Recap + Partnerships and Problems

So, I want to remind us of the journey we are on and how focus and market go together examining the wide range of examples using the UMC-1000 as an example in its journey from 1993 to today. The examples so far are:

The IOCs and how the flexibility of the UMC was just what this customer base ordered. This created AFC as the fastest growing Telecom Equipment startup of all time (3 years after start AFC was running at an annual revenue of $300M).

The RBOCs and how that same flexibility created problems at the RBOCs. Though AFC made some progress essentially this was a market failure partly because of the same feature that made it so popular with the IOCs.

The International Business and how the market conditions changed. Initially that product flexibility led it to wide adoption. Later the market conditions changed and the available market changed dramatically.

The CLECs and the one customer for which the deployment flexibility made a difference. The wild success in this one customer and the lack of success in the rest of the market segement.

In 4 different segments the differentiator of the product was viewed and adopted very differently. The success or lack of success in selling the product depended on the customer and their needs. The product was the same. It was the customers that were different. This is why focus and clarity are so important to any business. Are you spending time and money marketing to the people that value your differentiator? You can imagine a plan where AFC marketed to RBOCs exclusively. The company would not have been in business very long would it?

We have reached a point in the story where the Optical Bubble will collapse. If you recall, the DotCom bubble spawned a second bubble in Optical Equipment. This started with the $6.7B purchase of Cerent Communications by Cisco in August of 1999. The end of the bubble was heralded by the bankruptcy of Winstart in April 2001. This led to the 2001 Business Plan at AFC that I mentioned, but will explore more deeply on Thursday.

But a friend wanted me to talk briefly about the $1B lawsuit between AFC and Marconi. This was around some Intellectual Property issues associated with an escrow that AFC had with investors in Taiwan. The details of the suit are not important here, but what came out of it was that Marconi would owe AFC cash or sell a certain amount of AFC product (agreement in February 2000).

The idea for both sides was that Marconi would sell some AFC equipment. From AFC’s standpoint, that would mean that it would get some incremental sales in places that it was unlikely to get business. From Marconi’s standpoint, the plan was to avoid cash payments and substitute sales instead. Seemed like a win-win for both sides. But nobody really spoke to the Marconi Sales team and that was the problem. The Sales Teams saw no benefit – for them – in trying to sell this equipment. It was bringing on a new product line and they were already busy. From their standpoint, if a “bluebird” appeared and somebody directly asked for the product I am sure they would sell it. But it didn’t happen. As far as I know the “partnership” netted no sales.

The lesson here is one from Focalpoint which is everyone listens to Wii-FM (What’s In It For Me). The Marconi Sales team saw lots of work for little gain in the deal. The management team at Marconi saw things differently but it didn’t matter. The issue was low enough on the priority list that it was just easier to pay AFC.

Tomorrow I am going to talk about the Q3 results of 2 Sonoma County tech firms.

Jim Sackman
FocalPoint Business Coaching
http://www.jimsackman.focalpointcoaching.com/
We focus on your business – Time, Team, Money, Exit
Coaching, Sales Training, Web Marketing, Behavioral Assessments, Financial Analysis

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