Lunacy is the notion of repeatedly doing the same thing in the same way and expecting different results.
Henry Fiallo, CEO of network equipment maker Enterasys, opened a keynote with semblance of that statement during an April IT market research analyst conference speech in Florida, saying Albert Einstein once made such an observation. And while Fiallo didn’t flat out say the lunacy definition describes the history of Enterasys-parent Cabletron, you didn’t have to be a genius to figure out the underlying message.
The lunacy definition does, in fact, describe Cabletron during recent difficult years. The company kept on with the same product types, the same ultra aggressive sales strategies, and the same conservative vision of never entering a new market too soon and expected the approach to keep the company current with the changing industry.
Cabletron eventually recognized it needed to do something drastic. In 1999, four companies were spun out of the whole, including Enterasys – the company that was positioned as the reincarnated enterprise network communications business. The four-company spin-off move was an attempt to assert singular focuses on key areas of business. But initially, the business behaviour of Enterasys didn’t seem a whole lot different from Cabletron.
The company was not profitable and was steadily losing what remained of its meagre market share. Enterasys’s go-to-market strategy still focused on large accounts, still preached “we have better technology than those guys from San Jose” as the marketing mantra, and still focused on selling “products” rather than “solutions.” The new Enterasys was still perceived as the same old hostile partner by many resellers of its technology.
In terms of direction, Enterasys hadn’t really defined much beyond an “enterprise” focus. Observers and customers wondered what was the new value proposition? What was the Enterasys differentiator from competitors such as Cisco? Product and technology roadmaps hadn’t really been defined. Lunacy continued to rule.
Three months ago, Enterasys announced it would hold an industry analyst summit to educate the market research masses and address these issues. Then, suddenly, within days prior to the event, the company pulled the plug and cancelled the get-together. The temptation was to come out with knives – but it would have been too easy.
Yet finally given the opportunity to hear the Enterasys story in Florida last month, one is left believing real change may have finally arrived. Industry analysts finally heard the outline of a corporate strategy and were guided through a roadmap to getting there.
Fiallo says security will underpin the Enterasys product portfolio because security is a primary concern among enterprise customers. So through its Secure Harbor security environment initiative, the Enterasys value differences to customers will be enterprise communication equipment built upon an underlying set of inherent security features, the function of which comes partially activated. It’s a compelling value add.
Long gone are the days of competing head-to-head with industry giants Cisco and Nortel. Fiallo says Enterasys won’t try to be all things to all people – not that the company was ever in a position to step up to such a role. Instead Enterasys will concentrate on building close relationships with customers in manufacturing, health care, education and financial vertical sectors.
The company will focus future product development efforts on, among other things, creating alternative product choices for underserved markets, where customers may not have a breadth of selection. The company’s push is to have a complete high-quality product portfolio and “not just a hot box.” This, too, seems a direction that appears intelligent and, more importantly, achievable.
Enterasys chief technology officer John Roese announced his company is on an ambitious recruiting hunt for research and development talent, and has recently established a research facility in the Greater Toronto Area, currently staffed by 45 engineers, who among other things, will develop ASIC and IP-related technology products. A total of 100 experts are expected to be working at the facility by the end of the year. The Toronto engineers have been challenged to build a network access offering, which Enterasys hopes to position as a less-expensive and much more feature-rich product than those currently available in the market.
The new Enterasys says it recognizes a need to expand product lines and will focus on bulking up its low-end routing and connectivity portfolio, and provide a packetized voice/data communications solution. There are promised new partner programs, with meaningful certifications and a commitment to more strongly encourage direct sales to move business through the reseller channel. Enterasys vows to do more advertising, tradeshows, seminars, direct mailings, brochures and press/analyst briefings, all in an effort to promote brand awareness and maybe even help people more easily say that peculiar moniker.
But some old habits are hard to break. Enterasys, much like Cabletron before it, is still reluctant to move into fledgling technology areas. So in the space of packetized voice/data technology, Enterasys has decided to resell another vendor’s product rather than inventing or purchasing one of its own. Unfortunately, it happens to be the packetized voice/data solution of Siemens.
While extremely successful in Europe, the mighty German giant lumbers and slumbers in North America. Enterasys is looking for the obvious synergy – to leverage Siemens’ presence in products and markets where Enterasys is a non-player. But Siemens is too much like the old Cabletron when it comes to product marketing, believing technological superiority is all that’s needed to cultivate interest in a solution. Enterasys will no doubt need to do a great deal to promote and market the Siemens line.
Still, Cabletron and Enterasys have been one of the rare success stories during a dark period of chaos and uncertainty in the network equipment industry. While the communications juggernauts slash head counts and continue to miss financial targets, the little company from Rochester, N.H. unexpectedly had a profitable last quarter, grew its business by 20 per cent over the course of a year, and is expected to earn $1 billion by the end of FYE 2002.
“We’re focused on customer intimacy – understanding their problems, getting closer to their industries and crafting a solution,” Fiallo said.
Words of wisdom, and definitely the right approach to the market. That Cabletron incarnate Enterasys is poised to be among the important and most successful network equipment suppliers doesn’t seem like such a crazy idea.