Redback's New Sales Strategy
Redback Networks Inc. (Nasdaq: RBAK) is looking to move a heap of SMS 10000 boxes, which help carriers connect and manage up to 100,000 broadband subscribers.
In fact, the company is so willing to move the gear, they're telling the sales staff that price is not an issue and that they will be awarded special prizes for moving the gear, according to a colorful company memo obtained by Light Reading.
The memo, written by Richard Bibb, Redback's senior vice president of worldwide sales, motivates Redback's sales staff by telling them they'll be entered into a vacation drawing each time they sell an SMS box. And, reading between the lines, it appears to imply that moving inventory, not raising margins, is the ultimate goal.
"Yes that’s right friends, all you have to do to be eligible for one of four fabulous prizes is sell a customer, any customer, between now and January 30, 2002 just one SMS 10000 System of any size, any configuration, at just about any PRICE," writes Bibb, in a memo he recently sent to his sales staff.
"Targeted at the sweet spot of 30-40,000 subs, the bundle lowers the cost of Redback’s leading SMS functionality to below $5.50 per SUB!"
In addition to setting such goals, the Ron Popeil-esque memo provides a less than savory vision of the market for Redback's subscriber management systems, which are used to aggregate traffic for broadband connections like cable and DSL.
"When the SMS 10000 was introduced the concept of a mega-POP [Point of Presence] with over 100,000 [broadband] subs was all the rage," writes Bibb.
"Well, now that the mother of all corrections has occurred -- businesses have to run off real business plans, making bosses are concerned [sic] with archaic concepts like profits and even wear neckties on occasions other than funerals -- it is time to address the mid-range POP size of 30-40,000 subscribers that is rapidly becoming the sweet spot in providers’ architectures.
"We know in this age of budget slashing CFOs, limited capital availability, and modest network builds the entry price of the SMS 10000 has looked like a mountain just too high to climb to many would be customers. Well NO MORE. That mountain has been carved down to speed bump size and you just handed the keys to a HUMVEE to your customer!"
By repositioning its SMS 10000 for midsized POPs, Redback is filling a product gap that had existed between its SMS 1800, which supported 8,000 subscribers, and its old SMS 10000, which supported 100,000 subscribers. The cheeky memo, if nothing else, is good for a chuckle as the company wipes the cream pie from its face, laces up its clown shoes, and begins the long march back to a double-digit stock price.
"They're basically saying, 'Hey, we've got a lemon, we may as well try and make lemonade!' " quipped one analyst familiar with the SMS 10000 sales contest.
Redback, natch, doesn't see the humor (or newsworthiness) of the situation. "This is just a regular sales promotion we've put in place," says Kevin Dickson, vice president of Redback's SMS product marketing.
"The SMS 10000 is a very flexible product that can be aimed at a range of different customers. [Carrier customers] will get a price-per-subscriber, which is very attractive, and they have investment protection as they add subscribers.
"I wouldn't consider this to be a repositioning of the product. This is just a promotion put in place for a particular segment of the market."
- Phil Harvey, Senior Editor, Light Reading