Startups Search for Star Status

With all the hype they're capable of, equipment startups can't seem to get sustained name recognition in the real world, according to Heavy Reading's "2005 Wireline Telecom Equipment Market Perception Study," released last week.

“Routinely, private companies and startups have a name recognition of under 20 percent, while companies like a Cisco score in the 70 percent range, and Juniper, Lucent, and Nortel are in the 60 to 70 percent area,” says Heavy Reading managing director Dennis Mendyk.

That's bad news for startups because those are the companies most in need of name recognition and the perception that they're a market leader. Mendyk says startups tend to take their eye off marketing for a while after they launch because they're so focused on product development.

Some startups also suffer from being in the wrong space. The Metro DWDM category features nearly 30 companies, including heavyweights like Cisco, Nortel, Alcatel (NYSE: ALA; Paris: CGEP:PA), and Fujitsu Ltd. (OTC: FJTSY; Tokyo: 6702). “What chance do you think a startup has getting known in that crowd?” Mendyk asks.

Brian Drachman, director of product marketing at OpVista Inc., a maker of Metro DWDM equipment that came in tied for 23rd in the category with 4.3 percent recognition, says he’s not surprised at the company’s low name-recognition ranking.

Drachman points out that only 8.1 percent of the 160 people surveyed for the report are from the Cable/MSO space, which is the area OpVista has chosen to focus on. “We made a conscious decision to target the MSOs, who we target by attending tradeshows and advertising in cable trade publications,” he says. “But we have designed a carrier-grade platform that would be just as effective in a telecom environment. When we make the decision to focus on new markets –- like the U.S. telecom market –- then we will begin to look at telecom advertising to get our name out there.”

A few startups are recognized as key competitors in their categories and have the potential to emerge as segment leaders. White Rock Networks Inc., which beat out incumbents Ciena Corp. (Nasdaq: CIEN) and Adtran Inc. (Nasdaq: ADTN) to land the No. 7 position in the Sonet MSPP category, is one. Calix Networks Inc., which finished seventh overall in the DSLAM/3G DLC category, and Force10 Networks Inc., which grabbed the sixth spot in the 10-Gbit/s Ethernet switch market, are others of note.

Table 1: Top Startups by Equipment Category
White Rock Networks Sonet MSPPs, Metro DWDM Equipment
Calix Networks Ethernet MSPPs, DSLAMs, and 3G DLCs
Force10 Networks 10-Gbit/s Ethernet Switches
Movaz Networks CWDM Equipment, ROADM Equipment
Allot Communications Traffic Managers
Inkra Networks Content Switches
Infinera Terrestrial Long-Haul DWDM Equipment
Laurel Networks Broadband Remote Access Servers
Optical Solutions FTTx Equipment
Source: Heavy Reading

While some startups in the survey may rank low in name recognition, often their products are used by service providers that get their equipment from larger names that have OEM deals with them. Mendyk points to Tropic Networks Inc. as an example. In the ROADM equipment category, Tropic is listed as No. 9, with a 13 percent recognition rating. But Alcatel, sitting in the No. 1 spot with a 74 percent rating, is a reseller of Tropic gear.

One of the more notable drops in the survey includes 10-Gbit/s Ethernet switch maker Atrica Inc., which dropped one position to the No. 9 spot with 5.9 percent name recognition since the last survey in fall 2003. Not a good thing in a category with only 10 vendors competing.

The survey does show that startups cannot depend on solely using good press to get their names out in the marketplace in a sustainable way. That works for a short time, but without a long-term marketing and strategic plan to get their names out in front of the people making purchasing decisions, they are doomed to bit-player status. And, even those that partner with the right players aren't doing themselves any favors if no one knows who they are.

— Chris Somerville, Senior Editor, Next-Generation Services

The new Heavy Reading report, 2005 Wireline Telecom Equipment Market Perception Study, is available for purchase here.

ragnar 12/5/2012 | 3:24:45 AM
re: Startups Search for Star Status Really....cisco scored better in name recognition than a startup? WOW...that was worthy of a survey!

Were the survey participants crack heads or just comatose.

Start ups should focus their energy and attention on strategic accounts and early adopters hence they would not by nature be known by a greater percentage than an Alcatel or Cisco who sell on every street corner...

Those that try mass market appeal in their early stages usually get known by their obituary in Light Reading.
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