The dictionary definition of 'wan' is something that is sickly or bloodless. This seems quite apt, considering that so many companies have wide area networks (Wans) that lack in vitality, while the budgets dedicated to their upkeep are pretty thin, too.
Anyone who could invent a cheap product to invigorate these networks would make a fortune.
Expand Networks claims to be such a company, having pioneered a Wan compression market that analyst NetsEdge Research predicts will be worth $500m by 2007.
Naturally, having created a bandwagon, it won't have all that revenue to itself; rival companies such as Peribit, PKWare, Allot, Packeteer and ITWorx have all jumped aboard.
Having said that, Expand has 87 per cent of the market at the moment. But will it manage to keep that share? And is it the best company for the channel to work with?
There is no easy answer to the first question, but recent contract wins seem to tell their own story.
When Winterflood, a financier that owns a City of London headquarters and multiple satellite offices, wanted to get more performance out of its existing network without implementing an expensive upgrade, it walked the full length of the counter before making its buying decision.
Having weighed up Peribit and the rest, it decided that Expand was the best company to give its network a shot in the arm.
The concept that all these manufacturers use is pretty simple. They compress data by removing all the unnecessary baggage, and by sending less data they get a faster throughput.
Hibernian Insurance, for example, managed to get a 400 per cent increase in throughput on its network by using Expand technology, presumably by squeezing files to a quarter of their original size.
Peribit, being a later entrant to the market, uses even more exotic-sounding technology. The company's founder, Amit Singh, worked at Stanford University in California on Project Genome.
His role was to build an algorithm to identify and match similar patterns in DNA. (There's an answer for anyone who dismisses the importance of IT with the words, "It's not a cure for cancer is it?" In this case, it was part of it.)
Having built this impressive algorithm, Singh applied the same disciplines to the IT market, where he could make more money. A Peribit box can identify 90 per cent of the patterns on the network. Each is given a code, and the codes are held in a dictionary on all Peribit boxes across the network.
Now, instead of sending all the data, a two- or three-digit code suffices, and the data is rebuilt at the other end.
Time is money
"Information on most Wans makes a round trip of about 100 milliseconds," says Shane Buckley, EMEA vice-president of Peribit. "Now the time is down to 1.5 milliseconds. That can bring the costs of wide-area communications down by 30 to 50 per cent, and Wan costs are one of the top three expenses in enterprises."
The business case is even easier to make if companies have a network of leased lines. As applications get more complex by the day, the amount of network traffic generated by ERP, CRM and even office utilities is constantly growing.
This is why companies have to keep expanding not just their storage infrastructure but their networks, too. Even in today's competitive telecoms market, where there is a glut of available bandwidth thanks to the competition among telcos, comms costs are staggering.
An upgrade to a faster leased-line service may cost £10,000 a year, whereas the installation of compression boxes in each office across the enterprise (be they from Peribit, Expand or whoever) could cost around £8,000. At a stroke it would remove the need for an expensive upgrade, providing a return on investment within a year.
Selling this technology should be a breeze, surely? Even the dimmest finance officer can see the economies available.
"IT departments are being asked to provide better levels of service and roll out new applications while their budget and headcount are being reduced," says Rob Mustarde, UK director of Peribit, which is helping to create an even stronger argument for the compression sector.
But what sounds like a no-brainer sale is not that simple. Each of the main players has a question mark over it, and this is confusing end-users into delaying buying decisions. Packeteer, for example, has a well-established traffic-sharing technology, with sophisticated control over individual packets of data. But critics say it provides little additional capacity.
Peribit, on the other hand, can compress only data from Ethernet networks, leaving the data from mainframes untouched. Considering that the vast majority of data is still held on mainframes and conducted via legacy systems such as Systems Network Architecture (SNA), that is probably quite limiting.
Expand Networks, on the other hand, caters for both serial SNA traffic and Ethernet. "But it adds latency and is challenging to install," Mustarde claims.
Nonsense, retorts Adam Davison, Expand Networks' channel sales manager. If the installation of its Accelerator range frightens anyone, it's probably because it was designed to be understood by engineers who know their way around Cisco's Internetworking Operating System, he claims.
Admittedly those few who know Cisco routers inside out can command a fortune, so precious is their skill, but the complexity has been taken out of the process. "The people at Expand have all been around the channel for years, so we've worked at making it progressively easier for our partners," Davison says.
Configuring Expand kit for customers now will be so simple that almost anyone can manage it, he claims. That's if the latest innovation, an installation wizard, does its job.
This is an HTML front end, which presents a series of seven screens to the installer, with most of the difficult questions already worked out for them. They just tick the default option, just as you would when installing PC software from a CD.
"Installation takes 10 minutes, and from the central location the engineer can remotely configure all the other branches on the network," Davison says.
If this is true it will open up Expand's channel considerably. Previously the minimum requirement to be an Expand channel partner was the ownership of a Cisco-accredited salesperson and a Cisco-accredited engineer. Now you don't even need the accreditation.
It gets even easier for Expand partners, Davison claims, because the firm now offers Expand Professional Services, a managed-service offering VARs can sell under their own badge.
