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Going Global, Keeping It Simple

Light Reading
LR Mobile News Analysis
Light Reading
1/27/2006

Like most nuclear power plants, the Salem Generating Station in southern New Jersey must periodically replace its enormous reactor head. Measuring some 34 feet in diameter, the head weighs upwards of 100 tons and is moved along a set of raised tracks like an elevated railway. This process was going forward last spring at Salem when disaster almost struck.

"The rigging supporting the tracks started to sag," recounts Scott Michigan, IT project manager at the Salem plant, part of the Public Service Enterprise Group electrical utility. "If it had continued down that track it could have been disastrous. Our SpectraLink Corp. communications system was critical that day in keeping that from happening. We lost a couple of days on the project, but people recognized that without the SpectraLink phones it could have been a lot worse."

SpectraLink's wireless voice systems for enterprises have found their way into a surprising variety of settings over the last few years, from nuke plants to auto dealers. While the Boulder, Colo.-based company missed its earnings target by a penny a share yesterday (its share price was down 11 percent in heavy trading on the Nasdaq today, but had already begun to rebound in after-hours trading), CEO John Elms, fresh off the $62 million acquisition of KIRK, a wireless communications provider based in Denmark, sees great things ahead for the copmpany.

"Next year looks like a $150 million to $160 million year for SpectraLink," Elms states. "We're a global player now -- our worldwide product sales were less than 10 percent in '05, and this [acquisition] pushes international revenue to 30 percent for the company."

Expanding overseas with its first acquisition carries some obvious risks for SpectraLink, which saw its fourth-quarter revenues rise 10 percent year-over-year to $30.3 million, including the challenge of integrating a company headquartered some 5,000 miles away. But SpectraLink has prospered to date by keeping things simple. As many service providers and OEM manufacturers tout exotic new technologies, SpectraLink is sticking with its tried-and-true voice-over-WiFi system.

"There's all kinds of new technologies out there, people are talking about WiMax, Bluetooth, Zigbee, ultra-wideband, and so on," acknowledges Elms. "And they will have their niches, but in the near term we believe that WiFi will still be the driver of the future for wireless voice in the enterprise. We remain very focused on WiFi voice."

In fact, SpectraLink still generates $40 million a year in product sales, according to Elms, from an even plainer technology: voice communications running over the 900-MHz spectrum. That's the solution that Michigan and his colleagues chose for the Salem nuclear plant.

"We looked at wireless VOIP," says Michigan, "but to tell the truth, 900 MHz was just so simple to hook up and get running -- plus we sidestepped the whole security issue with WiFi."

Indeed, while Elms, whose company claims a 60 percent-or-better share in the WiFi voice market, remains bullish on the future of WiFi for converged enterprise voice and data systems, it has not been quite the engine he foresaw two years ago.

"It's still a vertical market play," he explains. "I expected that large enterprises -- carpeted spaces as they're called -- would have adopted mobile voice more quickly, as just another app on their WiFi networks. What we're finding is that those companies are deploying WiFi, but mostly in public areas -- conference rooms, lobbies, cafeterias, and so on. They're not deploying these broadly based WiFi networks yet."

That will change, Elms says, as more employees grow accustomed to ubiquitous WiFi in the environment, and as the technology standardizes. For now, it's something of a chicken-and-egg problem.

"The fact is, the market needs to get much bigger much faster to get folks to converge on standards. What will drive that is mobile voice in the general enterprise, as IT guys start demanding a comprehensive solution.

For now, Elms advises IT managers looking at a bewildering array of wireless networking options to do what SpectraLink has done: Keep it simple.

"If you're thinking of supporting increasing mobility for your workers, as most companies today are, converged voice and data over WiFi is the way to go. It just seems obvious to me."

— Richard Martin, Senior Editor, Unstrung

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