While a myriad of companies fight tooth-and-nail for the core switch and long haul router markets with state-of-the-art miracle boxes, BTI Photonics Inc. has targeted an untapped niche in the metro edge with reliable, straightforward technology.
With its last funding round more than two years ago, the no-frills approach helped the company develop its technology while keeping costs under tight control.
"We kind of grew up in the middle of the storm and it's starting to pay off for us," said BTI vice-president of strategic marketing Glenn Thurston.
"We're on our third release of product and we are starting to hit our stride both with customers and partners. In the past two years, we've signed a number of major partners, we have a North American distribution deal, and we've got deployments happening as well with many of the top service providers."
The modest complement of engineers needed to get the technology to market and outsource manufacturing helped the firm's last infusion of venture capital last more than two years. BTI announced $15.97 million in second round funding in January 2003. To date, the company has landed a total of $31.3 million.
But it was the company's product called an optical link that was its saving grace during the downturn. It allows an original equipment manufacturer or telecom service provider to increase network performance and capacity by amplifying optical waves. Since it doesn't perform many of the high-end functions of other boxes, costs were kept low.
While it uses Dense Wavelength Division Multiplexing (DWDM), BTI's Netstender family is what Mr. Thurston called "protocol agnostic" and easily co-exists with a number of different vendor products. A service provider can use the product to connect two switches without worrying about the protocols running at either end.
"If you lift the hood, it is a DWDM system, but we can fit it into a small chassis with a price point that's quite different than anything else on the market. Bu we also provide all the functionality that the big carriers look for," Mr. Thurston explained.
While sales grew steadily over the past 24 months and are doubling on a quarter-over-quarter basis, BTI probably won't hit the revenue positive point for another few years. The 60-person company doesn't anticipate any significant changes in its employment levels in the near future.
Mr. Thurston is one of BTI's newest employees after joining in October 2004. His last position was vice-president of global alliances for Nortel Networks' metro optical and enterprise groups.
BTI was actually founded in 1997 as a components company, but changed direction just as the bottom began to fall out of the market, becoming a systems business in 2000. The decision came at the same time as a venture capital deal worth about $9 million.
"We found that all the big players focused heavily in the long haul and then looked at regional networks and core and built very large-scale systems," Mr. Thurston said.
"There was no one working in the architecture that we call the photonic layer, which is really just networking light. We don't perform electrical packet processing, so we can also do some interesting things from an access perspective."
BTI's customers generally use the technology to extend services to new areas and to roll out new offerings such as video-on-demand.
A decision made nine months ago to outsource its optical manufacturing to another company also helped reduce expenses. Previously, it only outsourced mechanical and electrical components.
A reseller deal with Japanese equipment supplier Fujitsu Network Communications gave BTI an important steppingstone into the lucrative Asian market following the company's participation in a "Team Canada" trade mission to China early last year.
The mission in 2004 also led to a partner agreement with a Chinese company later in the year, which gave BTI an important toehold in the world's most populated country. BTI has been operating in China for about a year and recently set up permanent offices in Beijing and Shenzhen.
The first experience was so positive that BTI jumped at the opportunity to participate on a Canadian trade mission to China and Hong Kong led by International Trade Minister Jim Peterson that wrapped up last week.
BTI's vice-president of corporate development and sales, Chris Egner, met with a number of Chinese service providers, major system vendors, and system integrators that will be acting as resellers.
"On this trip I stayed with the trade mission – Shanghai and Beijing – but previously I have covered many of the major cities in the eastern part of China," he said.
"We further solidified many good contacts with senior executives at major customers and resellers and uncovered several new opportunities for BTI's products. The response to our products in China has been very positive and the potential from this market is huge."
While Mr. Egner came home with several new leads, he was excited that this trip allowed the opportunity to introduce BTI's technology to the Chinese government, which he feels will be a key in the future development of the market.
The trip helped identify more of the challenges facing BTI as it cultivates relationships in China, such as subtle nuances of culture and language.
The many small but critical differences in the fundamental way that business is done means mistakes could spell disaster.
"We have had a fair amount of success in overcoming many of these challenges. Hiring two good people with experience doing business in China as well as our contacts in the market space has helped move us ahead much faster than would have been possible otherwise," Mr. Egner said.
"Going forward, China will play a big role in shaping BTI's strategy both from a product and marketing standpoint and from a geographic weighting point of view. I would go again but not just for the trade mission – it was really good to build other meetings and business around the trip."
By Jeff Pappone
Special to the Ottawa Business Journal
