Osicom Technologies Targets Wireless Network Growth
Osicom Technologies Targets Wireless Network Growth By Nick Wakeman
After six major purchases during the last three years, Osicom Technologies Inc.'s buying spree is over.
With $115.9 million in fiscal year 1997 revenues, some analysts believe the Santa Monica, Calif., company is now positioned to become a leader in the wireless networking arena.
Osicom is a melding of several companies including Meret Optical Communications, Santa Monica; Rockwell Network Systems, Santa Barbara, Calif.; Cray Communications Inc., Annapolis Junction, Md.; and Digital Products Inc., Waltham, Mass.
Company officials said the goal of those acquisitions was to build a broad-based networking equipment manufacturer. As a result, the company now plays in three related markets - local and wide area networks, remote access and print servers, and broadband video distribution.
James True, Osicom's vice president of marketing
"The coming together of Osicom was a well thought out strategic plan," said James True, the company's vice president of marketing. Osicom officials looked not just for profitable firms to buy but for networking companies that brought together complementary technologies and markets.
Plans call for Osicom to pursue the government and commercial market for networking equipment that has wireless capabilities, officials said.
Federal sales represent about 30 percent of the company's fiscal 1997 revenues of $115.9 million.
Joe Gladue, an analyst with The Chapman Co., Baltimore, said he expects overall revenues to grow to between $160 million and $170 million this year. "They can become one of the pre-eminent wireless networking companies," he said.
Networks that have a wireless capability will be of increasing importance because of rising demand for bandwidth and the increasing mobility of network users, True said. "Wireless can address both of those demands," he said.
In the federal market, Osicom is pursuing projects similar to its subcontractor role with MCI Communications Corp., Washington, on the U.S. Postal Service's $3 billion Managed Network Services contract, said Ivo Lekich, director of federal sales. Osicom is providing remote access equipment as part of a project to link 34,000 postal service locations under the contract MCI won in April.
Also important is the company's spot on the Navy's $330 million PC-LAN plus contract as part of the Electronic Data Systems Corp., Plano, Texas, team. That win came in June 1996.
Lekich said Osicom is primarily interested in being a subcontractor. "We'll represent our products and services to the end users and then we pull the business as a subcontractor through EDS and other prime contractors," he said.
Besides broadening its range of offerings, Osicom's acquisitions have opened up more channels for it to sell products, True said.
"That was one of the best things that happened," said Arthur Trakas, worldwide president of sales for Osicom, who joined Osicom when it bought Rockwell Network Solutions. Rockwell Network Solutions had strong sales to original equipment manufacturers but not value-added resellers, Trakas said.
"Ask an OEM [original equipment manufacturer] sales guy to find a VAR [value-added reseller], and he'd be looking around for four or five days," Trakas said. "He just doesn't know where they fit."
Selling through the General Services Administration's schedules is one approach all the companies were using. Currently, the company is on about 11 schedules but Osicom wants to narrow that down to two or three to simplify things, Trakas said.
The market for wireless networking beyond local area networks and wide area networks is about $2.4 billion and growing, he said. Combined with some of its other products, such as a wave multiplexer to increase the capacity of fiber optic cables, Osicom could be a $1 billion company in a few years, Gladue said.
International markets, particularly developing countries without an extensive wired infrastructure, are other potentially lucrative markets. "Many of these countries are just skipping right by the wire[d] infrastructure and going right to wireless," said Tom Bishop, publisher of the investor newsletter BI Research, Redding, Conn.
Osicom will get a chance to prove its wireless mettle in a partnership with the Asia Broadcasting and Communications Network Ltd., a privately held media and communications company based in Bangkok, Thailand.
ABCN is developing a satellite-based system for delivering direct broadcasting services, multimedia and high-speed Internet access, and online services. The system's footprint will cover 11 Asian countries and 3 billion people.
Osicom received shares of ABCN's stock in the partnership agreement struck in March as well as the role of developer and supplier of technology for high-speed Internet access and online services, company officials said.
Osicom could realize $500 million a year in revenue from the project from the sale of network interface cards alone, Gladue said. The cards connect computers to networking equipment.