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Interview with Dr. Yaakov Stein, Chief ScientistIntroductionRAD Data Communications, a privately held company established in 1981 and based in Tel Aviv, Israel, with offices worldwide, is part of the RAD Group of companies. RAD Data develops and markets an extensive range of legacy and next generation communications products for the access network, which it supplies to carriers and service providers, utilities and enterprise customers. Major customers include major Tier 1 carriers all over the world. The company also partners with large incumbent vendors such as Alcatel-Lucent, Cisco, Huawei, Ericsson and others. With 1,000 employees, RAD Data Communications is at the centre of the RAD Group and is a central resource for the Group's other member companies now numbering 13. RAD Data provides a central infrastructure for the Group, including services such as legal and HR, as well as technical resources and general support for companies developing new technologies that the Group management wishes to nurture. While the RAD Group companies are independent, with each having its own CEO, R&D and marketing departments, they do cooperate as well as sometimes compete. ProductsRAD Data offers 'intelligent' access network solutions for service provider and enterprise customers. Dr. Stein commented that this is the sole focus for the company, which does not extend to providing core network or residential CPE systems, "RAD basically provides systems that link the core network to the end user, usually for enterprises but also for carriers that specifically require an access solution". The main applications for RAD Data's products are backhaul, including cellular backhaul where the systems link base stations with the core network, and connecting business locations. Dr. Stein said that the company's products are most commonly deployed at branch offices distributed across a country or worldwide to link to the headquarters, although they are sometimes installed at head offices. Particularly in Europe, mobile backhaul links may utilise microwave technology, which is the segment addressed by sister company Ceragon. Intelligent systems for specialised applicationsEmphasising the 'intelligent' aspect of its access solutions, Dr. Stein said RAD Data generally seeks to provide products different from what the major vendors offer, designed to address specific customer requirements, "For example RAD Data was first to offer network demarcation devices, now called NIDs. These products deliver carrier-type functionality at an enterprise customer site. The box can be pinged, managed and monitored for performance characteristics such as packet loss". "Interworking is another example. RAD developed TDM pseudowire technology (TDMoIP) in 1998 for customers with IP connectivity that wished to link legacy PBX and T1/E1 devices to the network without having to use a TDM connection". Dr. Stein cited RAD Data's Vmux devices as a further example of a specialised solution for a specific application. The product provides a compressed E1 circuit over which voice, data and fax traffic can be multiplexed together for transmission over a TDM or Ethernet link. This is not VoIP so functionality such as timing recovery can be performed on the traffic. As bandwidth costs have declined, the need for this type of product has declined, and Dr. Stein said that the Vmux is now generally used for satellite links where bandwidth is still relatively expensive. RAD Data aims to differentiate its offering by developing solutions for specific challenges and provides a very broad range of around 200 products with a total of approximately 17,000 configurations. The company also works with major vendors such as Alcatel-Lucent and Cisco to ensure that products deployed at customer sites are interoperable with equipment installed in the network and at the customer's headquarters. RAD Data provides a range of next generation interconnectivity and internetworking solutions, as well as continuing to offer legacy products such as enterprise/SOHO HDSL modems, crossbar switches (DXCs) and ATM access devices for TDM networks. Dr. Stein remarked that the majority of vendors exited the market for such legacy products some time ago, and as a result RAD's sales subsequently increased because it was one of the few suppliers still offering them. Although these products are no longer major lines, they continue to generate sales and there is still demand for them from some large carrier customers. For this reason the company is continuing to develop certain legacy systems in line with customer requirements. This approach of addressing niche applications contrasts with that of major vendors such as Cisco, Dr. Stein noted, which generally aim to address the needs of as many customers as possible in any particular product segment using a single solution. According to Dr. Stein, RAD Data's products are typically less expensive than the large, complex systems from major suppliers as they are simpler by not incorporating features to meet a range of different deployment scenarios and customer needs. The range of products RAD Data offers, some of which are very similar, means that customers may struggle to select the most appropriate one, although the company or its resellers can provide expert guidance in this area. It was also noted that if there is not a product for a specific customer application, RAD Data may be prepared to develop one for the right business case opportunity. Dr. Stein concluded by stating that usually a product or combination of products - including from third party vendors - will meet the requirements of a majority of customers. Standards over patentsDescribing the company's approach to technology, Dr. Stein stated that RAD Data is keen to get involved in standards development but only rarely seeks to patent its intellectual property. This strategy derives from the philosophy that if a market segment is large, RAD cannot meet all of the demand and so is happy for