'We Try and Learn From Competition'

by Sonal Desai    Jun 01, 2009

 

Like many CFOs, Seamus Hennessy of Ruckus Wireless sees competition as extremely useful and believes in learning from it rather than downplaying competition. In an email interview to Sonal Desai, Hennessy details his company’s strategies and its synergies with the IT deparment.

What will be your immediate priority for Ruckus?

My immediate priority is to drive the company to profitability by the end of the year. And we’re almost there now. For a company that is less than five-year old, this is a significant accomplishment. We’ve achieved this by diversifying our business, focusing on international markets and building products for specific vertical applications, such as IPTV or hotel high-speed Internet access, that have real money and real business models behind them instead of a general purpose product that gets thrown out into the marketplace.
 
Ruckus Wireless has been very capital-efficient. Having raised considerably less financing than our competitors ($39 million to date), it has been able to ramp its business quickly. The key to our success is now to become self-sustaining and to establish clear visibility into the products and markets that will drive our future growth. But the market remains highly crowded and competitive and the Ruckus brand is still in its infancy.
 
As a CFO, how do you view the current scenario and how do you position your company vis-a-vis competition?

Like many CFOs, I see competition as extremely useful.  And in our market, there’s lots of it.  We don’t simply downplay our competition; we try and learn from them - the good and the bad. These are very smart people just like us, but they have a uniquely different perspective. It’s useful as a way to calibrate your effectiveness as a company, as a way to stay sharp and motivated, and as a frame of reference.

We are highly optimistic about the current industry scenario. There remains a lot of opportunity for a better and more robust Wi-Fi  system that can handle video and meet the needs of more demanding users with more demanding applications. But competition remains stiff.

Where do you see the market going?

The worldwide market for wireless LAN equipment will grow to over $7 billion by 2012.  This market is extremely competitive - being led by the behemoth, Cisco Systems. Currently, within the market for wireless LAN systems, Ruckus Wireless is relatively unknown. This is our biggest weakness. But this will quickly change as companies see and experience the value of a better and well-thought out wireless solution.

Unlike many of the big Wi-Fi companies, Ruckus Wireless is bringing to this market extremely unique technology that others, despite their size, cannot easily or quickly develop. This technology addresses two major shortcomings of Wi-Fi:  inconsistent performance and spotty coverage.

Ruckus Wireless is the only Wi-Fi supplier today that has developed and delivered a commercial solution that supports the distribution of real-time IP-based video. This application is extremely difficult to support.

And while the macro-economic environment for most technology companies is bleak, the Wi-Fi market in general and Ruckus Wireless specifically is well-positioned for growth. This can be attributed to the explosion of Wi-Fi -enabled devices hitting the market and the increased demand for more multimedia services delivered over a wireless infrastructure. The enterprise market is also experiencing growth with the emergence of higher speed Wi-Fi technology such as 802.11n, which requires new hardware to operate, as well as the increased use of IP video within the enterprise.

Ruckus Wireless has been able to capitalize on the global downturn because our products deliver more value at a considerably lower price point and has developed purpose-built 802.11n products designed to uniquely support multicast IP-based video applications.  During economic downturns, loyalty to big established brands is replaced by value for money. Consequently, Ruckus Wireless is seeing increased demand for our products because we deliver this value while uniquely enabling a new set of capabilities such as multimedia support over standard 802.11 Wi-Fi.

A press release here says that you will play a significant role in geographic expansion? How will you essentially define geographies where Ruckus can expand?

We’ve already defined them. China, Southeast Asia and India are three markets in which we will invest over the coming 12 to 18 months. These markets are defined by a pent-up demand for a more cost-effective wireless system that can solve a unique problem in each of these markets.

We are defining our expansion based on market momentum and wireless demand. A number of emerging markets, such as India, are taking a much more strategic view of wireless as a way to provide economical broadband connectivity in the absence of a pervasive fixed-line infrastructure.

We are seeing increased demand globally for our Smart Wi-Fi products and technology.  However, we are seeing explosive growth in emerging markets, such as India, Southeast Asia, and China where the market has either been underserved or where deregulation is occurring.  In India, for instance, we are seeing increased business in two areas namely, classic wireless LANs for enterprises that deliver better range and reliability, and wireless broadband access for areas where Wi-Fi is used to provide high-speed access in areas where fixed lines are limited

What are the trends in India?

