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01/12/2009Q&A with Strix's Levetin
Martin Levetin is Strix Systems' Sernior Vice President VP Sales and Marketing and a key element of Strix's new management team. In order to secure its latest round of funding from long term global investors, Strix has over the last year restructured its operations refocusing its resources and efforts on vertical application for wireless mesh networks with an emphasis on high speed mobility applications as the common critical success factor for such applications as public safety, video surveillance and public mass transit. W2i Executive Director, Daniel Aghion, spoke with Martin Levetin on January 10, 2009 Daniel Aghion: Martin, Welcome! How are things as we embark onto this new year? Martin Levetin: Generally speaking, we are extremely busy, with a number of initiatives under way to help the company grow long term, as well as attending to near term business. Aghion: Strix Systems has been somewhat countercyclical this past year, amidst the economic turmoil, and this is intriguing: restructuring, new funding with a group of investors, new hires … What’s the secret? Levetin: You are exactly correct, and it is an interesting time to be shoring up with additional funding! Let me give you some background. In the early spring of 08, Strix Systems board took a hard look at steering the company in a new direction, and taking steps to ensure long term growth. The quasi-total crash of the “free” municipal wireless market called for refocusing sales and marketing, and developing a new vision of where to go from there. At that time Strix began looking for new investors who would be interested in a long-term strategy in the wireless mesh business. In addition, the board undertook some restructuring. In the fall of 2008 Strix found a group of global investors who had been looking for a wireless mesh opportunity. Strix offered the right mix: a company with a strong technology platform and a good position in the US and internationally. Aghion: Is this a strategic partnership rather than a pure investment oriented deal? Levetin: I would classify this as a classic venture investment. The investors obviously want financial returns and have an exit strategy, but the primary goal is to build a successful company. Aghion: Can you define “Global Investors”? Levetin: Thee investors are an offshore investor group. and we have a new board. Of course, considering the economy, the infusion of cash is great. But more importantly, some strategic decisions have been made towards making Strix a global player: a new development lab in India for example. The focus is on adding cost effective resources, new product development, low cost manufacturing. Also, our new presence in India brings us closer to markets that are showing short and long term growth potential. Aghion: What do you think has changed in the broadband wireless marketplace in ’08? Levetin: ’08 has seen a new trend established with vertical segments and anchor tenancy the principal ingredients. Although there is a significant variability of the markets from one geography to the next. Notably, in the US, the market has refocused along vertical lines, sector specific, with a major emphasis on public safety. The “free” muni wireless market demise came about for several reasons: one, it required a significant cost difference between wireless internet services and wireline services, and that difference has all but disappeared; two, there was an assumption about the number of wireless devices required for adequate coverage that missed the actual requirements by a factor of 2, and that significantly impacted the costs of deployment; three, there was a built-in assumption that municipalities could use the networks for free, as public access traffic would carry the cost load: that business model is completely broken.In fairness, there are a few examples of the old business model. Whats required is a relatively affluent population, and a very high-density urban environment (3,500 to 4,000 households per square mile). There are not that many places that match those criteria! Aghion: Since the Earthlink network was taken over by that NAC, daily free public access usage has increased to an average of 26,000 unique users/day while the paid subscriber base for mobility services is ramping up nicely, what are your thoughts. Levetin: I did not know the numbers, but I understand they shifted the focus to business users. This is a good sign. The mobility market is a kind of vertical market as well, requiring anchor tenancy, be it business or municipal. Aghion: What do you anticipate the challenges and opportunities for ’09 will be? Levetin: We have to approach markets differently from geography to geography, and look at each one and its particulars. Strix is well placed with a robust technology platform, that adresses a number of segments in the US and overseas.Deployments in South East Asia, Korea, India, China, are under way. In China, cellular providers are an important segment, in a model closer to the traditional muni mesh network. But there are also deployments in vertical markets like public safety and railroads. In the latter case, nodes are installed both on tracks and in rail cars, similar to the San Diego North County Transit network, providing video surveillance inside and along the tracks. In Kenya, our partner KDN has been deploying traditional mesh networks, with a mix of residential and business use. We have over a thousand nodes installed there, in both urban (Nairobi) and rural areas. In Malaysia, the deployments follow a “hot zones” model, while in Europe, the models are mixed, with some networks supporting both public safety and commercial use as in the Netherlands and in Finland, for example.That said, our biggest challenge and risk in ’09 will be the economic downturn. Aghion: Have you already felt the impact of that meltdown? Levetin: We have not seen it yet. If we talk about public safety, some of the financing sources might be more stable than the market in general, and this segment could be more resilient. At this time, our focus is and foremost to continue to have satisfied customers! Aghion: You described market segments that each have for very specific sets of competencies. Is Strix developing new competencies to address those needs? Levetin: Well, no one has the resources to be everything to every market! We need to choose which of those segments we can address in the best possible way. Geographically, we need to establish a knowledge base, and we do so mostly through local distribution partners. Vertically, we focus on developing a product platform that fits a variety of vertical markets. For example, in the public safety sector, we have developed subscriber units capable of high speed mobility and also nodes with cameras for rapid deployment: the high speed mobility attribute addresses needs in more than one market, like first responders, but also high speed rail. Ports are of particular interest, as they need to keep track of everything that moves, both a logistics and public safety issue. Another point is that we see an emphasis on new “hot zones”, with deployments in small geographic areas, or clusters of. Those projects require low cost solutions, no big muni budgets here! An example is RV parks, that all want Internet access, or oil rigs that need pumping data. We are talking 20 or 30 nodes here, and Strix has developed a low cost node HSx to target those hot zones. We are looking at many markets here. Aghion: Looking at your peers, how does Strix differentiate its offer from the competition? Levetin: We have two core competencies: one is the ability for our platform to carry traffic over long distances, and the other the ability for the platform to provide high-speed mobility. Our unique dual radio backhaul has the capacity for carrying traffic over multiple hops, including video monitoring, with little performance degradation. That also allows the deployment of very large networks where necessary. The combination of high throughput and high speed mobility makes our solution a good fit for a number of segments, particularly public safety and transportation. Aghion: What will be the key success factors in ’09 for Strix? Levetin: Keeping our existing customers happy and adding new satisfied customers; focusing on the right solutions for them. We are adding technical support in the US and abroad, as well as sales and marketing teams on a per market basis. On the technology side, we are adding product attributes with features matching the requirements for certain vertical markets, like the portable cameras, as well as bringing on lower cost products. We are also actively extending our distribution partnerships. Aghion: Do you envision your growth organically, or through mergers and or acquisitions? Levetin: Some of it will obviously be organic, like technical support, and it is a bit early to talk about acquisitions. We certainly will pursue strategic alliances per market or per territory. The wireless mesh market keeps going forward, and Strix intends to be a leading global player in the years to come.
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