Here is an interesting article cited on the RB board. (Thanks James) This is an interview with Bruce Sinclair.
One-on-One: WaveRider Reaches Its Last Mile
By CRN Canada
Bruce Sinclair admits he likes start-ups. Sinclair, the president and CEO of Toronto-based wireless start-up WaveRider Communications Inc., said he believes that "the first billion is always enjoyable and very rewarding for a start-up."
Sinclair should know what it's like, because he played a significant role in the first billion dollars Dell Computer Corp. made as the person who started the Canadian operations of the PC manufacturer.
WaveRider recently released its Last Mile Solution line of products for wireless networks. These products have been in development for two years, and Sinclair said he believes they are in a good position to make WaveRider a leader in the worldwide wireless Internet access market.
However, Sinclair is not drawing from his experiences working at Dell by going direct. He has chosen the channel route.
Computer Reseller News Canada recently spoke with Sinclair about WaveRider's plans for the channel and the wireless market.
Computer Reseller News Canada: What is the Last Mile Solution and what is WaveRider trying to accomplish with the product line?
Bruce Sinclair: There is a lot of confusion in the wireless sector. First of all, you have your traditional voice wireless industry. Currently they are starting to add features such as messaging, stock quotes. That is not the business we are in. There are also a number of companies developing high-speed, microwave type of systems. That is not what we are into. We have focused all of our product development with the Last Mile Solution, which we have just trademarked. The Last Mile Solution refers to that: How do you get from high-speed pipes out to individual businesses and homes with high-speed Internet services? And by high-speed Internet services, we mean speeds and broad bandwidth capabilities over 100 kbps and above ISDN, which is a minimum requirement we believe for typical desktop Internet access application. It is not the messaging or voice side. The Last Mile Solution product family is designed to deliver those kinds of speeds to home and businesses in a fully network-managed product line. What that means is, they have lots of radio devices and network management devices but none that have married the latest in radio and Internet network technologies that are managed that can be built up over a geography much like the cell phone technology.
CRNC: WaveRider's stock price has gone from next to nothing to over $10 on the over-the-counter exchange. Why has the wireless market has gone through the roof and taken your company with it?
Sinclair: We were the first company in the world that was globally marketing itself as a company that develops products and services for high-speed Internet access. Two years ago, we made presentations to the financial markets, and they thought we were crazy. There was not an understanding of the price performance that we could deliver. Then the understanding grew rapidly with the Internet growth throughout the world and the reality that only a small portion of the population has access to good telecommunications like we have here in North America. So there was a great need for better access technologies. Secondly, these technologies would have the price performance and quality that would be an alternative to wireline solutions. The traditional access technologies like fiber and DSL cannot meet the demand. So the appetite for access technologies with wireless on top of that, which can reach billions of people who won't have wired cable services, it shows that wireless has a tremendous future? People realize that this is just the tip of the iceberg of what is going to be purchased, utilized and implemented over the next 10 years with Internet access technologies.
CRNC: What are WaveRider's plans for the channel?
Sinclair: In North America we have a very active reseller program where we have been requiring VARs and systems integrators. It is quite interesting now, with Y2K behind us, they are looking for the next home run. Wireless communications services is attractive; several people and VARs are showing interest in expanding their services to include wireless. So a typical VAR would be someone who is providing LAN expertise within an office but is also consulting on WAN to business. We can start to provide alternatives that they can actually make more money and provide another service to their clients, especially in suburban and rural markets where telecom services are limited and expensive. And, school boards are the best example. There are a number of resellers we have signed. We do not sell direct; we go through resellers. Our goal is to train and support a reseller so that they can go out with their own sales and support staff and be able to install wireless networks. In Canada, I think we have a dozen ? and we have over 50 worldwide.
CRNC: What are the margin opportunities for VARs with WaveRider products?
