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Megisto Denies Italian Job

Wireless data infrastructure startup Megisto Systems seems no nearer to signing off on a commercial agreement for its IP infrastructure offering, but Carol Politi, the company's vice president for marketing, says Megisto continues to receive positive feedback from the two, unnamed, European carriers currently trialing the kit.

She did, however, deny that Telecom Italia Mobile SpA (Milan: TIM) is one of those two mobile operators, an idea floated by Unstrung back in July (see Megisto: Trialing in Tuscany? ). What led us to propose TIM? Because one of Megisto's backers is Saturn Venture Partners LLC, an independent firm with a capital commitment of $280 million from investors that include Telecom Italia Mobile and Telecom Italia SpA (NYSE: TI). With an investment relationship leading back to a major European mobile operator, that looked like a safe bet (especially for Megisto!).

The two mystery operators are "different types of operators, different sizes, different countries -- and one is very focused, very aggressive, on creating new enterprise services," hints Politi. Megisto plans to reveal more details about these trials in the coming weeks.

Megisto Systems is one of four privately-held and eight publicly-held vendors profiled in the recent Wireless Oracle report, Wireless Routers - A Market Waiting to Happen?

Talking at the UMTS Congress in Paris, Politi noted that Megisto is also now active in Asia, where the operators are "much more concerned about scale, whether the system can handle more than 1 million subscribers at a time, that sort of issue, which is exciting."

It seems, though, that the operators are still grappling with the problems and issues surrounding data service creation and delivery, especially to enterprise customers. "The operators would like to do more, but it's just so friggin' hard to do," exclaims Politi, especially when engaging with the IT departments of their enterprise customers. "It's the IT people [at the enterprise] that really need persuading, and they don't always want to consider adding what looks like much greater complexity to their systems" by managing wireless data services, she says.

But when exactly the trials and talks will end in a commercial agreement Politi could not say. The pressure is mounting, though, for Megisto to show its hand in a commercial deal, as larger, more established vendors, such as Nortel Networks Corp. (NYSE/Toronto: NT), solidify their positions as incumbent suppliers by delivering service node infrastructure as a part of a broader equipment deal. And another startup in the same space, WaterCove Networks Inc., recently announced its first commercial engagement, albeit with an operator (Orange SA) with links to one of its investors, Orange Ventures (see WaterCove Picks Low Fruit).

The market is particularly tough for the startups, says Gabriel Brown, Unstrung's research analyst and author of the Wireless Oracle report. Wireless routers, also known as GPRS Gateway Support Nodes (GGSNs) and Packet Data Serving Nodes (PDSN), are the primary interfaces between carriers' radio and packet core networks. In their next-generation guise, these wireless routers comprise a new class of equipment that adds sophisticated service creation, billing, and IP traffic management capabilities to this interface.

"The startups will have to demonstrate performance and functionality that is degrees of magnitude better than the established alternatives if they're to have any realistic chance of persuading carriers to purchase PDSNs or GGSNs independently of wider packet core or radio access contracts," says Brown. "Most carriers are working off a base of installed equipment that they want to continue to leverage. This evolutionary approach creates all sorts of interoperability issues, which gives an advantage to the incumbent vendors that also supply radio infrastructure and associated SGSNs."

In the meantime, companies such as Megisto continue to push their case to the carriers and look to develop new relationships at events such as the UMTS Congress and the upcoming CTIA show in Las Vegas. "These events are a great way to meet people you don't already know, but what we need to concentrate on is closing deals with the carriers we are already working with," says Politi.

— Ray Le Maistre, European Editor, Unstrung
www.unstrung.com

Editor's Note: Light Reading is not affiliated with Oracle Corporation.
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deepciscothroat 12/4/2012 | 9:37:32 PM
re: Megisto Denies Italian Job Carol is such a pro
In the Spring, in the 451, Carol said she was going to announce customers in weeks

Few weeks later, Gordon announced pricing

Then she buys lunch for you guys and you fall over her (Trialing in Tuscany)

Now we learn the only way Megisto is going to see TIM is on a Eurail pass

We at Cisco has NOTHING TO FEAR from Megisto or any other start-up. They will take their 'slow burn' strategy to the grave and Ericsson at $0.67/share is not going to bail them out again (remember Torrant - -where is that deployed?). My prediction: Cisco 51% share of GGSN/PDSN in 05
spc_King 12/4/2012 | 9:37:24 PM
re: Megisto Denies Italian Job Does anyone know exactly what they (Megisto) are trying to sell the enterprises on? GGSN on Enterprise premises (that would open a can of worms!) or is it the Mobile IP concept Enterprises are balking at? If it is the latter then I guess 4G and WLAN/WAN roaming scenarios based on MIP may meet some resistance...

