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Optical/IP

Marketing Mantra: Prove Your Worth

IP routing startups appear to be going back to basics when it comes to pitching products to incumbent carriers.

While carriers are still looking for innovative technology from startups, they are also focusing on the bottom line. As a result, startups are getting more aggressive in how they market and sell solutions to carriers.

Earlier this week, edge routing startup Laurel Networks Inc. introduced a suite of tools it’s using to help convince leading carriers that its edge routers can save carriers money and allow them to create new services (see Laurel Unveils Analysis Tools).

Laurel has developed four tools: a financial modeler, which allows carriers to do a customized business case analysis of the product; a portable testbed that allows the ST200 Service Edge Routers to be tested with multiple services enabled; an integration lab, which is used to validate operation of the ST200; and an OSS integration toolkit, which helps integrate the product into the existing network management infrastructure.

Such tricks of the trade are nothing new -- they've often been standard marketing fare. But they appear to be getting more sophisticated in the current environment, in which a startup must show potential customers it can help them save money.

"They are marketing them to attract network planners that will be champions for their solution within the carrier," says Mark Bieberich, an analyst with Yankee Group.

Laurel’s approach follows a similar strategy announcement by Juniper Networks Inc. (Nasdaq: JNPR), which is also trying to break into the RBOC market. The company recently launched its MINT marketing campaign, designed to target upper-level executives in Tier 1 service providers (see Juniper Targets Carrier Services). Traditionally, Juniper marketed its gear to technologists in the lab, winning business mostly based on its products’ performance rather than the cost savings they enabled. But recently the company has changed this focus and has launched a big-picture marketing campaign to compete with its main rival Cisco Systems Inc. (Nasdaq: CSCO).

Other companies say that such software perks have become a necessary part of doing business.

“We’ve returned to normal business models,” says Basil Alwan, president and CEO of Timetra Networks. “If you can’t show how your product saves or makes money, you’re done.”

Laurel’s approach is not completely unique, says TiMetra’s Alwan. He says many companies, including his own, develop spreadsheets and tool kits to demonstrate their product’s value to customers.

While Laurel is focusing its message on the mid-level managers in service provider networks, it is marketing a similar message in terms of how its products can help carriers make money.

“It’s smart for Laurel to acknowledge that they don’t have the influence of larger vendors like Juniper or Cisco,” says Bieberich. “They need to find someone who can champion their product all the way up the line. But the message is key, especially in RBOC networks.”

Cisco and Juniper have already broken into a few large regional Bell operators: SBC Communications Inc. (NYSE: SBC) has announced a deal with Cisco; and BellSouth Corp. (NYSE: BLS) has announced it will be using Juniper routers in its network. Both of these big players are also rumored to be getting a piece of the Verizon Communications Inc. (NYSE: VZ) IP contract.

While some of these large carriers have placed their bets on the leading router players, there is still opportunity for smaller companies, says Bieberich. But it's obvious that convincing incumbents to go with a startup will not be easy.

“The product could be valuable to an incumbent, but until they hook up with someone they’ll have a tough time winning business,” says Sam Greenholtz, an analyst with Communications Industry Researchers Inc..

— Marguerite Reardon, Senior Editor, Light Reading
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