How then does a cabling vendor fight the threat of commoditization?
For Systimax Solutions, existing in a state of flux is something that the company has taken in its stride.
Sweden-born Peter U. Karlsson is an 18-year veteran who has been with Systimax since its AT&T days. Based in the United States and now the company's senior vice president of sales, Karlsson tells ZDNet Asia how the cabling vendor stays relevant in the mainstream tech world.
You've witnessed many changes in Systimax having started out first at AT&T. What's the biggest difference between then and now?
We used to be very US-focused back in those days. Today, we're still headquartered in the United States but over half of our revenues come from outside the country. We're very much more a global company today compared to 15 or 18 years ago.
Cabling is not normally regarded as a high priority on an IT manager's list. How do you then achieve mindshare in the market?
Now that we are seeing new networking technologies come out, such as voice-over-Internet Protocol (VoIP) and 10 Gigabit Ethernet over copper, networking managers are starting to realize that they need to pay more attention to infrastructure or they'll not be able to take advantage of these technologies.
According to a survey that we did, one of the trends showed that IT managers clearly understand they have to pay more attention to infrastructure. It's like buying a very fancy car that can move up to 300 kilometers per hour. But if you drive it on a very badly paved road, you're not going to be able to drive at more than 100 kilometers per hour.
We think a company's cabling infrastructure is given anything between 5 to10 percent of a typical IT budget, so it's a very small piece of the total IT investment. At the same time, the cabling infrastructure is good for between 10 and 20 years. We offer a 20-year warranty but customers usually use it for 10 years. During that 10-year lifespan, they will probably change their routers and network equipment at least three times, and change their software at least five times.
The cabling infrastructure has a very, very long lifecycle and all these applications are going to run over it. So our value proposition is very simple: by paying a bit of attention to the infrastructure, and maybe paying a percent or two extra for it, you'll get more value out of it because you'll have a better technology to support the network equipment and software that you've just upgraded.
In your view, what are the top technologies driving the business in the cabling world?
First of all, we see that the evolution toward higher speeds to support bandwidth-hungry applications will continue. People are saying that Moore's Law is obsolete, but I think that it is proving itself over and over again, where software companies are developing fancier and fancier applications that require higher and higher bandwidth. The networking companies like Cisco Systems are developing newer equipment, so the need for increased bandwidth will continue.
Another trend resolves around data centers. There is a growing need to store and archive data. People are putting more data into data centers, and that data needs to be made available to corporations, so that drives bandwidth demand as well.
There has been a lot of discussions about wireless technologies but we don't see wireless replacing either copper or fiber. We still see wireless as a complementary technology to copper and fiber.
What's your response to people who are convinced that they don't need to upgrade their cabling infrastructure?
When I first joined the company, we talked about 1 megabits per second (Mbps) technology. We then went on to 10Mbps, then 100Mbps, and then Gigabit. Every time we talked about the next technology leap, the naysayers would ask: why do I need that when I already have enough bandwidth. But time after time after time, new bandwidth-hungry applications would surface. You see the laptops today, they've got support for 100Mbps port connection, and even gigabit connection. Two, three, four, five years out, they're going to add 10 Gigabit Ethernet port connection…that's the way it's going to be.
Forty-five percent of the IT managers we surveyed said that within two years, they would be installing 10 Gigabit capabilities, at the very minimum, across their data centers. What we're saying is that when you make a new cable installation today, even if it's not good for 20 years, it should be good for at least 10 years. Here's the thing: is there a good chance that you're going use 10 Gigabit technology 5-10 years from now? The answer from most people is going to be 'yes'. So you make the investment now to make sure you're ready for that.
What do you do to keep your company's technology fresh and up-to-date?
In every industry, you fight against commoditization every single day, and the way we try to fight against that is through innovation and being consistent with the way we treat our customers.
We invest a large portion of our revenues each year into research and development--we have over 600 active patents in this business. A big piece of what we're working on right now is called the iPatch System, which is a combination of software and hardware that brings the intelligence into the infrastructure. What that means is you have a software interface that allows you to see how your network is laid out, and how your infrastructure is laid out. You can even see every single IP device that is attached to the network, and you can also set access by port. So for instance, you can determine that only certain devices can access a particular port, and you'll also be able to see the people who are connected through it.
We see a lot of opportunity for us to expand the iPatch offering, which you can integrate with network management software like HP Openview or Remedy. The iPatch hardware has been available for a couple of years, and we keep adding software features to it. This year, we're doubling this business which is one of the fastest growing businesses we have. We still have a lot of customer education to do, but we really see this as being a big piece of our future going forward.
What would you say has been your biggest challenge in the 18 years you're been in this business?
I was sent to set up the business in South Africa in 1995, when Nelson Mandela was the president and South Africa had just started to open up its economy. When I came, Systimax had very little presence there. The mentality in South Africa was very much to buy everything that's a commodity, where everything everyone cared about was price only.
I set up our business partner network, created demand among our end-user customers, and educated the market about the value of infrastructure in which they really saw no value in the past. That was my biggest challenge but that was also the most rewarding period in my life. I think we established a legacy there…we're the market leader, and Systimax has a great name now in Africa. It took us about two years to get that. The first year was a real challenge, and by the second year we started to see some rewards. It took continuous education, a bit of evangelism, and a lot of passion, but we got something really good out of it.