I guess Cisco is pushing the same concept, but I guess IT managers might be less reluctant to take on new functionality from an existing supplier with long relations than with a new Startup making lots of promises.

Wonder if Netmotion's end-to-end IPSec tunneling is being percieved as less of an nuisance by IT managers?

/X-Eri

spc_myles_telos 12/4/2012 | 9:37:00 PM
re: Megisto Denies Italian Job I recall reading a telecoms mag article about Megisto recently. They have integrated a GGSN, MIP/HA, some security and QoS mgmt functions and then provided some hooks into service creation and probably some kind of directory enabled services/feature sets.

They don't necessarily have physical GGSN's per enterprise, but service delivery and etc.. can be customized per enterprise.

Similar to IP/Centrex platforms based on softswitch vendors I would imagine... network based services/delivery.

The megisto box almost sounds like something Springtide/Cosine would do for IP services delivery.

Myles.
WirelessUndertaker 12/4/2012 | 9:35:54 PM
re: Megisto Denies Italian Job
Did you see Megisto's recent presentation at the UMTS Congress - one of the slides has some Italian text on it.

Even though Watercove won a contract with Orange, startup GGSN vendors such as Megisto, Watercove, Tahoe face a real struggle all the way to the finish line - and that finish line can be (a)acquisition, (b)IPO or (c)shutdown. To be profitable, these startups will have to generate not one but a steady stream of commercial contracts. And remember that the entire GGSN market is not that large; with GGSN capacities in the range of 500K to 1 million PDP contexts, a nationwide GPRS operator will only need 2 or 3 GGSNs for the entire network in the first few years. And there are 11 to 12 GGSN vendors vying for this business: Nortel, Ericsson, Cisco, Nokia, Siemens/Unisphere, Watercove, Megisto, Starent, Tahoe, Tesaria and Netspira.
There is simply no business case for making money by selling GGSNs.
spc_King 12/4/2012 | 9:35:53 PM
re: Megisto Denies Italian Job Wireless Undertaker...what an appropriate name :-)

Agree that GGSN business will be bleak for the near term, probably for the rest of this year and maybe even next year, but after that I see potential.
Will the startups run out of cash? I should think so!

/X-Eri
deepciscothroat 12/4/2012 | 9:35:52 PM
re: Megisto Denies Italian Job Carriers want the entire IP equation, not just the edge box (GGSN).
eom
spc_King 12/4/2012 | 9:35:51 PM
re: Megisto Denies Italian Job Indeed, that is why Ericsson did its infamous strategic blunder and cancelled the inhouse GGSN platform (it was built from scratch and had no legacy functionality and such limited IP capabilities every operator had to buy a seperate 'site' router to stand next to the WPP GGSN so you could support BGP, other than IPSec tunneling etc).

I say strategic blunder, because they should have never admited to it and made that box shine instead of opening up the market to other GGSN vendors to Ericsson's %40(!) of the market.

However, I have seen at least one startup which has not learnt that lesson and are shipping (for trials) bare-bones routing functionality and who have NEVER participated in a bake-off - good luck :-)

/X-Eri
deepciscothroat 12/4/2012 | 9:35:49 PM
re: Megisto Denies Italian Job Tigris is still alive
What about Cielo?
spc_myles_telos 12/4/2012 | 9:35:46 PM
re: Megisto Denies Italian Job Is the lucent ggsn gone? springtide one. just curious. would hazard to guess that huawei and ZTE try GGSN's as well?

You would think the incumbent vendors have a pretty decent "lock" on this business. Perhaps, Watercove/Megisto have to partner with some of the smaller gsm network suppliers...

The other crucial success factor in any of these projects is customer support. The big vendors have local support in most any of their regional even local markets. For growing, expanding, upgrading, their SGSN/GGSN equipment this would be crucial. Lab trials, IOT aside, start-ups also don't always understand nor appreciate the value and even the resources required for such efforts...

myles
spc_King 12/4/2012 | 9:35:37 PM
re: Megisto Denies Italian Job Myles wrote:
>Perhaps, Watercove/Megisto have to partner with >some of the smaller gsm network suppliers...

Is that an invitation to contact Telos? Unstrung charges for advertising you know :-)

Hadn't heard about the Springtide, but have heard other Lucent associated projects being cancelled. I think they are in a really bad way!

/X-Eri
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