Testing Minnow Crosses Atlantic
The 20-strong firm, based in Newtownabbey in Northern Ireland, made its first foray into North America by opening an office in San Francisco eight years ago, but withdrew from the market in 2000 "during the industry crunch," says managing director Aubrey Sayers.
So when Arca saw an opportunity to market its VOIP test product set in the U.S., it decided to minimize its risk and set up an OEM deal with existing partner Teltone, which was already marketing Arca's ISDN and PSTN test products. Teltone announced its launch into the VOIP test market with Arca's Harmony product this March.
But only seven months later that deal was abandoned. Sayers says that having a channel partner that was using sales agents to sell the products left Arca too far removed from the customer base to gauge the state of the market. "We want to get closer to the U.S. customers, and decided that the market demand is strong enough to warrant us opening an office and going it alone," he says.
And he says Teltone didn't feel it was making enough money from Arca's VOIP test line to continue as a reseller. "That part of our relationship was ended by mutual agreement. We had been discussing it for some time. It's all been done amicably."
Sayers says the tipping point for his decision to go solo in the U.S. was seeing the level of interest in VOIP test tools at the recent VON event in Boston. "There was a lot of interest in the products on Teltone's stand. We reckon the market's sufficiently big to justify our move," says Sayers, who adds that a Boston office is being set up any day now.
So is Arca making a wise move? Industry forecasts, the amount of activity in the sector, and the testimony of the market's big guns, such as Spirent Communications and Empirix Inc., suggest that Arca's timing is about right.
Frost & Sullivan reckons the value of the VOIP test market will grow from $133 million in 2003 to $607 million in 2010 as service providers launch and ramp up their VOIP offerings and vendors bring new products to the market. Existing players have seen a significant upturn in business this year that has led them to expand and launch new products and services (see Report Touts VOIP Test Market , Spirent Ups VOIP Test Ante, Empirix Hammers on Carriers' Doors, Empirix Has Growth Spurt, and Agilent Launches VOIP QOS Tool).
But up against such large and well-known competitors, what can a small player such as Arca achieve? Sayers says the demand he saw in Boston fitted well with what his firm has to offer, and although Arca will have to use sales agents at least he'll be only one step removed from the customer.
"Not everyone wants, or can afford, big products from the big players. We offer a low-entry-point product that's expandable for mid-sized customers, but unlike other small players with cost-effective products ours is not a one-trick pony. It's an integrated packet and circuit-switched voice performance test platform, and we've developed a graphical interface that's easy to understand. Some of the other suppliers have interfaces that are still geared towards inhouse techies that can play with the product and generate their own view of the results."
So where does that leave Teltone? Sayers says the two companies are still partners, and that Arca is still reselling Teltone's Edge platform, which tests the TDM voice capabilities of network elements, outside the U.S.
Teltone's director of marketing, Cindy Anderson says abandoning the VOIP test gear arrangement was a decision that was "best for both parties. There are no hard feelings, and it's not as though they abandoned [us] or anything like that. We had made a significant marketing investment in the Teltone-branded Arca products, but that was the nature of our agreement. I think, in retrospect, we would have liked to wait until the product [Harmony] was more mature before entering an OEM relationship."
— Ray Le Maistre, International News Editor, Light Reading