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Megisto: Trialing in Tuscany?

Light Reading
LR Mobile News Analysis
Light Reading
7/24/2002

Next-generation IP data service-node vendor Megisto Systems has been in service trials with one mobile operator since June 3 and is to start trials with another before the end of July, the company has revealed to Unstrung.

But with which operators? We're pretty keen to know their identities, as such details, along with confirmation from the carriers, could catapult Megisto into the hardware Top 5 of Unstrung's Top 25 Startups.

So come on: Name some names! "We are not giving out the names of the customers at this point because there's no reason to -- why introduce them to our competitors?" says Carol Politi, Megisto's vice president for marketing, in an exclusive interview with Unstrung in London (very nice lunch, by the way -- fine fish).

And competitors abound, including fellow startup WaterCove Networks Inc., as well as more established telecom equipment vendors (see Having a Flutter on the GGSNs).

So, any chance of a hint about these carrier trialists? Major western European operators? Large customer bases? "I think there's been a trend away from using early customer engagement for public relations purposes. There is a realization in the broader market that early customer engagement is exactly that. Introducing PR into the customer process is distracting and, frankly, can prevent you closing customer deals. Trying to leverage off things that aren't closed deals yet is something we're staying away from."

In addition, Politi feels that as the company is well funded it "can focus on our potential customer base" and not have to try and attract further market attention by crowing about trials. "We have financial backing from companies with very deep pockets that understand about the time it takes to bring returns from the hardware sector." Megisto has raised $67 million to date from a number of investors.

Without naming names, though, the company is naturally enthusiastic about its current relationships. "Both trials have very concrete, tough plans and metrics associated with them," says Politi. "One of the operators has promised exclusivity around the service in a particular country for the first six months. That is a trial based on service creation for the enterprise networking environment. We feel pretty good that the customer has negotiated that. It means they are serious."

These trials could lead to completed purchase orders within months, she adds. "Potentially we could see revenues this year, with increasing revenue during the course of next year. You will certainly hear about revenue from us in 2003."

Keeping costs under control and resisting the urge to expand too quickly before any contracts are won is also important for Megisto, which has fewer than 100 staff, the vast majority of whom are engineers. "We didn't want to hire too many people and then find we had to get rid of some of them, like some companies have had to." Could she be having a dig at fellow data service-node vendor Tahoe Networks? (See Tahoe Confirms Cutbacks.)

So what type of carrier is most likely to be interested in these next-step mobile data systems? "Operators that launched data services early are the ones that are looking to add value in the service core now. The ones that started later will be in another cycle at another time. It takes a certain amount of [data service] uptake within the operator before they start to find that they need to add services. They have got to work through their sales cycle. If an operator hasn't provisioned a lot of customers, it is not going to identify a number of the service management issues. If it hasn’t had a lot of customers turning on their phones every day, the operator won't have seen a lot of the scale issues."

So, no carrier names revealed, yet all the signs point towards Telecom Italia Mobile (TIM), an early and enthusiastic adopter of mobile data and a leading supporter of M-Services, as a likely trialist. Megisto's most recent funding, in April, netted $5 million from Saturn Venture Partners LLC, an independent firm with a capital commitment of $280 million from investors that include Telecom Italia Mobile, Telecom Italia, and Olivetti. A telling trio. Olivetti holds a controlling stake in Telecom Italia, which is the parent of Telecom Italia Mobile.

Most interesting is this statement from Saturn's Website:

    In performing technical due diligence on new investment opportunities, Saturn benefits from a strong partnership with Telecom Italia Lab, whose 1,200+ engineers provide expertise on key aspects of current and next generation architectures for wireline and wireless communications. Also, through this relationship, we introduce our portfolio companies to senior executives and other important decision makers at Telecom Italia and Telecom Italia Mobile. Since our launch in April 2001, we have found this unique source of technical due diligence and this bond with a large incumbent carrier to be invaluable to both entrepreneurs and other venture firms.
Go figure.

If Megisto can't get business with TIM, then some serious questions should be asked of the vendor and its investors.

— Ray Le Maistre, European Editor, Unstrung
http://www.unstrung.com
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deepciscothroat
deepciscothroat
12/4/2012 | 10:02:48 PM
re: Megisto: Trialing in Tuscany?
No proof. No facts. No POs
Politi is another blowhard
spc_rayella
spc_rayella
12/4/2012 | 10:02:44 PM
re: Megisto: Trialing in Tuscany?
Who cares? Megisto's competitors care, I am sure. Incumbent systems suppliers care. Mobile operators care. It would be a bit strange if they didn't care about service trials of new hardware.

