[Sales profit]
Hi Steve:
I agree with the assertion that the money to be made here is in modem sales not licensing revenue. I think you are voicing some valid concerns about Amati's capability to make money in this sense in your various posts. Following are some of my takes on your points.
<The mantra is...marketing and distribution channels...
AMTX doesn't even have a commercial product (that anyone wants beyond initial trials), let alone the kind of crack sales team ($$$$$) they will need. Anything can happen.. we shall see.>
First on the commercial product thing: AMTX is at the very least not worse of than any other DMT vendor (I don't thing there are any "Commercial" Aware modems). If the news/rumour trickling out from HK is true, then there is already some AMTX modems in commercial use NOW, of course we won't know for sure until there is an announcement. As far as CAP is concerned, they may have some commercial modems now, but most probably first generation 1.5M modems, I don't know how successful these are going to be "commercially". I think people are waiting on the 7M RADSL CAP modems for wider deployment. In my view the RADSL CAP modems are no closer to "commercial deployment" than any of the DMT modems.
Now, on the marketing/sales concerns. Yes AMTX doesn't not have a crackÿsales team. I think we can even agree that their PR/IR department could use a lot of improvements. The question to me is, howÿimportant is an excelent sales/marketing team to the overall success of the company? AMTX management's answer to the above question will determine the thrust of their business plan (I think we can safely agree that AMTX is substantially ahead of competitors on a pure technical ground). The validity of their answer to the question will determine the success of the company.
Of course marketing is important, but how important depends on how you think this ADSL/xDSL market is going to develop. I think there are two possibilities, one the market develops along the way of the analog modem market today, with substantial portion of the sales happening at the retail level and with consumers having total freedom in choosing the modems they buy. In this environment, mass marketing would be very important and companies like USRX would excell. If this is the situation, I would beÿworried about my AMTX investments, as I think they could not get the marketing job done without a large partner that they do not currently have. The second possibility is that the xDSL modems would not really be marketed en masse directly to the consumers, but will be bought mainly by service providers directly fromÿnetwork integrators. Customers would then be restricted to leasing or buying the modems from the service provider or buying compatible modems on the open market. In this case the key would be toÿpartner with system integrators. The need for mass marketing is notÿas critical here. I believe that AMTX managements holds the second viewpoint and is thus executing their business plans accordingly by forging partnerships with system integrators. To date we have:
1) Siemens partnership deal
Should be major presence in Europe. I particularly like the tone and thrust of the agreement: "Siemens and Amati will work together on the next generation of ADSL technology.... In addition, Siemens WILL MARKET Amati's ADSL modems an ADSL distribution systems." I think Siemens has a pretty good Marketing dept, don't you?
2) Sumitomo partnership deal
Guarantees major presence in Japan, most probably in other asian countries also. Again, notice the thrust and tone: "Sumitomo Corp today announced a strategic relationship to DISTRIBUTE (i.e. MARKET) Amati's ADSL products in Japan... focused on ACCELERATING the DEPLOYMENT ...." Again Sumitomo's Marketing presence in Asia is no chickenfeed operation.
3) NEC partnership deal
This partnership is rearing its head not only in Asia (HK, Japan,???) but also in Australia (Telstra VOD trials) and the US (MCI VOD trials). Besides a major marketing ally, they are working feverishly on AMTX version of the VDSL chip.
4) US System Integrator partnership???
This is the one missing piece of the puzzle. I trust that they are working on this right now. Hopefully we will hear about this soon.
Now, if you believe that the second scenario above is likely, you cannot but conclude that of all the ADSL companies out there, AMTX has probably done the best job in forming and executing the correct business plan. I haven't seen any Marketing/distribution partnership agreement for Aware, all their deals are basically technology transfer/licensing deals. I am not sure what Westell is doing here, weren't they suppose to have a similar deal with Nortel??? I am not sure, but the fact that Nortel is demoing mainly with Amati equipment in various shows is something to chew on. Finally, I think Orckit has aÿsimilar deal with Fujitsu??? All in all, nobody has worked harder and achieved more in establishing these marketing/distribution partnerships then Amati has.
After considering these facts I am Significantly more comfortable with my Amati investments, and I am feeling better about it all the time. All of the above are, of course, IMHO. Perhaps somebody has a better understanding of the issues above or a different point of view. I would like to listen to their comments.
Regards,
Edward
PS How can I copy and paste comments from the message I am trying to reply to? Having trouble with this with Netscape on my SUN Workstation |
