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Sat 9 Jan 2010 04:00 AM

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Wonder of wireless

Its arid climate and rising PC penetration rates make the Middle East an ideal hunting ground for Proxim Wireless, a broadband wireless systems vendor with annual revenues close to US$30m a year. Pankaj Manglik, president and CEO at Proxim Wireless, sat down with Channel Middle East on a recent visit to the region to explain why the company believes it has such a compelling partner offering.

Wonder of wireless
Wonder of wireless
Proxim sees huge growth potential in ME (Getty)

Its arid climate and rising PC penetration rates make the Middle East an ideal hunting ground for Proxim Wireless, a broadband wireless systems vendor with annual revenues close to US$30m a year. Pankaj Manglik, president and CEO at Proxim Wireless, sat down with Channel Middle East on a recent visit to the region to explain why the company believes it has such a compelling partner offering.

Give us some background on the company. Who is Proxim and what do you do you?

Proxim Wireless is a company that has been in the wireless space for about 20 years now. We are a public company listed in the US and we focus on three main technologies. The first one is point-to-point backhaul [solutions], the second technology is WiMax — which is providing connectivity in a variety of point-to-multi-point technologies — and the third is wireless LAN, which is WiFi indoors as well as outdoors.

Do you have a different channel model for each business?

No we don’t, we actually have a pretty straightforward two-tier channel model. We go through distributors worldwide and then the distributors obviously talk to the VARs. We are an extremely channel-focused company. We rely exclusively on our channel. We have what I call a ‘high-touch’ channel model because wireless products, especially in the larger deals, tend to be technologies where you want the vendor to come and help the VAR close the deal. We might get involved on a high-touch basis to close the deal, but the fulfillment always goes through the channel. That’s de facto for us.

You work through Westcon in the Middle East, don’t you?

Out here in the Middle East we work with Westcon, yes. They are not exclusive. We have a couple of other channel partners. Westcon is by far and away our largest partner in the Middle East and we are very focused on doing business with them.

What is your philosophy when it comes to the channel?

When we look at the channel and when we look at VARs, we try to do at least two things that we find VARs are consistently interested in worldwide. The first one is leads and the second one is training. If you look at our product line, our products have a common core. So even though we have these three major product lines, once a channel partner or an end-user has got to know one they should be able to use the others because there is a lot of similarity in how the products are built out from a software perspective. We focus heavily on training our partners and we have a training facility in Dubai Internet City, which is where our office is. We take partners out there for training here in the UAE and then outside the UAE we try to do local regional training. We try to keep the channel focus from the perspective that every time you introduce a new product you shouldn’t have to go back and relearn. All that knowledge you have should apply to each product line and each successive new product that comes out.

At the time of speaking, your latest financial results (calendar Q2) show a year-on-year decline in sales…

For us, year-on-year, sales are definitely down. They are probably down a little more than 10%. But what we have seen this year is that the business environment has consistently got stronger. The biggest problem that we saw [is credit availability] and I will give you an example. We had a deal that we won with the government in Egypt but weren’t able to fulfill because there was no credit available anywhere in the channel. That is just one example, but the point is that this happened in hundreds of deals around the world during the first nine months of the year. Now what we are seeing is that the credit markets have actually opened up and once credit starts flowing you automatically see deals get funded. What happens is that you have Proxim, you have Westcon, if you will, and you have the VARs. Generally the VARs are smaller than Westcon, so until they are able to get credit from somewhere they are not able to actually pick up the equipment from Proxim via Westcon. It is that whole machinery that stops when credit stops flowing. What we have found out is that the spigots are now open and credit is flowing, and because credit is flowing business is picking up. At some level it is linked to the overall economy, but in some ways it is not because it is more directly linked to the availability of credit. Has the global economic downturn reduced your ability to invest in the channel?

It has actually made us focus more on the channel. In an environment where you have sales challenges, you can either go out and hire more sales guys and put them in two or three countries or you can hire one or two people inside the company and then just focus on trying to push more through the channel and see if that turns into more business. So, in fact, in a downturn, the focus on the channel increases substantially versus the sales force, and when times are better we are able to focus more on hiring individual sales guys — it is kind of a reverse. The other thing that is interesting with the downturn is that wireless is actually cheaper than wired. When I say the broader economy is less of a factor than credit for us, it is because when times are tough people try to pick the more economical option and wireless tends to be cheaper to buy as well as to deploy over a period of time than wired solutions. That has played to our favour. Obviously you hope that doesn’t happen because of a recession, but it is what it is.

What does a typical Proxim reseller look like?

Wireless is a fairly specialised business, so I would say the typical Proxim reseller probably has roughly 10 people or so in their office. Their backgrounds are obviously in technology, but they generally carry more than just wireless products. They are usually more of a networking VAR so they have networking knowledge and will probably carry Proxim just because we have the entire portfolio of products. When we pitch to end-customers our go-to-market strategy is that we carry the entire portfolio of products in wireless. That’s our pitch to resellers — if you carry Proxim you have got it all.

You previously worked with Aruba and Cisco, to cite two examples. Has your experience with those companies shaped the way you have implemented Proxim’s channel strategy?

Yes, absolutely. I would say both Cisco and Aruba are very channel-oriented companies. Having said that, the stage at which I joined Proxim — just the nature of Proxim being in business for the last 20 years — means the channels tend to be developed and broader and deeper than I had experienced in some of the previous roles. The difference also is that my role is much broader in Proxim than it had been at, say, Cisco, so that is certainly part of it.

How satisfied are you with the coverage and the business you have in the Middle East? And what are your expectations going forward?

The Middle East is the sweet spot for wireless, both from a technology and a business perspective. From a technology perspective if you had to create an environment in which wireless works well you’d pick dry air — flat, dry air —and in the Middle East you have plenty of those two things. Wireless goes much longer in terms of distance when you get those factors. The second part is that from a business perspective, the Middle East is not an emerging economy, it’s pretty flush with funds. Downturn or no downturn, there are enough funds in the Middle East because of the general economy so in that sense it is pretty well to do. Secondly, it is growing at a clip of the emerging economies. So you get this dynamic where it is growing like the emerging economies but they have the standard of living of some of the western nations and that makes for a very attractive market for anybody, not just for Proxim.

The Middle East is seen as a high growth market with huge potential, but on a pure volume basis it is not any larger than a single European market such as Germany, for example. Is there a danger that vendors put too much emphasis on the region?

It’s hard for me to comment on the broader issue. In our specific case, because of the way Dubai, for example, has set up different cities which all need wireless connection, communication is not an option. It has to be set up and wireless does well, certainly in the Middle East. So we are a little immune from that scenario. I’ll tell you that I couldn’t even compare the revenues between the Middle East and Germany for Proxim — there is so much more business in the Middle East in orders of magnitude.

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