3 customers!

This is a sad act of desparation!
doc21 12/4/2012 | 7:30:32 PM
re: Appian Scores Deal With NTT What's up with Luxn I heard they had a huge layoff
HarveyMudd 12/4/2012 | 7:30:31 PM
re: Appian Scores Deal With NTT Facts stated very well.

Any comments on the Enron deal deal which thrust itself into Fiber leasing business. The huge lies by the company ( also practiced by many VCs) are hard to reconcile. What Enron did to Dynegy is very typical art of lies and deception practiced by many VCs and start-ups. Their unethical activities no bounds. The net conclusion is that the VCs and start-ups cannot be trusted with their products and technologies.

Another myth that has been promoted by VCs and start-ups is what is known as being in stealth mode. This is another shield for practicing deception. Many of these companies have nothing new, as quick glance at MSPP companies would reveal.
Litewave 12/4/2012 | 7:30:27 PM
re: Appian Scores Deal With NTT Author: HarveyMudd

It is also very strange that a provider loke NTT would accept products from a start-up without as major trial.

Harvey, are you really this intellectually challenged, or do you just pretend to be?

How do you know there wasn't a trial? Just because no one reported it in the public doesn't mean there wasn't one.

As a matter of fact....
poster 12/4/2012 | 7:30:25 PM
re: Appian Scores Deal With NTT HarveyMudd reminds me of that crazed, paranoid referee Dennis Hopper used to play in the Nike commercials. it's all a big conspiracy!

while some VCs and startups clearly took advantage of the 'gold rush' or 'bubble' era, your statements all startups and VCs being evil are overblown and totally inaccurate. sounds like you're munching on some sour grapes, or trying to overcompensate for some type of professional (or otherwise) inadequacy. I guess you don't believe in capitalism either. for your info - cisco was once a startup, so was cerent, and the 15454 is an MSPP! how do you like them apples!

from this I can deduce:

you must live in Canada (or some other socialist or communist country), work for Nortel - or maybe Bell Canada - or maybe the government, are desperately worried about competition, or any other mechanism that might threaten your little fifedom.

optos 12/4/2012 | 7:30:25 PM
re: Appian Scores Deal With NTT MR: What is the value of the contract?

MS: Millions.

MR: How many?

MS: Many.

MR: Many?

MS: Many.

MR: (exasperated): How many?

MS (evenly): Many.

MR: [sighs]
optos 12/4/2012 | 7:30:24 PM
re: Appian Scores Deal With NTT Cool. HarveyMudd disses Appian. HarveyMudd is always wrong. Therefore Appian must be doing something right.

It is also very strange that a provider loke NTT would accept products from a start-up without as major trial.

So what does that tell you? Maybe, just maybe you aren't privy to everything that goes on in the industry.

Appian can hide a lot of things but NTT sooner or later will have to disclose the details.

Puhlease. You think Appian would risk making an announcement of this nature without NTT's blessing? All that VC money would belong to NTT if they did.

Doesn't it hurt being so daft, HM?

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