Marketing Management – WaveRider Communication Inc.
Marketing Management – WaveRider Communication Inc.
דיויד שוגרמן David Sugarman
How would you characterize the market for wireless access equipment in mid-2000, and what (in any) were the problems or risks?
We would characterize the market of wireless access equipment in the mid-2000 as small market in the present with huge
expanding potential in the nearest future.
This market was effected by the same 4 factors that was driving demand for the overall telecommunication market services and
Internet growth and increased data traffic.
An Increase in demand for overall connectivity.
Upgrades to existing infrastructure as technology improved.
Increased competition due to privatization and deregulation.
The U.S fixed wireless market was expected an annual growth rate of 65% in the next 3 years. The number of wireless data users
in the US was expected to multiple by ~4 in the next 2 years.
According to WaveRider analysis there is a large gap between the “wired services” infrastructure currently available and what
the worldwide marketplace desire. Most of the market (homes and commercial users) does not have yet infrastructure for fast
ground Internet connection. As Jim Brown stated, they are targeting a market of fewer than 50,000 users.
The market share for wireless product is going to be very large, and is currently in its very early technological stages, thus, many
companies has a chance to get into this market if they will be prepared with the right product line and the right business and
market plan. Its a big opportunity for new companies to make their big move in this market, and now days are the right time to
build the customers network.
The major problems (or as I would prefer to call them: the major challenges) standing in front the companies that are targeting
There are currently few strong players already in this arena – Motorola, Nokia, Cisco, Lucent.
Chances are better in non-central market (BreezeCom focused on south America, China, Russia and eastern Europe)
The technological progress in this area is extremely fast. A company that wants to be part of this market has to be constantly
updated with the newest technology and solution suggested by its competitors both in order to keep its product competitive to the
eyes of the customers, and also to be able to show staying power in this Dynamic market to the eyes of the customers and stock
Long sell cycle – that is a problem for the companies in this market that has to show profitability, and the sooner the better. It is
also an issue to take under consideration while handling the sales force motivation and compensation plans.
What made the sale of Network Communication Link Routers (NCL) different from the sale of Last Mile Solutions (LMS), and what
were the implications for WaveRider?
The sale of NCL is totally different then the sale of LMS. The differences are all – It’s a different product that is targeted to different
customers. There is a major differences between those two products in their technology used, level of support needed and the its
While NCL is a relatively simple plug & play product, that is easily deployed and its price is relatively low in this industry (1995
US$), the LMS is an expensive and complicated system, built from 3 technological components (CAPS, NAPS and modems) that
can be connected and configured in many types of customization according to the customer needs. Therefore, while NCL sale
process was pretty simple – the customer knew what they want, and could get the exact solution to their needs, the LMS selling
process was less simple, the customers themselves failed to understand the configuration and there was a heavy pressure on the
technical people and support to understand the customer needs, convince him that LMS can give that solution. The sales force has
to even do better then that – he need to know how to identify a potential customer that LMS wouldn’t fit, in order to avoid waste of
expensive resources on a deal, that even if will be done, will slow down the whole sales and support process due to the costumer
dissatisfaction. Due to all these, the sales people of LMS has to be more qualified to the specific product then those who sold NCL –
for selling an NCL one need a basic set of skills, while in order to close an LMS deal, the sales person had to work for a long time, deal
with a lots of technical aspects of the product and has a high ability of prioritize prospects, and choose the right ones to invest its
The NCL was the first product released by WaveRider, therefore the sales and support processes were clear, and the organization
was pretty confident and skilled in operating the whole sales and support cycle for this product., While entering the market with
LMS was something new, and it seems as if the organization was not well prepared for it, although to begin with, it required more
The sale cycle for LMS was much longer (thought o be 13 weeks, while eventually ended up after more then 6 month) then the one
of NCL (30 days), that was both a cash flow issue and a Human Resource one, since sales people had to be motivated by other
things then quick sales.
