Interview - Piyush Patel

Piyush Patel,

president, CEO, and chairman, Cabletron Systems

Inc. speaks to Srinivas Rao of Voice&Data (srinivasch@cmil.com).

Piyush Patel, 43, one of the founders of Yet Another Gigabit Operation

(YAGO) Systems in 1996, has taken over the stewardship of the $1 billion

networking major, Cabletron, from June this year. The coveted position of

leading Cabletron from the upfront came to Patel, the man known for his

strong technology attributes, following the acquisition of YAGO in April

this year for its strength in Layer 3-switch Router Technology. Patel has

his goals set clear for the company. In a teleconference meet on 17 August

1999, Patel highlights Cabletron’s world wide and India plans.

Excerpts:

The new CEO’s plans for Cabletron…



My vision is to build Cabletron as a technology powerhouse and create
an environment to make it a great place to work in. What I mean by being a

technology powerhouse is being a leader in introducing new products on

cutting-edge technology at affordable cost.

Plans for Asia and India…



Asia, especially China and India, is one of the key markets for
Cabletron. I will be aggressive and be teaming up with partners and go in

for equity investment in companies. India is in the process of building up

its network infrastructure and the time is right to make substantial

investments. Cabletron’s engineering centre, which is currently involved

in network management software, has about 35 engineers. We would be

looking for expansion of the engineering group and would double or triple

it. It must be remembered that India has a pool of talented people and

also the country is witnessing infrastructure development. This will

increase further.

We cannot do with just sales office and are looking for joint

partnerships, joint services, and joint developments. The partnership will

be for joint engineering development and services. We are working on the

details of the plans and type of partnerships and we will announce the

details soon. I would be visiting India in September or early part of

October and will be finalizing several things.

Extent of investment in India…



Our R&D budget is about $215 million worldwide. Cabletron invests
about 15 percent of its revenues annually on R&D activities. This is

relatively high compared to many others in the industry. We are planning

to invest about $10 million in the Indian market in the next 18 months or

so.

You plan to turn Spectrum Network Management Software division as a

separate company…



We have plans to turn this into an independent and separate entity.
Spectrum is tied to Cabletron and is a multi-vendor platform. In fact, we

actually manage more Cisco routers then the Cisco software itself. As this

is a multi-vendor platform, we want to ensure that the full potential of

Spectrum is unlocked. If we spin off Spectrum as a separate company, we

can double or treble the revenues from this. Spectrum would rank as one of

the top 100 software companies in the US, if it is a standalone company.

Today, the world-wide trend is towards convergence and we are seeing

telecom companies acquiring datacom companies and datacom companies

acquiring voice capabilities. How is Cabletron addressing the convergence

scenario?

We are witnessing synergies between telecom companies and data

networking companies. We offer a value-proposition to those who do not

have the data type of expertise. We are data equipment supplier to telecom

companies and can leverage on the accounts that they have. Our objective

is to provide products that guarantee higher life expectancy, lower cost

of ownership, greater bandwidth allocation, and reduced cost of

management. Our focus would be on reclaiming our leadership position in

enterprise and identify and leverage the product folio into the service

providers’ space-the CLECs, ILECs, ISPs, and multi-service cable

providers. We would generate significant partnerships in the service

providers’ market in the next 24 months. We would be looking at growing

market share rapidly through key partnerships and alignments.

From our initial efforts, revenue from Cabletron’s service provider

customers has grown to equal 10 percent of the company’s overall

business. Current customer partners include major carries such as

AT&T, British Telecom, Deutsche Telecom, France Telecom, GTE, MCI and

Sprint among others. We have solutions to address the broadband access

market and are aggressive. Cable operators are emerging as viable

alternatives to traditional telecom operators too, offering Internet-based

services for voice, fax data, and video.

We will target the high-speed access solutions towards CLECs directly

and in partnership with suppliers like Alcatel, Nokia, etc. Hosting

services will focus on ISPs such as GeoCities and EarthLink, and broadband

solutions for the cable operators.

There are rumors as to Ericsson acquiring Cabletron…



As of now these are just rumors. However if a good opportunity
presents itself, and if it makes sense, we will look at it.

With such trend of M&As prevailing, is Cabletron not a target of

acquisition?



I am open and flexible to evaluate the options to make Cabletron an
independent healthy company at the forefront of technology and maximize

the shareholders’ investment.

On the flip side, do you have plans for acquiring companies?



We will be looking for acquisitions. I will be aggressive and we will
acquire expertise that we do not have. We will be looking for technology

acquisitions in Asia, especially in the services, support, and the

infrastructure areas.

In the services and support areas, we will team up with partners and

are looking for equity investment in India too. In the US, we have

invested about $80 million in the startup companies and will be similarly

looking to invest in Indian companies too.