Mayan Finds a Customer

Finally, Mayan Networks Inc. has some good news to talk about. The company, which has been around almost as long as Cerent (bought by Cisco Systems Inc. [Nasdaq: CSCO] back in 1999) announced today its first real customer, NTT ME, a subsidiary of the Japanese carrier NTT Corp.

Analysts seem split on how much of an impact the NTT deal could have on the company, in light of the fact that Mayan told employees last week it had to downsize its workforce to cut costs (see Mayan Ruins?).

“I think it’s significant that they could close NTT, given the fiber-rich market that Japan has,” says Chris Nicoll, vice president at Current Analysis. “As long as the deal is not a fluke and it's part of a strategy, then it’s a positive for the company.”

So what could be wrong with a customer win? For one, the amount of the contract has not been disclosed, which makes it hard to evaluate how much business it will generate for the company. Secondly, the products shipped were through a reseller channel and not for a direct sale. Although it is common for Asian and European carriers to sell equipment on behalf of the manufacturers, it’s not an ideal money-making proposition for startups, says Scott Clavenna, president of PointEast Research LLC and director of research for Light Reading.

“Sometimes those reseller agreements don’t result in much of anything,” he says. “They aren’t using their own sales force, and their margins don’t tend to be as good.”

Some analysts contest this point of view, arguing that NTT is a tier-one player in the world market and getting a foothold there could be just what Mayan needs to get itself back on track.

“The benefit of selling through NTT is that services are bundled in with the Mayan units, so that NTT can show a stronger revenue model than if they were just selling equipment,” says Nicoll. “And Mayan benefits from the NTT name in Japan. Overall, not a bad deal.”

But even Nicoll has his reservations. "The real measure, though, is when revenue shipments start and how quickly they ramp up," he says.

-- Marguerite Reardon, senior editor, Light Reading http://www.lightreading.com