To summarize the implications of those on WaveRider, it seems that a totally different and separated sales unit is needed to handle
LMS. A more structured sale process should be defined, more qualified sales people should be recruit, and a whole new training and
compensation plan should be developed.
What would you recommend WaveRider Communication Inc. to do about its product marketing, sales and service in the USA in
Our Recommendations for WaveRider Communication Inc are :
Effectively train sales people around the value and positioning of the new LMS system.
Limit the number of customers exposed to the product at that early stage (create a beta program).
Try to establish a personal, long time relationships with its customers, to assure it will have any advantage over the competitors.
In the same time – try to re-position the mature NCL product and by that extend its life cycle.
Better target the potential prospects, to avoid spending expensive resources on a potential customer that is most likely not to buy
the product eventually.
Use skilled and reliable distributors – to sell an LMS the sales person has to know the system well, and know to identify the
Use some aggressive marketing in order to create a customer network at the beginning of the Wireless industry growth, while
competing the large players.
Put a large weight on continuing and developing the PLM’s, their duty as a bridge between the field (sales, customers) and
development was crucial to the sales of WaveRider.
In general, the organization has to increase the amount and quality of service it gives to its customers. Not as one of the VPs
commented, that WaveRider should be mainly a marketing and sales organization – Still in this phase (mid 2000) it seems that
they are still very technology and not business driven.
Make its service department an added value that will justify the fact that both WaveRider products are expensive, comparing to
the similar products of the competitors. Since it doesn’t have the economy of scale, which is a major advantage in this industry,
WaveRider has to create a unique service quality.
Question #4 :
How would you evaluate Waverider’s sales agreement (MOU) with Sparta in Spain, and what, in your opinion,
would Waverider have to do to support the deal and make it work?
WaveRider tried to establish its position as an international player in overseas markets through strategic partnerships – this
strategy was well explained by Rémi Gaudet a business analyst: “…WaveRider’s goal was to achieve 5 – 10% share of the global
market for wireless Internet Service products…. In order to leverage its efforts and limited resources, partnerships had to formed
with integrators and installers.” (p. 4). Sparta was a completely new venture based on principals of an existing Spanish wireless
engineering company (Velnos). Although these individuals might be professionals in the wireless engineering field and also well
networked in the Spanish communications market, it looks as an awkward decision to base WaveRider’s penetration to the Spanish
market on a company that was just founded with no existing sales, support and marketing organization. The need to move very
fast and enter the market (that according to the forecasts looked very promising) before the well established local phone
companies, probably pushed WaveRider to do business with an un-established company. The expected revenues from this
agreement (commit on purchasing equipment for the value of US$28 million in two years) does not fit WaveRider’s financial
results until the middle of 2000: according to the annual statement of cash flows, WaveRider had US$1.72 million sales revenues
in 1999 (worldwide) and US$1.5 million sales revenues in the first half of 2000 (worldwide) – exhibit 1. According to these actual
numbers – the expectation to generate US$14 million in a year, only in Spain looks very unrealistic.
In the suggested structure of the partnership, Sparta should operate the WaveRider business in Spain almost by itself. WaveRider
appointed a liaison manger that would be the contact point between WaveRider and Sparta. In order to better support the deal,
WaveRider should have used a different approach. According to the first part of the case, WaveRider suffered from many support
issues, especially in this same period in which the agreement was about to be signed, the complicated LMS product was launched,
and was not well understood by WaveRider’s sales force or by the market. For these reasons and also for the fact that Sparta did not
have any actual experience with WaveRider’s products before, WaveRider should have established a Spanish based support team,
to help Sparta in its first steps, by guiding and training them. Only after this first period the full control should have been handed
over to Sparta.
Aftermath: Fast alliances, based on technological “spike” and the ultimate desire for fast money, but with no real business model
behind it were pretty common in the “internet bubble” period. The growth forecasts (internet traffic doubling every six months)
were mostly based on false reports that came from Worldcom. WaveRider still exists today, and it is not a world leader in wireless
Internet equipment. Sparta is not there anymore.