& cplSiteName &

Has GiantLoop Done a Loop?

Light Reading
News Analysis
Light Reading
1/21/2002

What's up with GiantLoop Network Inc.? Depending on whom you ask, it's either transformed itself or come into its true identity.

After what appears to have been a period of retrenchment, GiantLoop plans to announce a partnership with Williams Communications Group (NYSE: WCG), in which the startup will enlist Williams to provide the underlying infrastructure for GiantLoop customers.

GiantLoop will design multisite data networks, procure connectivity from Williams, install its proprietary data management software on each network, and act as integrator for hardware hooked to the Williams facilities, via arrangments with suppliers of metro and storage area networking (SAN) gear, including Akara Corp., Compaq Computer Corp. (NYSE: CPQ), McData Corp. (Nasdaq: MCDT), and others.

GiantLoop will take responsibility for the overall management and service of each network, even though its partners may be involved. "We will do everything for the customer. There will be one throat to choke -- ours," says Joe Gately, senior VP of marketing and alliances.

The deal with Williams closely resembles another one GiantLoop announced in December with Con Edison Communications, a carrier's carrier spun off from the parent power company.

So, has GiantLoop shifted gears? Has it morphed from optical service provider to network integrator?

That there's been a change is tough to deny. Last year, GiantLoop was touted as a hot new optical metro service provider (see GiantLoop Scores GiantLoot). Yankee Group. "I knew they'd changed their strategy, but I couldn't get to the bottom of what they were doing differently."

Other changes were evident, too. Despite $160 million in funding, news of layoffs started trickling out this past fall. The company now confirms that it's laid off roughly 50 employees and is down to "about 200." Former VP of sales and marketing Jon Oltsik and global communications director Phil Sloan, both high-profile and oft-quoted sources on GiantLoop strategy, have left the building.

The marketing message has changed as well, as reflected in descriptions of GiantLoop given in company press releases over time:

  • July 25, 2001: "The leading provider of Enterprise Optical Networking services"
  • October 5, 2001: "The leading provider of Enterprise Optical Networking services and technology"
  • November 6, 2001: "A leading provider of services and software for information movement, management, and protection"
  • January 7, 2002: "A leading provider of services and software for information management and movement of critical corporate data"


GiantLoop says there's been no change to its strategy. Instead, its message is only now starting to be understood.

"We never set out to be an infrastructure company. We said from the beginning that we weren't competing with Telseon and Yipes. Only a few really got it," says Gately.

Then why all the talk last year about GiantLoop's optical metro facilities? Gately says the startup had no other choice than to license fiber and facilities from other carriers, in order to get its particular expertise in network design and software into customers' hands. But it was never in the plan to keep doing so. "We never planned on being in infrastructure long term," Gately insists.

Gately admits GiantLoop's message doesn't fit neatly into any popular categories, such as integrator, storage service provider, network designer, or software supplier. Instead, GiantLoop is all of those things at once. "We have a unique skills set," he asserts. "We really understand how to design and implement data movement." He says a key to the company's expertise is that it doesn't restrict itself to one site or one product, but focuses on multivendor, multisite networks linking data centers, in applications such as disaster recovery.

It wouldn't be surprising if GiantLoop had decided to change its strategy. It's not easy to be a startup carrier, as recent news from the likes of Cogent Communications Inc., Telseon Inc., and Yipes Communications Inc. attests (see Metro Providers Retrench, Telseon: Profitable in 2003?, and Cogent's Reverse Prognosis). Most of these startups don't have their own networks and rely on differentiating themselves through managed services offered on leased facilities. That means a high burn rate coupled with fierce competition against RBOCs and other startups.

GiantLoop apparently realized early on that teaming with existing carriers was a better bet than building its own network. It also spotted a storage niche among metro customers. "We found that the leading demand for optical networking services is being driven by storage," said Jon Oltsik in an interview with Light Reading in January 2001.

GiantLoop's heavy emphasis on SAN, disaster recovery, and data movement is hardly surprising given the management team's strong background in storage. Indeed, nearly every team member, including cofounder/chairman Harry Dixon, cofounder/CEO Mark Ward, COO Jim Sullivan, and cofounder/exec VP Randy Seidl hail from management positions at EMC Corp. (NYSE: EMC). And back in March, GiantLoop hired Yuval Ofek, a former VP of enterprise software development at EMC, as its CTO (see Yuval Ofek Joins GiantLoop).

The question remains as to whether GiantLoop's latest messages will get through to customers. Capex is tight, even in the enterprise space. But some observers are hopeful that GiantLoop's particular blend of products and services will succeed: "They have a lot of expertise over there," Mayard says. "You do what you can."

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com
(5)  | 
Comment  | 
Print  | 
Related Stories
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
flanker
flanker
12/4/2012 | 11:02:56 PM
re: Has GiantLoop Done a Loop?
If you want to make money as a service provider, GiantLoop seems to be shifting in the right direction. All you have to do is look at where WCOM, T and CWP are making money and go after the same customers.

All this stuff about software and "integration" seems to be hype, though. Either you provider your customer with a 99.999 SLA or you suck.



LightMan
LightMan
12/4/2012 | 11:02:55 PM
re: Has GiantLoop Done a Loop?
Seems like they had a $50M credit facility from Nortel. Was this counted as part of their funding? I also thought I heard musings that this was why NT and EMC had their big partner push [insert interoperability name here]. Probably makes sense to lease while the rates are so low. They also had some activation efforts with folks like Emperative and AdventNet - FWIW.

LightMan
//www.thesoftwareprompt.com
bear
bear
12/4/2012 | 11:02:55 PM
re: Has GiantLoop Done a Loop?
GiantLoop has it partially correct. However it's confusing as hell with their sales approach. Basically they are storage guys trying to become a network integrator for enteprise businesses. A bigger problem is purely financial. They were boasting about their $800M plus valuation over a year ago. What about now? How are they going to raise a nickel of new money (if and when) when their current valuation is less than a third of their of their post B round? GiantLoop are great marketers but scratch the surface and I bet you will find a toothless, paper tiger.
watchtower
watchtower
12/4/2012 | 11:02:52 PM
re: Has GiantLoop Done a Loop?
Is there any validity to the rumors that Quallaby is taking legal action against GL for breaking its licencing agreement and incorporating Quallaby's SLA tools into its software/service offering?

If GiantLoop is now an SI with a secret sauce software, what's in the secret sauce?
poster
poster
12/4/2012 | 11:02:44 PM
re: Has GiantLoop Done a Loop?
who cares about secret sauce, valuations, and the rest of that BS. where's the customers and the revenues? the proof is in the pudding.
Featured Video
Upcoming Live Events
March 16-18, 2020, Embassy Suites, Denver, Colorado
May 18-20, 2020, Irving Convention Center, Dallas, TX
All Upcoming Live Events