It's not just about technology

Garage Technology director Brian Jenkins says the communications market is still ripe for start-ups. But simply flashing cool bits and bytes won't cut it with customers anymore.

3 min read
For everyone involved in communications-related companies, the recent downturn has been painfully obvious. We all watched as high-flying companies came crashing down after the era of irrational exuberance abruptly ended.

In the aftermath of this tornado, the start-ups that were created to sell to carriers and service providers now operate in a sharply changed terrain.

During the flush times, when carrier expenditures were booming, these upstart companies were confidant that innovative technology was enough. That's not true anymore, and the struggles of the telecommunication carriers, punctuated by bankruptcies and significant reductions in expenditures, have created new realities.

That's forcing entrepreneurs to follow basic, and previously ignored, business tenets--the prime one being that start-ups can no longer solely focus on technology and ignore customer needs. It's not just good business practice, but a matter of necessity; without customer traction, there is no investment potential.

With the service provider market still mired in a slump, communication-focused start-ups can still thrive by focusing their attentions elsewhere. During the Internet landgrab of the last five years, the enterprise and government markets were both overshadowed. But they each now represent attractive markets.

Beam me to the enterprise
In the enterprise market, the two most promising opportunities for communications companies are in LAN-based policy queuing and outsourced service enablement. The former focuses on intelligent application-aware networking, while the latter allows outsourced solutions to function as if they were local. During the Internet landgrab of the last five years, the enterprise and government markets were both overshadowed.

In most large corporations, data networks must provide a large mix of applications, from mission-critical client-server applications to e-mail to database access. However, these same networks have little or no intelligence about how to prioritize traffic. Although there are a few point solutions available in the market, none currently handle application prioritization from the desktop across the wide-area network.

That's where LAN-based policy queuing and outsourced service enablement fit in; both overlay intelligence to data-centric packet environments. By enabling networkwide traffic prioritization, corporations can improve mission-critical application performance and launch latency-sensitive applications such as voice over IP.

Elsewhere, outsourced services such as application and storage hosting also present interesting opportunities for communications.

Although many small pure-play service companies have struggled, larger diversified providers will eventually offer a suite of value-added outsource services. These services would benefit from innovative solutions to address the interconnectivity issues that arise when linking enterprise customers to outsourced service providers. Whether the focus is on ASPs, SSPs, ITSPs or the like, equipment vendors can succeed by enabling security, guaranteeing qualities of service, and ensuring end-user transparency to these outsourced services.

Security after Sept. 11
Following the Sept. 11 terror attacks, the government market for communications-related business has heated up. In fact, the General Services Administration now wants to create a high-security private government network. Although the verdict is still out on the construction of an entirely separate communications network, Uncle Sam is clearly looking for secure alternatives to what's currently considered state-of-the-art solutions.

There could be a significant opportunity for start-ups to leverage a combination of security and transport for this new network. The government is interested in protecting sensitive communications, and there could be a significant opportunity for start-ups to leverage a combination of security and transport for this new network.

Another area of government involvement involves the Communications Assistance for Law Enforcement Act. Specifically, interests include wire-tapping voice-over-IP calls and leveraging technology to counteract terrorist groups using the Internet to coordinate activities.

Although the communications sector has been wracked by bad news, most of it has centered on the broadband and optical networks, which both now represent overly funded and highly competitive markets. However, the enterprise market still has opportunities for vertical segmentation and targeted innovations, and the government opportunities are just beginning to emerge. Regardless of sector, today's start-up environment has forced entrepreneurs to spend their time listening to their prospective customers rather than talking to them about new technology.