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Best Practices in Optimizing Network Assets in an Environment of Legacy Networks
Adrian TylimDirector Sales - CALA
Somera Communications
Somera - Proprietary & Confidential
Forces Shaping our Industry
OEM Concerns
1. Maintaining customer relationships
2. Commoditization
3. Managing end-of-life while launching new products
4. Margin protection and operating efficiencies
5. New market players
Industry Issues
1. Carrier consolidation
2. Prolonged life of legacy networks
3. Accelerated technology cycles
4. CapEx scrutiny and OpEx reductions
5. Business transparency and SOX compliance
Technology Trends
1. VoIP introduction.
2. Wireless consolidation, relocation, rural and indoor coverage.
3. Broadband access build out.
4. Data communications upgrades (GigE, ATM/FR)
5. Wireless harmonization 2.0 to 2.5 to 3.0G.
1. Minimal investment in legacy networks
2. ROA optimization
3. Technology migration
4. New services delivery to meet market demand
5. Competitive pressures
Carrier Concerns
Somera - Proprietary & Confidential
Extended Network Equipment Lifecycles
Time
Revenue
Planned Life CycleActual Life Cycle
Uncertain ending for:• Class 3,4,5 switching• ATM, FR• TDMA, CDMA, GSM • DLC• SONET, SDH
Introduction of:• VoIP• Data• Wireless Data• DSL, Cable• Gig E
Supply of New & Used
Asset Disposition & Valuation
RepairOutsourcePrograms
Somera - Proprietary & Confidential
Lifecycle Management Requirements
New Equipment Sales
Refurbished Equipment Sales
Spot Buying
End of Life Management
Custom Configurations
Logistics Management
Installation/De-Installation
Spares Management
Out of Warranty Repair
Testing & Refurbishment
Disposition
Valuation
Inventory Analysis
Procurement
LifecycleManagement
Offering Criteria
Equipment
Disposition
Repair
Maintenance and Services
Somera - Proprietary & Confidential
Lifecycle Services Trend
*Source: Dataquest / Gartner, NSO, Industry estimates, Ovum HolwaySources: Telecom Industry Association (TIA), BAH study, Lucent Managed Services report, Somera management interviews, LEK reports, Tyler & Company analysis
3.42
4.12
4.94
5.88
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2004 2005 2006 2007
CAGRs
2004-200720%
24%
13%
25%
3%
Market Size($Bn)
Lifecycle Management SupportLifecycle Management Support
Network Maintenance Installation/de-installation
Logistics, spares, repair & testing, inventory mgmt
Kitting, Staging, Re-configuration
Global Business Process Outsource Mkt*Global Business Process Outsource Mkt*
202
242
348
2004 2005 2006 2007
50
100
150
200
250
300
350
CAGRs
2004/0720%
290
Market Size($Bn)
Somera - Proprietary & Confidential
Standards for Buying and Selling Equipment Assets
Buying
Equipment supports your network deployment standards and requirements
– For legacy structures to next-generation implementation
Equipment has been tested to extensive required specifications
Equipment is refurbished and fully warranted
Equipment is reconfigured to your exact network application and specification
Somera - Proprietary & Confidential
Standards for Buying and Selling Equipment Assets
Selling
Established channel and relationships to effectively sell the equipment
Extensive sales force to accelerate the remarketing of assets
Strong cash position to stand behind commitments
Refurbishment expertise to ensure maximum value on the open market
Offer different programs to gain best return from the excess equipment – buy, consign, exchange.
Visibility into market demand of specific components and technology to assess real market value and return.
Somera - Proprietary & Confidential
Lifecycle Management Partner
Qualification Checklist
Financial strength & Publicly traded to stand behind commitments
If your company is public, is your partner Sarbanes-Oaxley (SOX) attested?
Global reach and regional representation
Established relationships with leading operators
Extensive technical knowledge
Visibility into market demand and equipment values to yield highest ROI
Large sales force to accelerate remarketing efforts
Operational precision and scale
Extensive testing & refurbishment capabilities
Breath of services and offerings to create custom solutions
Complete Business Transparency through SOX Compliance
Somera - Proprietary & Confidential
SOX Business Transparency —
Customer Benefits
Complete documented processes in place
Commitment to honest and professional business practices
Rigorous testing and approvals
Financial strength and documentation
Complete visibility for customer reporting
Somera - Proprietary & Confidential
The Future:New Strategies for LegacyNetwork Management
Key is to balance network objectives of cost containment while introducing new technologies and services.
Refurbished equipment can provide the solution to meeting your network needs at a lower cost.
Idle and excess inventories can be a new source of capital to offset the cost of new equipment purchases.
Reclaiming existing assets and either redeploying or remarketing them supports corporate financial imperatives without compromising the network strategy.
OEMs are less able to provide the traditional resources to manage the network’s lifecycle due to their focus on their own technologies.
Operator and OEM return to core competencies likely to fuel the trend toward outsourcing.
Buyer beware – select a partner with the qualifications to make you successful!
