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Optical/IP

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
http://www.lightreading.com
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realdeal 12/4/2012 | 7:30:23 PM
re: Appian Scores Deal With NTT Does anyone know if Sumitomo is an investor in Appian? Or if Sumitomo has one of those "discrete" investment arms, not using the name "Sumitomo", which has invested in Appian?

Anyone know how to find out?
adobe2 12/4/2012 | 7:30:21 PM
re: Appian Scores Deal With NTT The only box that Appian sold before this deal, was to Sumitomo a few months ago (for somehwere around $20K), but again Sumitomo buys boxes from everybody.
I believe they have some small investment in Appian, how much; I don't know that ????
miki02 12/4/2012 | 7:30:15 PM
re: Appian Scores Deal With NTT >Does anyone know if Sumitomo is an investor in >Appian? Or if Sumitomo has one of those >"discrete" investment arms, not using the name >"Sumitomo", which has invested in Appian?

See Appian press release dated March 5,2001.

The amount is typically in the $2-3M range.
Sure, they'd love to see a return on this; have been quite serious marketing the product in Japan
since.

Note the difference: the buyer of the Appian gear is NTTCom, not NTT. NTTCom is a sort of CLEC, spun off from original NTT and thus with a deep pocket (Just wrote off $4B on Verio).

The Ethernet-to-SONET/SDH gear Appian is pitching is indeed an interesting concept. Established cariers have invested so much on SONET backbones, but their users want Ethernet services now... Never mind whether it'll work. A couple of millions on Appian won't break their neck.
lo_mein_noodles 12/4/2012 | 7:30:13 PM
re: Appian Scores Deal With NTT Trimming down to make a would be buyer happy? or will this be just another step in a long, long, slide into obscurity? Too bad their products are not bad. Funny thing here is people will say "bad economy" and nobody will notice it was really all the piss poor steps their management has made for the past six months.
StartUpGuy1 12/4/2012 | 7:30:13 PM
re: Appian Scores Deal With NTT Luxn did have a big layoff on Tuesday. No information other than the sales staff is very very lean now.
my2cents 12/4/2012 | 7:30:11 PM
re: Appian Scores Deal With NTT Trying to dig dirt after this positive news from Appian? You are not being a good neighbor there Mr W.

--
Does anyone know if Sumitomo is an investor in Appian? Or if Sumitomo has one of those "discrete" investment arms, not using the name "Sumitomo", which has invested in Appian?

Anyone know how to find out?
realdeal 12/4/2012 | 7:30:09 PM
re: Appian Scores Deal With NTT Property values are down a bit.
And I bet Sp also offers an employee discount for the all you can eat lunch buffet.

I remember what has happened to others who took investment money and then turned around and claimed to be selling product to the same source. Didn't work then and won't work now.

noitall 12/4/2012 | 7:30:04 PM
re: Appian Scores Deal With NTT amazing to me that a company makes an announcement specific enough to include a revenue figure, albeit a vague one (many many millions), and immediately everyone on this board jumps in speculating that it's bogus. they may all be right, but why is it that these boards are so negative? if we're in the communications business, we ought to give companies the benefit of the doubt "until proven guilty" of b.s.ing the press. people like this harveymudd (probably a nortel lifer just holding onto his paycheck and envious of the money, freedom and excitement so many have found in the world of communications startups, who needs a lesson in grammar and probably a prescription for prozac), jump on every announcement a company makes and pronounces it a lie.

we need to recognize the differences between promotion, hype and outright lies, but wherever we can, we should be looking for reasons to applaud the companies who are trying to succeed, rather than reasons to discredit them and gleefully predict their demise...i've been guilty of it in the past, but am finding it less and less fun to poke holes in these stories as the industry suffers more and more broadly.

appian, i wish you well.
optos 12/4/2012 | 7:29:59 PM
re: Appian Scores Deal With NTT why is it that these boards are so negative?

Indeed. Armchair psychology brings me to the conclusion that the battered economy and devastated sector that we work in is the cause for so many negative posts. Nobody wants anyone else to make it either (it seems.)

I think people had better start hoping for some indications that the worst is behind us and that someone is making progress. Do you want the sector to continue to be in the doldrums? That's what you're asking for by begin negative. Someone has to be the first to experience events that will lead us out of the recession. If it happens to be Appian, well, we should all be happy for them and wait our turns because things will get better.
realdeal 12/4/2012 | 7:29:58 PM
re: Appian Scores Deal With NTT I can't speak for everyone, but I don't think people are trying to take something away from Appian.

If Appian had announced a deal with Verizon I believe it would be a credible announcement. But when Appian announces a deal with a company which has invested in them, it is without merit.

What's next? A deal with Qwest, the company where an Appian sales person is married to the daughter of one of Qwests decision makers?

I wish Appian well, but I'd like to see a deal with some substance behind it.
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