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| Wadhwa
says the company will leverage its leadership in the IP-based
PBX market to strike it big in the Net telephony segment |
April
1, 2002 will see the Indian government unshackling Net telephony.
Many networking providers are all set to ride the opportunity
when the gates open, and so is networking giant Cisco Systems.
Srikanth R P and Rajneesh De report on the company’s
strategies for this important market
When
the then Union minister of Communications, Ram Vilas Paswan
announced that Internet telephony would be allowed from April
1, 2002 it came almost as manna from heaven for a host of
both domestic and global operators who were waiting patiently
in the wings to begin operations in the VoIP space. Almost
all the major networking players have since then formulated
comprehensive strategies in a bid to gain an early mover advantage
when the market actually opens up.
One of the most obvious names in this segment is networking
giant, Cisco. Cisco has rightly identified India as the fastest
growing market after South Korea as India is poised on the
verge of a telecom revolution. Industry analysts predict India
will be the fourth largest market in the Internet telephony
sector after China, Japan and South Korea.
Cisco has adopted a multi-pronged strategy to offer solutions
in the sphere of VoIP. Explains Naresh Wadhwa, vice president
(west), Cisco Systems India, “There is no doubt that
there is an exponential market opportunity waiting to be tapped.
Since Cisco has always been at the forefront of introducing
new products, we feel we will have an early mover advantage
in leading the revolution.” The key part of the strategy
as Wadhwa explains is to educate the market and explain the
benefits of the technology. In a bid to spread the technology,
Cisco is taking a proactive stand and conducting several educational
workshops across the country.
The company has identified several growth areas to sustain
a yearly growth rate of 30-40 percent. The first obviously
is to keep focusing on the adoption of converged networks.
Other than the traditional LAN and WAN segments where companies
are deploying VoIP applications on their closed user group
networks, Cisco is betting big on the latest opportunity Voice
over Internet. Today, the only hindrance that industry analysts
feel would stifle the growth of VoIP is that operators don’t
assure quality of service (QoS). Currently, QoS is only guaranteed
in a closed user group as operators feel that they don’t
have control over the entire network in the case of Voice
over Internet. But Wadhwa dispels such doubts and says, “We
are seeing a lot of operators like Reliance, Bharti and the
Tatas setting up their own private networks. When operators
own the whole IP network, they can assure QoS, which will
increase opportunities for us. The technology today is also
more mature to take care of quality issues.”
Operators like BSNL can learn from the examples of China Unicom
and TOT in Thailand who have been huge success stories. Today
almost all the operators in India are pouring in billions
of dollars to create one of the world’s most advanced
VoIP networks. This could lead to larger call volumes that
will translate to cheaper per-minute rates. In countries such
as the United States, where a strong telephone infrastructure
already exists, installing a VoIP network is daunting. But
in countries like India, where phone networks are less advanced,
it represents a huge opportunity to leapfrog generations and
become one of the few nations to have an advanced VoIP network.
It is this opportunity that Cisco is eyeing. VoIP is undoubtedly
a killer technology, as a host of opportunities would be opened
up in India through VoIP, with players in the sphere of national
long distance telephony, international long distance telephony,
cable operators, ISPs, enterprises and contact centres expected
to deploy VoIP in a big way.
 But
before Cisco can take advantage of the VoIP boom, it faces
the daunting challenge of convincing corporates to give up
their old networks which are currently maintained in the form
of separate networks for voice and data. Explains Wadhwa,
“The onus is on us to drive the market. In the New World
of convergence, corporates are gradually realising that PSTN
infrastructure that is based on circuit switching is more
expensive than IP telephony. Also, as Indian companies look
to expand their networks, use of IP networks for applications
is the only cost effective solution.” Cisco knows that
it faces a lot of competition from traditional PBX vendors
especially on the LAN front. But even in these trying times,
Cisco has a lot to cheer about. One, Cisco is the leader in
the IP-based PBX market, which though small is growing at
a fast clip. In addition, the shipment of traditional PBX
systems has been witnessing huge drops contrary to IP-based
PBX systems, which have been going up all pointing to market
acceptability.
One of the key reasons why Cisco has been able to maintain
its lead over competition is its ability to introduce products
and create niche markets of its own. If the product is accepted,
others are forced to follow suit as has been seen countless
times both in India and abroad. Almost all the equipment Cisco
has been supplying to customers is voice ready, and ready
for deploying VoIP applications. One killer product what could
generate huge revenues for Cisco is the Cisco IP Phone. Aimed
at addressing the needs of enterprise users, the phones are
based on Cisco’s AVVID (Architecture for Voice, Video
and Integrated Data) platform. In addition the phone supports
services like video conferencing, collaboration, and other
options like prioritising calls received. But the key advantage
is that these phones are designed for scalability with a single
call manager software having the ability to handle over 10,000
calls at the same time. Many large organisations in India
have identified the potential of these phones and have shown
keen interest in buying Cisco’s IP phones. As part of
its strategy, Cisco is in talks with almost all the major
Indian telecom operators for its IP based products and solutions.
Cisco has also restructured its operations by abandoning its
earlier business structure for eleven technology groups to
address the market. Explains Wadhwa, “Previously there
was a difference between the kind of product or solutions
an enterprise or SME used to buy. Hence our earlier model
was based on enterprise segment (addressing banking, financial
and manufacturing sectors), service provider (telecom companies
and ISPs) and commercial (addressing the low end of the market
and catering to the SME segment). But we realised that the
potential of a particular product or solution should not be
restricted to a particular group, but should be available
across the whole spectrum. For example, a product developed
by a particular group could be made available to another group
with slight modifications. This also allows us to share R&D
resources.”
In another first, Cisco has also come up with an innovative
strategy to target real estate developers and architects.
Many a times, organisations are wary of investing in putting
up the newer cables which support both voice and data since
they have already spent considerable amounts of money in putting
up separate cables for voice and data. Wadhwa says that if
architects have knowledge about new technologies, they can
help in spreading the concept of an integrated network. Cisco
is even going one rung down and looking at educating the concept
to even people who pull in the cables. If Cisco gets prior
knowledge about a major project going on, the company can
pitch in with their solutions and evangelise the concept ultimately
translating to more opportunities and more revenues. The company
sees a huge market in the manufacturing segment, which has
huge campuses.
Cisco is also bullish on the wireless segment in India. Though
almost all major operators have laid down miles and miles
of optical fibre, there is still the serious last mile connectivity
issue. Cisco claims it has a great product in the Aironet
340 series, which provides customers the mobility and flexibility
of a wireless LAN (WLAN) to complement or replace a wired
LAN. A product like this is a perfect fit for an operator
who needs to address the issue of last mile connectivity.
In addition to wireless, security is another sector that is
ranked high on Cisco’s list. Cisco is also looking at
the content delivery system market, which is at a very nascent
stage in India. Wadhwa believes this market will take off
once a concept of a integrated network comes in. Going forward,
as organisations grapple with routing bandwidth hungry multimedia
rich content in the network to users, content delivery systems
would be in great demand because of their ability to intelligently
route and manage content. With its ability to think way ahead
of the competition and ability to innovate, Cisco surely looks
like it is going to enjoy its dominance in the Indian market
for a long time to come.
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