ENTERASYS: Taking on Cisco?

Networking majors are feeling the pinch of the slowdown: Cisco announced 17%

layoffs in workforce to cut costs, admitting slowing of investments. Nortel said

its global revenues would grow just 15% in 2001 against over 30% growth earlier.

Lucent’s revenues fell from $38.3 billion in 1999 to $33.6 billion in 2000.

Amidst all this gloom, however, Enterasys Networks is hanging on to its

forecasts, convinced that its "enterprise vision" will propel growth

and push investment plans. A subsidiary of Cabletron Systems, Enterasys recorded

a turnover of Rs 268 crore in 2000-01 from its Indian operations. Now, it hopes

to double its revenues by next year.

According to Gary Workman, president, Asia-Pacific, Enterasys, "Nortel,

Cisco, Lucent…Almost everybody is missing targets. But we have picked a

segment that is stable and constant. Our focus on the enterprise sector will

help us meet our targets."

Riding high on the dot-com wave till a year ago, the networking market was

flooded with hoards of ISPs and carriers. Most networking bigwigs were focussed

on these segments. It was obvious that they would be hit badly after the dot-com

crash. Many ISPs which had earlier projected huge investments in infrastructure,

either withdrew from the market or toned down their plans. "People who

focussed on ISPs and carriers are now facing problems. They are desperately

trying to pull strings and curtail expenditure," says Workman.

When defiance pays

At a time when traditional networking companies like 3Com, Nortel and Lucent

were busy de-emphasizing their enterprise focus, Enterasys found a void to fill.

"Instead of chasing the hype, we decided to focus on core networking

products that all corporate infrastructures need. Whether it was defiance of the

norm or a vision with a difference, the enterprise strategy seems to be working

in our favor. While others are downsizing investment plans, we will be making at

least 20 new investments in the Asia-Pacific region alone," reveals

Workman.

Analysts believe that despite the slowing economy, there is no reason for

CIOs to panic, and therefore, Enterasys’ strategy might work out. In a

worldwide CIO survey conducted by Morgan Stanley, it was revealed that the

enterprise segment had not really cut down on IT spend. Asked whether the

combination of a slowing economy and a stock-market decline had forced IT

managers to reevaluate spending, 74% of the respondents said they were holding

steady and 1% were actually planning to spend more.

Unlike companies which attempt to cater to a large audience, Enterasys is

pinning its hopes on specific sectors. Key verticals the company plans to focus

on are education, healthcare, professional services, manufacturing, finance and

banking. Though it is difficult to predict how far this overall strategy will

succeed, it has certainly given the company an edge over its competitors.

Last year, the company increased its share in the LAN switching market to

about 33%, while Cisco slid from 29% in 1998-99 to 22% in 1999-00. And though

Cisco has perked up its act and regained the top slot in the period from April

to December 2000, the competition has been snapping at its heels.

Over the last year, parent company Cabletron has secured orders in India from

Reliance Industries, Haldia Petro Chemicals, Indian Oil, Silverline Industries,

Advanced Radio Masts, Digital India and Mahindra British Telecom. India, which

is among the focus areas of the company, constitutes about 10-12% of its

revenues from Asia.

New zeal: The SAM model

Enterasys, which was spun off as a separate entity in 1999, is now trying to

build an all-new image for itself. Enterasys recently formulated the SAM model–security,

availability and mobility–which is designed to provide comprehensive products

and solutions for an enterprise’s rapidly increasing demands. "Enterprise

networking is no longer a box-selling business and we have to expand and provide

a range of solutions that can adapt to changing environments."

"For instance, we are now trying to shift our focus in the LAN switching

market, planning to include WAN," says Uday Birje, Enterasys country

manager. "Besides ensuring a robust network with maximum uptime, other

critical issues are bandwidth and security," he adds.

The security part of the SAM model proposes a holistic approach for

enterprise security through intrusion detectors and firewalls. The availability

model, with a host of products and in-built capabilities, ensures operational

efficiency and services. The mobility model, piggybacking on wireless networks

and VPNs, provides access to mobile users, be they in classrooms, conference

rooms, temporary offices or anywhere else.

More channels

Apart from the SAM model, Enterasys is also trying to strengthen its channel

strategy to cater to expanding corporate needs. The new approach provides

partners with benefits such as training resources, industry expertise and access

to information, so that they can work together on comprehensive solutions.

Enterasys' recently announced alliance with Siemens, for instance, will tap

emerging markets like call centers, ASPs and data centers. "It will be

Siemens' proven expertise and standing in the IP communications segment which

will really make the difference here. Siemens already has over a million

customers worldwide and an installed base of 70 million work points," Birje

added.

With a strategy that identifies the key concerns of the CIO, Enterasys

Networks appears to have a firm footing in the enterprise segment. However, that

alone will not guarantee success, or the targeted doubling of revenues. The

company might face teething problems in terms of brand visibility, but, as Birje

says, "We might surprise you on that front soon."

SHWETA VERMA in Goa

Enterasys: Stepping Up Channel Activity

As in the rest of Asia-Pacific, in India too, Entrasys Networks gets 100% of

its business through channel partners. The channel, therefore, is the key, and

this is where the big focus will be this year.

First step: a restructuring of its channel, and the partner levels. This will

"help us offer world-class service and solutions to enterprise

customers," according to Robert Ray, V-P (partner marketing) of Enterasys

Networks, USA.

Ray admitted that some aspects of channel management, notably training

support, had not been up to the mark. These would get a special focus, along

with the streamlining of the channel, stepped-up brand visibility, and the

convergence focus for products and services. "Our new channel thrust

represents a new company with an innovative culture," he says. "Our

partners will understand Enterasys better–business strategy, solutions and

products, through consistent awareness programs."

Under the new channel model, Enterasys partners are classified into four

categories. The "associate member" is a reseller that acts as a

channel for networking products. The "certified partner" is an expert

in specific solutions, and may integrate services and software too. The

"elite partner" provides such expertise in all of Entrasys’

solutions, end to end. The "distributor" forms a value-added delivery

channel to the other categories.

Says Uday Birje, country manager, India and SAARC, Enterasys, "The new

approach will us identify the inherent strengths of partners, enabling them with

technology and other training to deliver Enterasys solutions to enterprise

customers."

Enterasys gets over 10% of Asia-Pacific revenues from India (and another 15%

from China). Its major partners in India include CMC, Compaq, Global Telesystems,

L&T, Network Solutions and Siemens. Distributors include Nebula and Webcity.

Asim Raina in Goa/CNS