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RHK: Rest in Pieces

RHK Inc. is no more, but the two parts of its business are continuing on under new monikers.

RHK's research division is being bought by U.K. market research company Ovum Ltd. (see Ovum Acquires RHK Research). Ovum has only bought the research division of RHK, which amounts to a total of 17 staff, 12 of them analysts.

RHK's consultancy business lives on as the 10th Street Advisors, a "Global Telecom Advisory Boutique" according to its Website. And with the word "boutique" in the title, we won't expect anything big. [Ed. note: Will they be selling candles and floral scented soap?]

The good news is that Harry Hamster is on the treadmill there, along with nine others including, alas, John Ryan, the R of RHK.

Fash Darabi, managing director of Ovum Telecoms, declines to say how much Ovum paid, but analysts in this field speculate that it wasn't a lot, possibly somewhere between $1 million and $2 million.

"I don't want to say that RHK has been broken up, but by breaking it up, we're picking up something that is nice and clean and profitable," says Darabi.

The reference to cleanliness refers to the absence of "liabilities and overhead" that Ovum might have been lumbered with had it bought the whole company, Darabi says. The whole company was up for sale, but "we didn't discuss the purchase of the consulting arm."

RHK's research business "was subscale," Darabi adds. [Ed. note: Maybe he meant to say "boutique."] He says it didn't have the sales and marketing muscle to sell its research worldwide. Ovum has about 230 on staff, about 25 of whom have been recruited this year, and its revenues have increased 15 percent in the past year, according to Darabi.

Observers think the acquisition makes a lot of sense for Ovum, because it brings it expertise in new areas and strengthens its presence in North America. The combined company will be known as Ovum-RHK, which sounds like a prescription treatment for migraines.

RHK's history is one that reflects the ebb and flow of the telecom industry itself. The company was founded in 1991, and, by September 2001, it had swollen to more than 130 people -- a growth of 160 percent from its January 2000 headcount of about 50. Shortly thereafter, the company's market projections began to rise while its analyst and management numbers dwindled (see RHK's Fat OSS, RHK: No Numbers for You!, RHK Changes CEOs, and RHK's OSS Loss.

As a nod to RHK's role as one of the most entertaining prognosticators in the field, we'll predict that the two parts of RHK will each grow to become a $900 billion market -- a 4,550 percent increase -- by 2022.

— Peter Heywood, Founding Editor, Light Reading

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dwdm2 12/5/2012 | 3:10:09 AM
re: RHK: Rest in Pieces "As a nod to RHK's role as one of the most entertaining prognosticators in the field, we'll predict that the two parts of RHK will each grow to become a $900 billion market -- a 4,550 percent increase -- by 2022."

How'd this be categorized? Just curious ;)
paolo.franzoi 12/5/2012 | 3:10:08 AM
re: RHK: Rest in Pieces
I was hoping an arrogant *&^% like John Ryan would have gone jobless and then homeless.

:(

seven
OpticOm 12/5/2012 | 3:10:05 AM
re: RHK: Rest in Pieces I remember the good old days, when at a certain start-up in the telco space, in 1999, we got a marketing report about the size of the crossconnect market (at least $7B in the report).
Being in engineering, I am not sure if the marketing guys based their strategy on that report, but it would not be unheard of.
In any case, the start-up crashed, like many others, and, looking back, that data was completely flawed...
paolo.franzoi 12/5/2012 | 3:10:05 AM
re: RHK: Rest in Pieces
Wow, DF you and I agree on another one.

My favorite response to RHK was, "If I based my business decision on what RHK said, then I wouldn't have a business."

seven
deauxfaux 12/5/2012 | 3:10:05 AM
re: RHK: Rest in Pieces John Ryan is the most arrogant guy in Telecom, which is absolutely amazing in light of the number of times that he was absolutely dead wrong. He hasn't had an original thought in his life, and all of the conventional wisdom that he espoused was backed up with double counting, weak minded BS.

More $100M startups were wrecked on the shoals of their BS than any other single factor.

At $1M, Ovum overpaid

deauxfaux 12/5/2012 | 3:10:04 AM
re: RHK: Rest in Pieces I remember the smell of BS permeating the first Startrax that I ever attended. John Ryan was holding court with some of the smartest VCs in the business and they were buying the whole line of garbage. One of them confessed to me later that he didn't buy any of it, but was completely intimidated by the other guys that supposedly "got it." He claims that it was the biggest mistake of his career.

The emperor had no clothes indeed

DZED 12/5/2012 | 3:10:02 AM
re: RHK: Rest in Pieces Just FYA, I think all of Bookham's 'strategy' was based on RHK figures. I may even have some of the PPTs somewhere.

I always though it amusing to back calculate some of their figures.

eg Everyone in the UK would have to hand over more than their entire disposable income to meet the growth projections for telecoms from RHK.
(OK I made that up)
larry333 12/5/2012 | 3:10:00 AM
re: RHK: Rest in Pieces . . . many of the firms that are now griping about RHK numbers have only themselves to blame. There were other -- more realistic -- numbers out there including data from the firm I head. It wasn't hard to get such data. All you really had to do was go ask the service providers what their actual plans were.

We did O.K. during the optical boom era. But it was interesting how some people treated RHK data with religious fervor. (They would have done better with the real thing.) In one case, I remember being told that our modest forecasts for DWDM couldn't be correct, simply BECAUSE RHK's numbers were so much bigger. Others were more cynical. One company (now long gone) used our numbers internally and then used RHK numbers in press releases.

The truth is that many optical era executives didn't want to admit that they were in a bubble and they were looking for some independent verification. There was always going to be someone who would step up and give them what they needed. And telecom used to be such a nice little industry . . .
Stevery 12/5/2012 | 3:09:59 AM
re: RHK: Rest in Pieces DZED: Everyone in the UK would have to hand over more than their entire disposable income to meet the growth projections for telecoms from RHK. (OK I made that up)

This made me laugh. Making up numbers is befitting to RHKs epitaph, no? So that makes me want to give you points. But in order to get full points you must omit telling us that you made them up.

desikar 12/5/2012 | 3:09:57 AM
re: RHK: Rest in Pieces Believe that is an unfair statement about John Ryan....

It was John Ryan who in June 2000 at Supercomm first identified that the industry was topsy turvy in terms of capital expenditures. That, and the sound analysis of Andrew Odlyzko were the first portents that were credible.

If John (and many of us) had known that Worldcom was committing fraud in inflating Capex numbers (and UUnet was the bellwether), he would have likely brought this up even earlier.

What is sad that even after this realization at RHK, they were not able to transition the wisdom to their market projections which grew through Oct. 2000 (at least) before they started expressing doubt. Data driven analysis on both sides, but erroneous because of the misdirection in the industry and Wall street. We were too focused on using UUNet as the basis for the Internet and assumed that Worldcom was accounting appropriately.

People have been fired at AT&T for not being able to match MCI in network performance and cost - the latter was all bogus, it turned out :)

Where was LR when John Ryan brought up the problem of Capex? Still going ga-ga over this startup or the next...

Sorry, Peter, the tone of the article is a bit self-serving and an unfortunate choice.

desikar
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