WaterCove Picks Low Fruit
Neither party would reveal any financial details.
The deal does not come as a great surprise: One of WaterCove's financial backers is Orange Ventures (significant role in $40 million round in March 2001), so it seemed only a matter of time before the vendor's system was deployed somewhere in the France Telecom SA-owned Orange SA family of wireless operators.
Despite this inbuilt advantage, the deal does carry some weight and significance, as it's a major carrier customer that will have to use the equipment in a competitive environment. That's enough to catapult WaterCove into the Unstrung Top 25 ranking of private wireless companies (see Top 25 Privates: Flarion at #1), which will be revised shortly. [Ed. note: Set up a conference call and break open the Jack Daniels -- we've got juggling to do!].
"This is positive news for the industry," says Rajeev Chand, senior equity research analyst, wireless technologies, at Rutberg & Co.. "There have been a lot of trials, especially in Europe, but this appears to be evidence of some traction. This market offers some medium-term opportunities for private companies. The ones to look out for are those with strong balance sheets, that are funded for the next four to six quarters, and which have moved up the stack with their products. It needs to be more than just a product that is faster or more robust."
There is no shortage of vendors claiming to be able to give the wireless operators what they need to take their data service strategies up a notch and start generating some significant revenue from non-SMS traffic. And along with fellow service node startups Megisto Systems, Tahoe Networks, and Starent Networks Corp., WaterCove has been lobbying the mobile operator community to bypass the usual roll call of established vendors (i.e. Juniper Networks Inc. [Nasdaq: JNPR], Cisco Systems Inc. [Nasdaq: CSCO], Nortel Networks Corp. [NYSE/Toronto: NT], Lucent Technologies Inc. [NYSE: LU], Siemens AG [NYSE: SI; Frankfurt: SIE], and friends), saying their systems are designed specifically for wireless networks (see Having a Flutter on the GGSNs). By naming Orange as a customer, WaterCove becomes the first of these emerging firms to have its system commercially deployed.
The equipment in question -- known as a gateway GPRS service node (GGSN) in GSM-derived networks, and a packet data service node (PDSN) in CDMA networks (see A Wireless Taxonomy for more) -- provides a link between GPRS and CDMA2000 radio networks and the IP backbone. Although the various vendors have slightly different propositions, they are all focused on allowing the operators to develop and provision new data services.
Orange, though, is not keen to talk about exactly how it will use the equipment. In fact there was no one available at all to talk about it today. Unstrung believes WaterCove had its work cut out to get Orange just to agree to announce the deal. As a result, the killjoy operator has forced the vendor to keep the specifics of the relationship particularly close to its chest.
"At this point we can't disclose any specific information," says David Mancuso, WaterCove's corporate marketing director, though he was able to reveal that multiple systems (hardware and software) are being fully integrated into the Orange network and will be managing and delivering data services later this year.
Mancuso is quick to play down any suggestion that this deal was inevitable because of the funding link between the two parties. "While we have a long and very good relationship with Orange, we still had to jump through hoops to get this far. We still had to prove that our systems do what we say they can do."
WaterCove founder and vice president of marketing Jayesh Patel is understandably upbeat about the announcement. "It is amazing for me to see this company go from 4 people to 110 staff and a commercial contract. There is no substitution for live deployment. Announcing product availability is one thing, but having a commercial agreement is the validation that is needed for a new infrastructure company. This takes us from being a startup to being a young company. It makes it easier to talk to other operators and convince them that we can offer a proper alternative."
Without talking specifically about the Orange deployment, Patel says the company's mobile data service system, as it calls it, gives the operator real-time information about subscriber data sessions, provides more accurate usage data for billing purposes, and helps the operator to differentiate its service offerings between various subscriber bases. "It offers visibility, intelligence and control," he gushes.
It does this by integrating a number of different elements into the same box: a server-based solution that allows the management and creation of subscriber profiles, a support node for "the deep packet processing power and high bandwidth switching capability" that mobile data services need, and a data-management system for network management and resource monitoring.
Of additional importance, says Patel, is what this deal will mean for the whole mobile community and for further contract announcements. He believes this will spur on operators to consider alternative technologies and look more closely at what startups can offer. Mancuso adds: "This shows we can sell against the incumbent vendors. We said a long time ago we had something different. Now we hope this will allow us to be more aggressive about announcing other agreements very quickly," though neither WaterCove man would say whether the next deal would be with a non-Orange operator.
It may also spur on the other startups to get news of a commercial deployment into the market sooner rather than later. Could Megisto be next with an Italian deal? (see Megisto: Trialing in Tuscany? ).
— Ray Le Maistre, European Editor, Unstrung