Expand also has a package to generate graphs and statistics to illustrate the cost savings that could be made by potential customers. A reseller can input a customer's network details (number of branch offices, how much the leased lines cost between them, what the applications and interfaces are, and so on) into an online product configurator that calculates configurations and savings automatically.
These figures are presented in Excel spreadsheets and mapped onto the type of charts even the dullest finance director will appreciate, Davison claims. "We're giving our channel everything we possibly can to help them close the deal," he says.
Joining the party
This could explain why Expand has a hold on the market. Piers Carey, chief executive of Teneo - a reseller that works with compression vendors - is enthusiastic about Expand. "We were the first Expand partner in the UK and [Expand's market strategy] makes a lot of sense," he says.
However, Expand will not have things all its own way, because a lot of new entrants are after its slice of the market. Teneo, for example, has since signed up with FineGround and Allot in order to differentiate its offering. Allot has its advantages when customers need a guarantee of quality of service for certain applications. Meanwhile, FineGround is carving out a niche for itself in web applications.
People take a market seriously if one of the giants of the industry gets involved. One of the new entrants to this market is a company whose software can be found on a third of all PCs in the world. That company is PKWare, whose PKZip software you have almost certainly used.
Unfortunately for any resellers that might want to work with PKWare, it does not have massive marketing muscle, because it never really exploited its success. These days it turns over about £10m a year.
But this time, according to David Johnson, its managing director, the company is going to exploit its opportunity fully, and resellers could make their fortunes selling its Wan and storage compression technologies.
There is no doubt that compression will be a massive market, thanks largely to the escalating amount of data generated by applications and the costs of wide-area links. Comms and networking resellers could sell compression at the expense of selling comms links. Expand seems to own the market and is apparently willing to go the extra mile in supporting its channel.
But is that the end of the story? Manny Pinon, managing direcgtor of distributor Norwood Adam, says Expand may dominate the market now, but Peribit's technological strength may help when people start buying on price.
"Peribit is a more feature-rich technology and uses the very latest compression," he says. "It is also more cost-effective, and increasingly we're going to see people buying this technology to cut costs."
Mobile market opportunity
Now that mobile technology is so prevalent, and particularly if third-generation networks really take off, there will be a massive opportunity for offering compression services over mobile networks.
According to a UK company that is pioneering this market, end-users could cut down the costs of sending and receiving data over GPRS, GSM and satellite channels by up to 80 per cent.
Imhotek, an Oxfordshire-based start-up, has developed a cut-down version of its Imhotek X-ccelerator Program (IXP) compression software, calling it IXPLite, and is launching it at the mobile market. IXP works by making messaging programmes such as Pop/Imap and Simple Mail Transfer Protocol email services more efficient.
Explaining the rationale of IXP, Jason Salmon, director at the software developer, says: "Companies send and receive increasing amounts of data on the move. We can offer them savings in terms everyone can understand: hard cash.
"If you use a standard GSM mobile link then IXP can cut transmission times by a third. For GPRS, where the user is billed per byte of data transmitted, IXP can make reductions of up to 85 per cent."
IXP sits between the email client and server, compressing and reconstituting all inbound and outbound data. It is supposed to be easy to configure, but this is not a product that end-users will want to tackle. Which is why Imhotek is in the process of creating a channel.
Any resellers that have clients with lots of remote workers who need to communicate regularly from their mobiles would be ideal candidates for this new opportunity. IXP works on platforms that support Java 2 Micro Edition, such as Windows, Pocket PC, Symbian and Palm.
Who would use it? A new digital photography vendor has developed its own application that allows its customers to download their photographs from digital cameras, manipulate the images and select those they wish to have printed as photographs. The uploading of those images takes a long time and is an expensive overhead for the customer.
Retail clients could be useful, too. Take, for example, sales agents for a large group of independent florists who have to send daily updates of their activity reports.
While some have ISDN and are able to connect in the evenings from home, others have larger territories to cover and are away from home or office for most of the week, connecting via hotel phone lines or mobile phones.
By using the IXP software development kit, the company is able to reduce telecoms costs for these mobile users dramatically and save a lot of time.
Market research: what do customers want?
"Expand (Networks) has clearly emerged as market leader in Wan compression and acceleration," said Peter Christy, in NRG Research's 2003 report, Bandwidth Optimization - Today's Compression Market.
"It was first to market with modern Wan compression, resulting in the maturity and completeness of their product solutions, along with a substantial distribution channel."
What the customers tell NRG Research:
- The value of compression is greatest in getting to specific locations not well-served by bandwidth.
- Customers are not buying dual-ended compression units at all locations, but cherry-pick the locations that offer the best economics.
- Compression is seen more as a means of expanding capacity than saving money. No customer ever lowered its link data rate after installing a compression device.
- Compression is being used on a pragmatic basis rather than as a standard component of all Wan links.
- Customers moving away from their Frame Relay networks are not sure what role these devices will play.
Teneo (0118) 970 3900
Imhotek (0870) 741 1212
Peribit (01342) 870 170
Expand Networks (07748) 761 448
Norwood Adam (01342) 870 170
PKWare (0118) 963 7784
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