The annual survey of Indian communications industry done by VOICE&DATA ranks the equipment vendors in almost 30 segments. The survey brings out market leaders in various segments but there are many companies that either go unnoticed or do not make it to the list of top companies. Nevertheless, the contribution made by these companies in the overall growth of the industry cannot be discounted. Though it is not possible to bring out all such companies, VOICE&DATA picked up a few in various segments and tried to assess how these companies would fare in the FY 2005–06.

Crouching Dragons
In carrier class equipment, Chinese companies like ZTE, Huawei, UT Starcom have been giving the traditional giants like Cisco, Ericsson, Nortel, Alcatel, and Siemens a run for their money. The recent $19-billion, BT's next-generation network deal with Huawei has again launched the specter of threat from the Chinese companies to the traditional equipment vendors, even on their home turf. And, this time price points were not a concern. It is a reality that these companies have arrived and are here to stay. They have already forced a huge slide in the cost of equipment and they have also proved themselves in carrier-grade equipment technologies.

In high-growth markets like India, almost all the telecom operators-in private and public sector-are expanding and buying equipment across technologies and there is enough scope for the survival for all companies. But, till now the major portion of revenue for ZTE, Huawei, or UT Starcom was flowing in from the BSNL/MTNL tenders. These vendors have the full range of offerings and unless there is regulatory requirement for partnership they are capable of supplying carrier equipment, enterprise equipment, customer premise equipment, and even handsets.

The importance of India in the boardrooms of these companies is highlighted from the fact they have been investing heavily here both in terms of setting up manufacturing units, R&D and testing centers, and also expanding their employee base.

The companies
ZTE has set up a manufacturing unit at Manesar near Delhi, and Huawei is evaluating a similar move this year. These factories come in addition to their R&D units in Bangalore. Last year ZTE registered its 100 percent Indian subsidiary-ZTE Kangxun India. They are also expanding their Gurgaon office to become the head office for Southeast Asian operations. The India office would now cater to the SAARC countries, Myanmar, Malaysia, and the Philippines and would be a hub for supplying equipment to these countries.

UT Starcom has an R&D center at Bangalore and a complete equipment testing facility at Gurgaon. The company has invested over $50 million in India. For the company these centers support almost 50 percent of global development work related to 2G and 3G CDMA data, voice-over-IP (VoIP), and personal communication management systems (PCMS), and unified messaging solutions.

In the last financial year the revenue for ZTE was around Rs 300 crore. It executed CDMA projects for BSNL and MTNL on one hand, and supplied end-to-end GSM solutions to BPL and Spice Telecom on the other. For BPL, the company supplied caller ring back tunes (CRBT) solutions and also placed bids for BSNL tender along with CellNext.

Huawei had revenues of around Rs 160 crore with a Rs 500 crore order in hand. The company got 70 percent of Rs 190 crore National Internet Backbone project (NIBII) project. In the private sector they are supplying IN to Spice in the Karnataka circle and also have orders from Reliance for FWTs and are in talks for CDMA infrastructure products. On the transmission side, Huawei had a small order from HFCL Infotel for $1 million.

UT Starcom in India is known for its broadband equipments and last year it entered the GSM handset market in the retail segment too. Though the company lost a Reliance deal in FY 2004–05, it bagged the Rs 40.5 crore deal for BSNL's National Internet Backbone II project for deployment of its Total Control(R) 1000 multi-service access platform and related equipment. It also got the 75,000-port, DSLAM tender from BSNL, which was an extension of the NIB II project.

On the broadband front, ZTE along with Atlas Interactive is implementing a four-city $100 million project for BSNL. The company has also bagged another BSNL order for $1 billion and has done trials with MTNL for ADSL modems. Similarly, UTStarcom has done trials with Bharti. Huawei has been doing pilots for IPTV and ADSL modems with HFCL as partner.

In the current financial year, everyone has targets keeping in mind the 47 million-line tender from BSNL and MTNL on the mobile telephony side. They are also eyeing a huge chunk of the broadband networks being planned by Bharti, BSNL, and MTNL. On the CDMA side, ZTE and Huawei would be good competition for Lucent and Motorola who have traditionally been the prime suppliers to PSUs, Tata Indicom, and Reliance.

Though no vendor would like to be left out of the great Indian telecom party, the Chinese companies would be the ones who would be closely watched for their price points, technologies, and ability to recreate the China-like success in India.

Creating Success Wirelessly
In all the wireless frenzy that gripped Indian networking market last year, one company made a silent entry and struck gold in WLANs. Santa Clara-based Netgear joined hands with distributors and resellers in India and straight away became the third-largest WLAN vendor in India. Global revenue for the company is around $383 million and has been growing at almost 28 percent. Though its India revenue of Rs 5.5 crore is way behind the market leaders like Cisco (Rs 41 crore) and D-Link (Rs 22 crore), Netgear has pushed players out like Dax and Proxim to take its place in the hierarchy.

As a vendor, Netgear gained tremendous acceptability in both the enterprise and home-SOHO space. Netgear products gained a lot of mind share and volumes as its three distributors promoted them extensively across India. This company would be worth tracking while the number of WLANs and hotspots increases in the Indian market.

In the network integration space Houston Technologies and Gemini Communication are registering good growth rates.

Gemini came up strongly as a competitor to Tulip, who successfully implemented the Mallapuram project. The company has grew almost 41 percent in a year. Not only did the Gemini grow in wireless networks, network security, and LAN-WAN analyzers but it also entered new areas like RFID. With a few players in the RFID space, Gemini is expecting almost 200 percent growth from current revenues of Rs 1.6 crore.

Last year Gemini also bagged a pre-WiMax wireless broadband network project for three major telecom operators in India for around Rs 40 crore. The company also implemented MTNL's Garuda SDH project in Delhi for Rs 8 crore. With a target of Rs 100 crore revenue this year, Gemini would be giving a tough time to its competition.

Houston is a traditional OSS/BSS company, which forayed into the network integration and consulting space with great success. Between FY 2003-04 and FY 2004-05, the company revenue jumped from Rs 15 crore to Rs 50 crore. Within a span of four years the company registered a 233 percent growth. The success comes due to a shift of strategy to mix network integration market with the OSS business. Though OSS/BSS still contributes Rs 22.37 crore to the overall revenues of the company, in FY 2005–06 integration and consulting business is likely to pick up for the company.

Softswitches Makes Things Harder
Veraz Networks is another company to be watched closely, as the telecom operators expand their networks. It was last year that the US-based company set up its India office and a research and development center at Pune. Recently the company announced an additional $5 million investment for the Pune center.

The annual revenue for Veraz is almost $70 million of which almost 15 percent comes from the Indian market. The company offers softswitch-based communications services and toll-quality, packet telephony solutions for carriers. Last year the company bagged a $10 million static trunking deal from BSNL. The project has been implemented.

Though the traditionally the company targeted multi-service operators and mobile operators, now it has moved focus towards the BPO industry too with its new network compression solution for multi-city and multi-country call centers. The company has orders worth $5 million from four BPO clients for the FY 2005–06. Veraz has a target of $20 million for this financial year and is banking on class 4 switches for the MSOs as their long distance traffic is seen to rise. Veraz in India would be commanding a major market share with its softswitches and would like to cash in on the BPO boom.

Anurag Prasad