Sinclair: The reseller channel is trying to sell a private network that they will build for a company. A typical sale there would range from $25,000 to $250,000. The margin opportunities are similar to LAN opportunities, where they get 25 per cent on product side for gross margins and even more on the service side. There should also be good follow-up revenue for expansion of service and networks. What we see on the Internet, you will see someone sell a 2Mbit service and nine months later they want a 10Mbit service. With school boards, the costs go down, so initially the board can only afford to put their three big schools. But now the costs are less and the demand is more that they can put another 10 on board. So there should be great growth and add-on potential.
CRNC: What is WaveRider's plan for distribution?
Sinclair: We have set up two distributors ? Omni Provincial is one ? and our strategy is to get some demand at the sales and installation market penetration level first, because it is not attractive to distribution channel until there is a demand for the product. So we do not expect it to be a large distribution product until another year or two. A typical VAR has a learning curve on how to sell and install these products. I compare it to the '80s, where every year was going to be the year of the LAN, according to every technical publication. But at the end of the year, they would tally it up and it would be miserably slow and there would be great products from Novel and 3Com, but the market was slow in taking off because there was not a distribution channel that could handle it. The distribution channel was not trained to sell it or support it or to make it an easier transition for small and medium-size businesses to actually utilizes these technologies effectively. The only people putting in LANs in those days were large corporations. The LAN industry took off only when there was a good distribution channel in place. I think we are going through some of the same growth curve today.
CRNC: How does a small start-up like WaveRider compete with bigger, more-established companies?
Sinclair: There are a half-dozen such companies with the NCL product family (wireless modems). Lucent does not have a product in that category, but Aironet has one and BreezeCom. There are a number of companies selling those. We sell those to a main distribution channel of resellers that implement those in small to medium-size businesses and the school boards, which is the biggest vertical market for these products. In the Last Mile Solution, which takes the wireless modems to the next level and builds them out to a cellular structure fully managed network, there is only one other company which is similar. That is MetroCom, which focuses on urban U.S. cities. Now, Cisco has said it would have a product line for this market. So I expect to be playing against the big boy soon.
CRNC: Cisco has a very public acquisition strategy, having spent well over $1 billion (U.S.) on acquisitions. Is there any thought of WaveRider being bought by Cisco?
Sinclair: I am not personally thinking in that direction. I believe the first billion is always enjoyable and very rewarding for a start-up. I do not have any desire to be acquired by a large company. But my job is to support the shareholders, and as a publicly traded company, I would consider it, but it is not something that we are pursuing. We have acquired one small company, called TTI Wireless, out of Cleveland. We are talking to a variety of companies around the world. Basically, when you have a high-growth industry, you see a number of new entries. What also happens is that these companies are driven by strong technical minds. What also happens is that these people do not have a strong balance of financial, sales and marketing and manufacturing resources, and often they hit a wall in the first few years of development and start to look at companies who do have a broader foundation. So we are looking for companies that have complementary products for our Last Mile Solution distribution.
CRNC: What are WaveRider's revenues?
Sinclair: We hit our first revenue quarter in Q3 of last year, which was just over a million dollars Canadian. We publicly stated that our goal is to build a company that gets 5 to 10 per cent of what is expected to be a $3 billion to $5 billion marketplace over the next five years. You can translate that into a $150 million to $500 million company, which is what are goal is. If we set that as a goal, it would be too low.
CRNC: How would you define the wireless market in Canada in comparison to that in other parts of the world?
Sinclair: Over half of our early sales have been to less-sophisticated telecommunications infrastructures such as Latin American and Caribbean countries. And that was because they called us and asked us to sell them our products. Our sales and marketing strategy, now that we have a sales and marketing team, is to focus on North America and internationally in areas that are regulatory friendly to our products, which means in the U.S., Canada, Latin America, and Asia Pacific. Not Western Europe. And we are watching the Middle East area. In North America, it still represents over 70 per cent of the worldwide Internet business and is still growing quite rapidly. The market in North America is very large. We had wireline solutions and telephone and cable companies cover a significant portion of the market. So there has not been a need to sell you a wireless solution. However, there are opportunities today, because they realize that over 30 per cent of homes and business will not have DSL-level service. That is a huge market in North America? We are starting to see talks with wireless service providers and telecommunications providers and Internet services providers that want to build wireless products in North America.
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