Market research

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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dodo 12/5/2012 | 3:09:57 AM
re: RHK: Rest in Pieces "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"

I beg to differ. If anyone recalls, it was Bob Metcalfe who predicted the burst of the bubble at Supercomm 1999. He did not agree with the data and forecast he was seeing in the different media.It was during a luncheon presentation. I remembered(this has been mentioned before on this site) that there were some VCs and analysts at the table i was sitting at. While I was pondering at what he was saying, my neighbours were laughing and were very amused by his arguments.

Guess we know who has the last laugh..........
deauxfaux 12/5/2012 | 3:09:56 AM
re: RHK: Rest in Pieces Unfair? Hardly. I've been listening to John at Startrax and OFC executive forums. The only hypester of similar size was/is Gilder himself.

IMO, Peter should have let Larry write the article
Peter Heywood 12/5/2012 | 3:09:56 AM
re: RHK: Rest in Pieces On desikar's comments, let's take a case in point:

March 6, 2000:

Xros OFC press release in which John Ryan is quoted extensively saying carriers are "desperate" for huge crossconnects like Xros's:


March 14, 2000 (8 days later)

Nortel buys Xros for $3.25 billion in stock and LR suggests that it's paying "too much for too little"


April 21, 2000

LR runs story headlined: Xros's OFC Splash Was All Wet


March 5, 2002

LR runs story saying Nortel has ceased work on Xros technology


Who was it who went ga-ga over startups?
Drew Lanza 12/5/2012 | 3:09:56 AM
re: RHK: Rest in Pieces I've had the pleasure of knowing John Ryan for almost 20 years now and I'll step up to defend him.

RHK and Light Reading both provide a valuable service that was sorely lacking in the late 80's and early 90's.

If you wanted to find out what was going on in the industry you either had to do it yourself or pay some really high priced consultant whose numbers weren't any better than RHK's or Light Reading's.

I'm a big fan of John's, of RHK's and also a big fan of the guys (and gals) at Light Reading. And, like all of you, I've lost plenty of money staying in this industry.

RHK and Light Reading stimulate the debate and create connections throughout the industry.

So their forecasts are wrong? Whose aren't?

In the end, this industry is almost impossible to forecast. That's because it's always been (at least in the 20 years I've been involved) a lot more political than technological.

It's not an accident that the countries with the highest penetration rates of broadband are those where the government has said 'make it so'. And we didn't get mass penetration of phones, water, electricity, or roads until the government fiat, either.

Had our government been less concerned with Bill Clinton getting his weenie waxed and more concerned with maintaining its leadership role in the Internet we might not have had a meltdown. In any event, it would not have been as severe.

So I guess we should all blame the forecasters for not predicting that Bill Clinton had needs or that knuckleheads would fly planes into buildings or that the people at the heads of some of our largest telecom companies were out and out crooks. Let alone they didn't forecast how absolutely clueless our elected officials were and are.

John Ryan certainly was the messenger and you've all certainly shot him. But he didn't cause the collapse. And my recollection matches one of the other posts here that that he was an early doomsayer (just as he was an early prophet).

And John's a good-natured guy. I once introduced him to a roomful of senior industry executives as "That buttmunch, John Ryan". He got a good, long laugh out of as did the rest of the crowd.

I look forward to the crucifiction that will inevitably follow the post. I'm soon to remember why I keep banging my head against the wall.

larry333 12/5/2012 | 3:09:55 AM
re: RHK: Rest in Pieces . . . and then again there are those of us who prefer integrity in both our presidents and our forecasters.
Peter Heywood 12/5/2012 | 3:09:54 AM
re: RHK: Rest in Pieces I'm pleased to see you posting, too, Drew. You always have something interesting to say.

I would take issue with one thing you said; Light Reading never has got into the forecasting business. All we've done is report other folk's forecasts and occasionally made fun of them when they were clearly ridiculous, as some of RHK's were.

rjmcmahon 12/5/2012 | 3:09:54 AM
re: RHK: Rest in Pieces Drew, nice post. It's good to hear from you again. I agree that our industry has been held back and it's not because of technology.

A question I have is why haven't any investors stepped up to the plate and started buying the municipal bonds, restarting some of the stalled municipal projects? It seems like if a few of those projects proved a viable model than others would follow. Any thoughts and opinions on what is holding that back?
dwdm2 12/5/2012 | 3:09:54 AM
re: RHK: Rest in Pieces "I don't usually like to post, because random people flame me and insult my mother and that just gets me all worked up over nothing."

I actually called for your absence ;-)

dwdm2 12/5/2012 | 3:09:54 AM
re: RHK: Rest in Pieces "I agree that our industry has been held back and it's not because of technology."

rjmcmahon, I had hoped that you'd not get started on this again... I don't know what you meant by "our industry" but technology play an important role in All industry. If a technology industry is held back for several reasons, 'technology' itself is always a common factor. So a statement like "technology is not the main reason that xyz industry is held back" or a variation of such would've been more agreeable. ;-)

I agree with Drew's statement that "In the end, this industry is almost impossible to forecast. That's because it's always been (at least in the 20 years I've been involved) a lot more political than technological."

Flame invited
Drew Lanza 12/5/2012 | 3:09:54 AM
re: RHK: Rest in Pieces rj:

I don't usually like to post, because random people flame me and insult my mother and that just gets me all worked up over nothing.

There's actually a huge amount of activity going on right now in upgrading our infrastructure to handle broadband.

I know that Wave7, one of our portfolio companies, is selling a ton of FTTH gear. And all the signs are that Verizon is putting its money where its mouth is and deploying billions of dollars worth of cable and accessories in advance of real mass deployment of FTTX.

I also hear that BellSouth and SWBT are installing lots and lots of new DSL lines and will soon be able to serve DSL to pretty much all of the customers in their serving areas.

We also see a lot of new technologies every day that promise to either up the bit rate over copper or lower the cost of broadband over fiber.

It looks like it's finally happening here. But, as I said in a column on Light Reading last year, it's mostly happening at the greenfield + rehab rate and not at the more ambitious overbuild rate (although Verizon may be the exception). But either rate will get most homes passed by optical broadband by 2020 and by copper broadband in the next year or two.

I don't follow the munis closely, so I don't know what the story is there. I've always been a huge fan of the munis and the small and medium sized independents. About 15 years ago I had the great pleasure of being the keynote speaker at the Louisiana Telephone Association's Annual Meeting. It was an eye-opener. The small Independents are far and away the most sophisticated operators out there and deploy new technology years ahead of the RBOC's.

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