India’s market for networking hardware, specifically wireless LAN equipment, continues to grow, driven by factors such as higher PC penetration and adoption, new Wi-Fi enabled devices, expansion of IT-related services and expansion of branch offices by SMBs.

Within the networking arena, routers and LAN switches will make up a large majority of the Indian SMB annual spend on networking hardware in 2009. Wireless LAN and other networking hardware - like network interface cards, structured cabling, etc. - follow closely behind. SMB wireless LAN spending is expected to more than double in the next 12 months - driven by faster wireless LAN connectivity at many public hotspots and increased notebook penetration. Penetration of Wireless LAN has also risen significantly.

Ruckus Wireless will exploit these trends with systems that can be deployed in half the time, at half the cost and with three times the performance of conventional alternatives from companies such as Cisco, Aruba, HP and others.

There is also a major opportunity for Ruckus Wireless in the hotspot market by providing better Wi-Fi systems that allow telecom operators to augment their existing broadband wireless networks, such as 3G/4G by using Wi-Fi as a high-speed access mechanism. In locations such as China, where the government is now issuing 3G licenses to operators, Wi-Fi is seen as a strategic element in developing high-speed broadband infrastructures to support the explosion of mobile data services.
 
The company already has some presence in markets such as India. What will be your strategy for us?

Our strategy for India is to find leverage points (i.e. system integrators and partners) that will allow us to quickly scale and better serve the local market, such as our partnership with Dell India, for instance.

We are focusing on specific vertical markets where Wi-Fi is a must-have technology - not just a technology of convenience. Specifically, we are seeing great success in the hospitality market, K-12 and higher education markets, the hotspot market and healthcare. These are all markets where there is increasing price pressure, but where Wi-Fi is extremely valuable for both back-end operational efficiencies and where Wi-Fi helps provide a better customer experience.  These are also markets where there are many users who are highly mobile.

Our strategy also includes providing more localized sales and support coverage. This only increases our effectiveness in these markets and our ability to be more responsive as a result.

Finally, we are looking to establishing direct relationships with the telecommunications operators rolling out wireless broadband access services using smart Wi-Fi technology.  There are a number of new upstart broadband operators looking to blanket entire cities using Wi-Fi as an economical way to provide high-speed broadband access in areas where there is little or no fixed-line telecommunications infrastructure.

How closely will your organisation connect with that of the CIO? According to you, how important a role does an IT organisation play in an enterprise such as yours?

Within our own company, IT plays a critical role in the productivity of our staff - whether they are local or remote. Because high-tech companies rely on fast computing power, high-speed connectivity and advanced online tools, information technology is fundamental to increasing the operational efficiency and revenue of our business.

For companies to which we sell, Wi-Fi is now viewed as a strategic IT tool and the CIO plays an essential role in the evaluation and decision for wireless deployments. We sell exclusively to IT organizations through our value-added resellers. The problem that exists today is that there is an increasing pressure on these IT departments to do much more with much less.  IT staff is being squeezed and sometimes cut back due to expense controls. As a result, IT staff cannot take the time to become wireless experts. So they need a system with advanced features, but one that is ultra-simple to install, deploy and manage (at a much reduced cost than conventional systems from the likes of Cisco, Aruba, HP, etc.). Ruckus Wireless IS is that system. Consequently, we are seeing an increase in our business because of this value proposition - despite the global recession.
 
What are the synergies the CFO will share with the IT organisation, and how will the alliance benefit the entire business?

In most enterprises, the IT department ultimately reports up through and to the CFO. Today’s CFOs are much more tech-savvy than ever before and look to leverage network computing and IT as a way to cut cost and increase efficiency. The use of Wi-Fi, virtual private networks, online applications such as Salesforce.com and hosted applications are just a few examples.  In many cases, new IT initiatives are driven by the CFO’s office. Due to the nature of their jobs, CFOs rely heavily on information technology within their own discipline to crunch data, track trends, and maintain efficient reporting models.

CFOs are putting increased pressure on IT organisations to deliver more value, quicker and for less capital and operational expense. Our Smart Wi-Fi systems solve this problem because they require fewer access points (about half) than a traditional Wi-Fi system. In addition, these APs can be purchased at a fraction of the cost of alternatives and deployed in half the time. And because our system can be deployed without costly and cumbersome Ethernet cabling, this reduces the cost and deployment time significantly.