No proof? That's right.

No facts? What are you saying? The fish was excellent, Megisto has raised that money, and the fact is that a co-founder of a mobile hardware company that is interesting a lot of folk - including you - has said this stuff. If it's BS then Ms Politi and Megisto will be discredited.

No POs? That's right. That's what she said.

I see from previous posts that you're a major fan of Tahoe and have a big downer on Megisto. But as you have also pointed out before, there are no purchase orders in the door there, either.

Relax, ciscowireless, why are you so uptight?
deepciscothroat
deepciscothroat
12/4/2012 | 10:02:40 PM
re: Megisto: Trialing in Tuscany?
Ray, instead of goosing around startups, you might spend some real time analyzing and commenting on the real issues in this industry

The biggest Mobile Internet company in the U.S. is Openwave and they are, sadly, falling apart.

How about some time and attention on them?

yours, cw
deepciscothroat
deepciscothroat
12/4/2012 | 10:02:40 PM
re: Megisto: Trialing in Tuscany?
Well Ray to be honest I am no strong fan of anyone except Cisco. I can't tell the difference between any of the startups since we do not see them strongly in any account

However, since you are supposed to be a journalist, it's a shame that you take sides and drink the koolaid (or eat the fish) so easily.

Customers. PO. Real Traction. Everything is just gossip and innuendo.
noitall
noitall
12/4/2012 | 10:02:06 PM
re: Megisto: Trialing in Tuscany?
I for one hope these guys win this and the three other operators they are pursuing.
wirelessexpert
wirelessexpert
12/4/2012 | 10:01:43 PM
re: Megisto: Trialing in Tuscany?
Tahoe Networks has already announced that they are letting go off people, why too much hype with no real substance. Basically, they have not received customer traction.

One of the vendors mentioned above are in the same position, if one major customer does not come through, it might not fare well.
gigeguy
gigeguy
12/4/2012 | 10:01:38 PM
re: Megisto: Trialing in Tuscany?
I think cw must have some Tahoe stock ... how else do you explain his blind devotion?

I welcome Tahoe to be as forthright with Unstrung about the company and product status as Megisto obviously is. We've all heard the hype ... let's get some real information on the table from a company exec.
wiredgenius
wiredgenius
12/4/2012 | 10:01:33 PM
re: Megisto: Trialing in Tuscany?
You guys are too funny and have been played like a violin. Travel around to some of the carriers we battled them in and you will get the true story
(I think it's real)

Walking into the unstrung orifices in London and buying lunch. That's not forthright, that's spin

Agreed, with gige --unstrung should go to Tahoe and get the real scoop
noitall
noitall
12/4/2012 | 10:01:08 PM
re: Megisto: Trialing in Tuscany?
Why doesn't Unstrung do a bakeoff between Tahoe, Megisto and the others? Then we'll all know who's hype and who's for real.
spc_King
spc_King
12/4/2012 | 10:01:07 PM
re: Megisto: Trialing in Tuscany?
A meaningful bakeoff would require SGSNs from each of the big vendors to test interop on Gn/Gp side and SGSNs don't come cheap! Not to mention Handsets (or simulators), HLRs and then the host of different Routers on the Gi side.

Megisto tested their GGSN with a Dutch operator to verify interop with Ericsson's SGSNs (To Eri's great dismay :-) But, I recon it costs a bundle to set up - we're not talking off the shelf equipment here.
I doubt they were able to test the Mobile IP roaming part though (are there any dualmode WLAN/GPRS terminals out there to test with?)

A bakeoff with Taho's GGSN could be interesting. Where do you connect an ethernet cable into a piece of paper :-)

In my humble opinion none of the GGSN startups have any killer features setting them apart from what the GGSNs from the 'MEN' (Moto, Eri, Nokia) or Cisco or Nortel can do.

Why should wireless operators bother with these startups other than to use them to knock the price down from their preferred vendors??

By the way: There is a rumour Nokia is looking to buy a GGSN vendor (Their in house one is based on a LAN switch and not very powerful and maybe their deal as a Cisco GGSN reseller ain't very profitable). Is that why they are buying up stock in RedBack? (bet the X-redback-now-Tahoe people wish they didn't leave so soon :-)

Any good gossip, anyone?!

/X-Eri

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