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Mitch Wagner 4/10/2014 | 10:57:28 AM
Re: Great article, but are you surprised? brookseven - So you do not see China's supply chain and manufacturing as more efficient than elsewhere? Why is so much electronics manufactured in China then?
R Clark 4/10/2014 | 10:46:16 AM
Re: Great article, but are you surprised? Fair point that not many telecoms startsup have actually set the world on fire, but standards-based competition in telecoms is a disincentive for anyone to get too far ahead of the field. Plus telecom startups if they exit successfully it's via acquisition, so their achievements tend to be less visible.

Even if not successful, startups play an important role in focusing dedicated resources on problems - it's that different path to innovation that China is missing out on. (Blog post: http://www.electricspeech.com/journal/2014/4/10/what-chinas-innovation-gap-tells-us.html).

To Mitch's question about supply chain, there's some innovation in manufacturing in China, but a lot of it is just about getting to scale and keeping costs down, with support from the govt by way of investment in roads, ports, etc.

 
SachinEE 4/10/2014 | 7:01:30 AM
Re: Great article, but are you surprised? @ brookseven, you are absolutely right in saying this. Things have changed drastically during last couple of decades. It isn't the same world for the startups. It never was easy for startups but there were opportunities in the past. With so much advancement in almost every field, it is next to impossible now for startups to make an impression with their limited resources and expertise. 
MordyK 4/10/2014 | 2:44:00 AM
Re: China's Innovation Deficit While I agree that it is extremely difficult to get into the carrier stack, which on its own is a terrible thing for carrier innovation & competetiveness. I would argue that during the shifts between generations of networks, new approaches are usually begun outside the traditional vendors.

Some examples include:

Shift to IP code: Starent

Shift to densityity/small cells: Ubiquisys, ip.access, Picochips, etc. (some would rgue about teh success)

Shift to network automation: Intucell.

and than there are the NFV and SDN guys already mentioned by many.
brookseven 4/9/2014 | 7:43:10 PM
Re: Great article, but are you surprised?  

Mitch,

You are missing on two points on your supply chain assertion:

1 - Chinese vendors have all kinds of governmental incentives to do exports

2 - Prices in China for the same goods are at a different price than if they are exported in the electronics business (i.e. You can buy stuff cheaper in China and use it in China then you can if you buy it in China and use it at a factory in Mexico).

There is no inherent gain in the supply chain.  It is government intervention.

seven

 
Mitch Wagner 4/9/2014 | 7:35:44 PM
Re: Great article, but are you surprised? In the West at least, startup capital is going to social media companies rather than networking vendors, because of perceived more rapid return on investment. 

Can Huawei dominate by simply being a fast follower?

And are the innovating in manufacturing and supply chain rather than in the devices themselves? Certainly China excels at that; it's a main reason why so much Western consumer electronics is manufactured there. 
Yulot 4/9/2014 | 5:46:18 PM
Great article, but are you surprised? I am not meaning to caricature here and yes China is making a significant part of the World's networks or components of these, etc. Yes, the companies mentioned are huge and have definitely changed our sector. However, if you remember the way they muscled their way through new markets (Europe included) in the first half of the 2000's and started entire product lines... it was not particularly based on their capacity to innovate, but rather to copy and even violate existing IPR of Ericsson, Cisco and the list is longer, with the help of China... Their equipment strangely looked almost identical to other leading OEMs and in some cases still had the copyright information of the likes of Cisco still appearing on SW, etc... In Europe it put most OEMs in difficulty, because beyond the agressive approach to IPR, they also had the Chinese government enabling them to sell without profit.

I dont want to sound like I am pointing finger and I will also acknowledge their qualities: they now have really good products that are sometimes more logically built than the traditional vendors. And they had the intelligence to understand that many markets are turning into commodity mode (US still have good arpu, but in Europe companies are fighting for not much) and they came with commercial offers that addressed a need in the industry (the most straightforward of all): cost reduction.

It is certainly an efficient way of building a business. But to those saying that start ups have not revolutionnized our sector, I would like to use the old Henry Ford saying: 'If I had asked people what they wanted, they would have said fasterhorses.' We cannot argue the fact that the telecoms are led by innovations and start ups have to be part of this ecosystem.
brookseven 4/9/2014 | 3:43:46 PM
Re: China's Innovation Deficit  

Okay, I have stated on these boards that I worked at AFC which had an impact (created the path through the IOC market for Access Companies, FiOS).  I would add Ciena to the list.

No - I am not saying that startups don't matter.  What I am saying is that their impact in the telecom equipment market is small.  The reason is the size of the required investment, the time to market, and the margins in the business.  This makes Startups in Telecom rare and getting more rare.  Remember the pronouncement on these boards by Drew Lanza maybe 10 years ago?

Let me take TiMetra.  They were able to get some market that had nothing to do with the original plan.  That was really execution by Alcatel.  Timetra was started as Core MPLS router, not an Edge IP Video product.  I think they are the poster child for how a large organization might be able to co-op startup technology.

I think what happened to TiMetra will happen in NFV and SDN (in the main, there will always be exceptions).  Tier 1 carriers will need the implementation done by major vendors and will ensure that the nice startup gets purchased if anything is going to go forward (see World Wide Packets).

I think saying that TiMetra had a big impact is a huge stretch.  Without Alcatel repositioning and supporting the product it was dead.  Compare that to Ciena, who essentially created the DWDM market.

seven
[email protected] 4/9/2014 | 1:36:19 PM
Re: China's Innovation Deficit It's an interesting question, but has a million different responses depending on what you mean by 'changed anything'?

A great many startups have impacted the strategies of customers and acquirers (and investors) in different ways, sometimes in an almost invisible fashion, and sometimes not for the best.

You could argue that not many (if any) telecom startups have had a greater impact than that of TiMetra in the router sector, but Acme Packet was a startup that went all the way to becoming a public company and its tech and products have had a notable impact in IP networking, and there are other examples too.

I can't believe you are saying that it doesn't matter if startups exist or not.... please tell me you're not saying that....
sterlingperrin 4/9/2014 | 1:34:05 PM
Re: China's Innovation Deficit Seven,

This is an interesting question! The ones that come to mind for me are Cerent and TiMetra, in terms of really major impact, so that probably supports your point.

On your point about facing the big guys, though, I'm not sure that's necessarily the barrier. The start-ups need the big guys to buy them for the technology/innovation and then spread that innovation to the service providers. Since SDN is software focused, it does fit the historical VC model alot better than the traditional telecom hardware model ever did. If VCs don't have to come up with $300 million to launch a viable company, maybe their interest in telecom would increase.

If you're saying that the big guys have already solved the SDN/NFV problems, that's a different story - but I don't think they have and their motivation is to retain the status quo.

Sterling
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