WaveSmith Wins at SBC
WaveSmith Networks Inc. -- the No. 3 company on Light Reading's Top Ten Startup List (see WaveSmith Networks) -- has hit the milestone most startups covet: the multiyear, multimillion-dollar contract with a regional Bell operating company (RBOC).
SBC Communications Inc. (NYSE: SBC) has picked WaveSmith's DN 7100 multiservice switch for DSL aggregation for 200 of its switching sites nationwide (see SBC Deploys WaveSmith's DN). According to WaveSmith, at least one switch will be deployed per site, with the potential for more than one in some locations.
WaveSmith spokespeople say they're constrained from giving the exact value of the deal, and SBC hadn't returned calls for information at press time. Apparently, the rollout's already started, with switches live in portions of SBC's network.
The deal marks WaveSmith's first big win, though it's scored prior contracts with a couple of competitive local exchange carriers (CLECs). (See WaveSmith Wins Twice and WaveSmith Wins Customer.)
"We're pretty psyched," says CEO Thomas M. Burkardt. "It's taken a long time... [Our] people have worked hard for this."
The RBOC market is considered to hold the most potential for vendors dealing in access and edge equipment in North America. It's the Big Time for established suppliers -- and, for many startups, the key to survival.
The significance goes beyond revenues, though money always helps. The recognition of WaveSmith's technology by SBC is the real career-builder.
"This installation increases WaveSmith's chances of winning other deployments at SBC and with other RBOCs," says Kevin Mitchell, directing analyst at Infonetics Research Inc.
Mitchell also finds it significant that WaveSmith won this contract over incumbent players. Though details of which firms WaveSmith beat out aren't available, Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Cisco Systems Inc. (Nasdaq: CSCO), Lucent Technologies Inc. (NYSE: LU), and Nortel Networks Corp. (NYSE/Toronto: NT) also play in this space, and most of them have supplied gear to SBC in the past.
At least one other observer agrees the impact of the deal can't be downplayed. "This is a very significant win not just for WaveSmith. This proves that startups can win, if they focus on solving RBOC problems and try to meet their requirements," says Mark Bieberich, senior analyst at Yankee Group.
What were some of the needs WaveSmith met? According Bieberich, the box's compact size and ability to pack DSL channels onto a large amount of multiple ATM virtual circuits per chassis helped distinguish the vendor from competitors. It's also likely WaveSmith's costly investment in obtaining Osmine certification from Telcordia Technologies Inc. -- a must for RBOC acceptance -- paid off (see WaveSmith Scores Osmine).
It's worth keeping a careful eye on WaveSmith's partnership with Ciena Corp. (Nasdaq: CIEN). (See WaveSmith Gets $30M, Signs With Ciena.) According to Mitchell, even if Ciena didn't play a role in getting WaveSmith into SBC, the vendor could help WaveSmith with service and support later on.
WaveSmith has certainly caught Ciena's attention. In an interview at this week's OFC Conference in Atlanta, Steve Chaddick, Ciena's senior VP for corporate strategy and marketing, said that Ciena had been impressed with WaveSmith's progress. "They will find success... We provide the financial backing. It's a good partnership."
Might the partnership lead to acquisition? Chaddick certainly didn't rule out more startup acquisitions by Ciena. "Valuations are nuts right now... It's a pretty good time to be looking around."
What's next on WaveSmith's plate? Burkardt says there are several trials underway with North American carriers, though he won't say whether any are RBOCs. The sheer pressure of it all could weigh on a small firm, which still has just 100 employees.
The startup's win throws into relief the fact that Équipe Communications Corp., Ciena's other startup investment, hasn't gotten its big break. Though they play in different markets (WaveSmith at the edge and Équipe in the core), their common ATM heritage and relationship to Ciena provoke questions of who will survive -- or ultimately be bought by Big Brother or another player.
— Mary Jander, Senior Editor, Light Reading