Patel: a lesson in network marketing

Patel: a lesson in network marketing

Cabletron's Piyush Patel made a faux pas last week when he claimed the company's Australian operation just isn't up to scratch. Public relations blunders aside, the new president and CEO is out to gain recognition as the new leader that will transform Cabletron into a serious global player. And guess what, the channel still sits atop the list as the best way to help it beat the US budget blues. ARN spoke to Patel during a conference call with Asia-Pacific journalists last week.

ARN: What are your plans for the near future?

Patel: My goal is to make sure that Cabletron becomes the technology powerhouse and delivers solutions for the customer. We are focusing on our four core businesses - enterprise, service provider, network management and professional services.

What are your plans for the service provider market given you are up against the likes of Cisco, Lucent, Nortel Networks and Alcatel?

In the service provider market our goal is to increase our customer base into the xDSL, cable, wireless, switching router, Web hosting and content markets.

We are also going after the Web hosting and content market where the Layer 3 and Layer 4 SSR (smart switch router) products fit in very well - they provide a competitive advantage over the Nortels, Lucents and Alcatels of the world.

The good thing about working in the service provider market is that a lot of the decisions to buy the equipment are based on the technology. Cabletron has very strong technology with products, not only in the switches, but also in the router space and the LAN space.

OK, but your competitors already have a very strong foothold in the Asian market. How will you counter that specifically? I haven't heard of too many Cabletron wins with companies like Telstra or Singapore Telecom, for example.

We are going after the edges of the cloud. Basically, we are after new emerging markets, which are not traditional service provider markets like large telco companies.

You won't see us going after the large telco markets, but the Web hosting, Web content hosting market.

For example, we are partnering with Alcatel where they are using our CTE devices. So we are going after the smaller segment of the market that is growing at 50 to 60 per cent per year.

How will you use your channel partners to help boost your market presence given you will still be competing against the top-tier competitors at the network edge?

We are very committed to working with partners and the channel throughout the world. The way we would like to use the other channels is to complement us as we move into some of the local markets where they have the knowledge and relationship with the largest telecommunications companies in that area.

So basically, [the channel] provides the local relationship and localisation of the product.

We implemented a channel strategy a few quarters back. Right now, 60 per cent of our revenue comes from the channel and 40 per cent is direct.

Are there plans to change the percentage of business through the channel?

Yes, my goal is to increase the channel sales percentage.

We are in the beginning phase of this channel program and we will get more and more success on the channel business side.

Cabletron seems to be gearing up for a big Spectrum bash at next month's Networld+Interop in Atlanta. What can we expect to see in terms of the Spectrum business unit spin-off for customers in Asia?

We have a very aggressive marketing campaign underway to brand Spectrum as a separate independent entity. That may involve rolling out a new name for the Spectrum group. We will create a new brand name for the Spectrum group [and conduct an] aggressive advertising campaign for SpectrumWe also have a big open forum partners program that we are rolling out, we are partnering with more than 300 companies.

We will also be rolling out the Spectrum 5.2 release, which is scalable and has a lot of new features that are targeted for the service provider marketplace.

How will you compete with the likes of Cisco who can afford to cut prices to attract more customers?

Companies like Cisco and Nortel don't actually cut prices. They charge a lot more than us. The goal we have is to ensure that the competitive advantage is for customers.

Another competitive advantage we have is in services. I think we can provide better services and support to smaller and medium customers than Cisco can. Cisco's strategy is just to go after bigger customers and then focus on those customers.

What percentage of revenues come from the Australian operations and what are your goals. Is the Australian business meeting your expectations?

The company achieved $US32 million last financial year, an improvement from $19 million the previous year.

This represents 192 per cent growth in Australian local revenue (including revenue from products acquired from Digital) and far exceeds the company's global growth of only 2 per cent.

Cabletron has consistently hit every target for Australia and continues to do so. The Australian office has already hit this quarter's target with three weeks to spare.

[Editor's note: Patel initially commented that Cabletron was not "getting enough revenue from Australia". This was based on his assumption that the Australian operation produced between $US20-$30 million in revenues a year. Patel has since retracted his comments as "factually incorrect".]We see a huge opportunity in Australian markets, Singapore markets, and some of the Asian markets, because they are in the process of putting in new network infrastructures nationwide.

How will you work to achieve continued local growth?

We are always looking at restructuring some of our offices. I think the biggest thing that is going to come is the partnering with local companies, whether it's the channel partners or another major company in Australia.

Also, we'll do a better job of marketing inside Australia.

We may not have done a very good job of that in the past.

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