other suppliers to address it with products based on standards it has helped to develop. RAD is involved in standardisation work with bodies including the ITU-T, Broadband Forum, IETF and MEF. Work with the standards organisations allows the company to provide input relating to standards development as well as gain valuable contact with other equipment suppliers. Dr. Stein added that RAD can be, and needs to be agile as it is smaller than most of its competitors. Leveraging this agility, RAD Data aims to be first to market both to combat this factor and to reduce any disadvantage arising from not protecting its technology. Sales channelsIn terms of routes to market, Dr. Stein said that more than 80% of sales are via distributors, although major strategic and corporate customers are addressed directly. RAD Data sells its extensive product range into 165 countries, which for a business of its size effectively dictates the use of resellers. The company has staff in 27 overseas locations, with most sites having a handful of employees. The company is not normally directly involved in sales via resellers, except for very large orders or if the customer has highly specialised requirements. RAD Data distributors are typically systems integrators that act as channel partners for the company. Dr. Stein said that in Israel the distributor is sister company Bynet, which also works with Dell and serves as a systems integrator for two large mobile systems suppliers in the country. Dr. Stein explained that RAD Data's distributors attend events held by the company in Israel once or twice each year to see demonstrations of new products, and meetings are held with channel partners in other locations worldwide during the year. There is currently a focus on strengthening the company's relationships with service provider customers, Dr. Stein commented, resulting from a lack of direct contact due to the use of resellers. One initiative under this effort is the RAD Care support program, "The company has now introduced a paid-for support service. One benefit for customers is that RAD Data can now offer 24/7 support in countries where it simply could not afford to do so previously. It also means more contact with the customer". RAD does work directly with what it defines as strategic and corporate accounts, which constitute the remaining 20% of total sales not handled by distributors. These strategic accounts include other vendors the company works with, which resell its products either under the RAD Data brand or as re-branded products. Market focusConsidering RAD Data's exclusive focus on the access network, Dr. Stein explained that in the core network, systems are very large and must deliver the maximum functionality in a single box in order to address as many customer requirements as possible. Such systems demand a huge amount of resources in terms of time and money to develop. RAD Data also seeks to manufacture its products locally as far as is possible, with systems for European customers produced at its factories in Israel. However, it was noted that RAD also has factories in Brazil and China where it manufactures products for those markets. This is mainly due to national requirements stipulating that products sold in those countries be manufactured locally. To help the company decide what products to develop, RAD Data's business development staff visit major customers on a frequent basis. The company has long standing relationships with these customers and will regularly meet with them to ask about problems they are facing and what solutions and features they would ideally have, as well as the price they would be prepared to pay for them. Innovating out of the recessionDiscussing the affects of the global downturn, Dr. Stein acknowledged that while the company's wide product range and geographic spread tend to make it less susceptible to general economic factors than many suppliers, a worldwide recession is a different matter. The company has been affected by the downturn of the past two years, which had a delayed impact on the network infrastructure market and by the same token will take time to recover, "A couple of years ago service provider and enterprise customers gradually started to reduce spending on communications equipment and new networks. An indication that customers are cutting their spending is when they begin to buy older products to sustain existing networks rather than investing in next generation solutions". Dr. Stein stated that RAD Data has also been affected by additional localised factors, including difficulties in China and India. In China, RAD Data has historically offered high-end products while local suppliers focused on the low-end, low-cost segment of the market. However, with sophisticated local vendors such as Huawei and ZTE now competing aggressively in China it has become extremely difficult for RAD Data to maintain its position. Dr. Stein revealed that the company's market share in China has dropped significantly over the past few years as a result of pricing pressure. In India there is also increasing pricing pressure, again due primarily to the entry of large Chinese vendors. RAD Data is presently regrouping in India to address this situation. Finally, Dr. Stein explained that a strengthening of the Israeli shekel against the U.S. dollar and euro further damaged the company's balance sheet, as most expenditure is in shekels while the bulk of its income is in either dollars or euros, leading to a significant impact on RAD Data's bottom line. However, RAD Data is now seeing significant growth on a month-by-month basis as compared to the same period in 2009, although Dr. Stein noted that service providers are still noticeably cautious with regards to big expenditure on equipment. Dr. Stein concluded by noting that the company has a tried and tested strategy for dealing with such difficulties, which is to innovate in the expectation of discovering the next 'Big Thing' in networking.  |
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