Triton pushes to pull success out of thin air
By Christopher Boyd
of the Sentinel Staff
Published in The Orlando Sentinel on August 21, 2000
A month after taking his company public, Triton Network Systems chief executive Howard "Skip" Speaks called a three-day meeting with top managers to begin mapping a strategy for the future.
"We`re at a transition point," Speaks said during a break in last week`s meeting. "We`re well-capitalized, we have a solid plan and we`re now beginning a push toward becoming cash-flow positive. That means developing a broader product base."
The Orlando maker of wireless telecommunications equipment is just beginning its assault on the market with technology developed in part by a team of Lockheed Martin Corp. rocket scientists.
Fast company. Triton Network Systems chief executive Howard `Skip` Speaks joined the company last September. `Our goal is nothing less than becoming the leading provider of fixed wireless telecommunications equipment,` he said. Triton is building a faster version of its existing system(Angela Peterson/The Orlando Sentinel)
If Triton delivers on its promise, its equipment will become a key component in high-speed digital workplaces around the world.
Triton builds highly specialized radio relay units that can move massive amounts of digital data through the air, allowing office buildings that aren`t wired with fiber optics to function as though they were.
Speaks, a top executive at wireless phone manufacturer Ericsson before joining Triton last September, understands the mind-boggling speed at which telecom technology changes. His team is already developing a much faster version of the system it`s now selling and is exploring Asian markets for growth.
"Our goal," Speaks said, "is nothing less than becoming the leading provider of fixed wireless telecommunications equipment."
Putting broadband data on the airwaves has advantages. It allows alternative telephone companies and Internet service providers that buy Triton equipment to avoid using existing phone lines. That gives their customers very fast connections while bypassing the local phone company.
In many places, especially older cities, the logistics of laying fiber cable is complicated and expensive, and can require many government permits.
The Triton system circumvents the installation process. It requires only one building in an area to have a fiber-optic connection. That building becomes the focal point for a ring of radio transmitters positioned on other structures. The transmitters move data across the airwaves at speeds of as much as 155 megabits per second -- 100 times faster than the T1 connection used by many businesses.
Triton, with headquarters and an assembly plant on John Young Parkway, began delivering transmitters early this year.
Triton calls the system invisible fiber, because the speed and quantity of information that can move through it greatly exceeds what can travel across the copper wires that connect most buildings to the outside world. It is marketing the hardware to Internet service providers and alternative telephone companies.
"There are 750,000 office buildings in the United States, and only 3 to 5 percent of them are actually connected to fiber," Speaks said. "That means an enormous potential market for us."
Getting there is expensive, and Triton has a huge appetite for capital. It raised nearly $98 million from investors during its start-up phase, and pulled in another $85 million during last month`s initial public stock offering.
"To compete in this fast-paced market, it`s necessary to spend a great deal on product research and development. That`s Reason One for going to the public market," Speaks said. "Reason Two is competitive. Customers feel much more comfortable dealing with pubic companies on large contracts."
But Triton faces a number of obstacles as it moves forward. Competition in the wireless broadband business is intense, and big-name manufacturers such as Harris Corp., Digital Microwave Corp. and P-Com Inc. are older and better established. Although Triton`s ring-relay system is unusual, the other companies continue to innovate.
Speaks acknowledges that Triton is in a race against time.
"We are alone in our space right now, and our real challenge is to build market share," he said. "Our competitors are certainly looking at what we`re doing."Brian Modoff, who this month began following the company for Deutsche Banc Alex. Brown, agreed that Triton has an edge over the competition for the moment, and he ranked its stock a strong buy.
"Triton`s biggest challenge is capturing a couple more key customers and building its base," Modoff said. "They have a good plan and a good product. The big challenge is scaling up the operation."
Triton has been on a fast track since its creation in 1997. Brian Andrew, one of the company`s three founders and its first chief executive, said the company`s birth resulted from very good luck.
Andrew and co-founder Philip "Dan" Gulliford were working for Phoenix Wireless Corp. in Maitland in 1996 when Lockheed Martin`s missile unit came to visit. Michael Buffa, who now leads Milcom Inc., a high-tech business incubator and deal-making company, arranged the meeting in his role as a manager with Central Florida Innovation Corp., an Orlando high-tech development agency.
Lockheed, which works primarily for governments, was offering its technological expertise for the development of commercial products. Phoenix wasn`t interest, but Andrew and Gulliford were intrigued.
"Lockheed wanted to commercialize its technology, but they didn`t know what they could do with it," Andrew recalled. "This isn`t uncommon for companies that trade in military technology. I decided to go to Lockheed to see what they had to offer, and among the 100 items that I looked at, I saw one thing that really interested me."
That one thing was a radio transmitter. He called Gulliford and the wireless data system came into focus. With Buffa`s help, they came to terms with Lockheed.
"Lockheed rented me a team of rocket scientists, and they went to work developing equipment to meet our needs," Andrew said.
Michael Clark, now Triton`s vice president of engineering, wrote specifications for the equipment and sent them to Lockhead`s missile research and development people. Buffa worked on a business plan and connected Andrew with venture capitalists.
"Mike Buffa loved to solve people`s problems. He was more than a deal-maker, he was the catalyst," Andrew said. "We had a business plan that was completely fundable, and Mike moved around arranging the funding."
By late 1999, the company was taking orders and it sold its first equipment early this year.
Andrew left the company in November 1999 to found Cavu Inc., a wireless Internet service provider and one of Triton`s first customers.
"I`m really eager to put Triton`s technology to work as one of its biggest customers," Andrew said.
But Triton has a hard road ahead. Its expenses far outstrip its revenue, and it isn`t estimating when it might become profitable.
Philip Richards, a telecommunications analyst with Insight Research Corp. in Parsippany, N.J., said wireless technology has an appeal, but he cautioned that it has grave limitations.
"Wireless is fast to install and less expensive than fiber optics, but I`m skeptical that it will ever become a major means of communications," Richards said.
Richards noted several problems. Heavy rain can interfere with communications -- a problem Triton addresses with power-modulation equipment it says works better than anything on the market. Wireless also requires line-of-sight connections between one radio in the communications ring and the next -- a big problem in some cases. Triton said the configuration of its system allows for much more flexibility in locating radios than systems its competitors are building.
Ultimately, the biggest problem may be capacity. The broadcast spectrum accommodates only so much bandwidth, making it less capable than fiber-optic cable of handling big data loads. As technology advances, that limitation could become more significant.
But chief executive Speaks says the company will continue to innovate, and he points out that Triton`s technology has enormous potential overseas, where installing fiber optic faces similar prohibitions of cost and permitting.
To that end, Triton struck a deal this month with CommVerge Solutions (Asia) Inc. to provide a wireless broadband network for Taipei, Taiwan.
"There is no doubt that Triton Network System intends on being a major player in Asia`s fixed wireless market," Speaks said.
The company also has three domestic contracts, with Cavu, Advanced Radio Telecom in Washington state and Century Tel in Louisiana."We have a three-year agreement with Triton," said Bob Mirabito, Century Tel`s vice president for emerging services. "The equipment offers a fast way to get our voice and data services operating, and it gives us the flexibility to move radio receivers from place to place."
But Mirabito said there are also disadvantages, particularly obtaining roof rights to install the radio equipment.
"Roof rights can add to costs," said Mirabito, whose company offers telecommunications services in 36 markets. "But we think the advantages to wireless remain. There is a strong possibility that we will grow, and Triton will grow with us."
Posted Aug 19 2000 1:40PM
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