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Champion of 2G, Proponent of the Possible

July/August 2001

Born and raised in England, Andrew Harries spent his teens in Ireland and pursued competitive flat-water kayaking before settling in British Columbia. In Vancouver he followed an academic focus on marketing and the adoption of new technologies. That focus helped as he moved from working on Motorola's early mobile data efforts to co-found wireless modem firm, Sierra Wireless, in 1993. Today he is adamant that mobile data offers value now.

WIM: As you and chief technical officer Norman Toms founded Sierra Wireless, what made you focus on modems and related products?

Harries: Right from the start we were focused on the subscriber end. We were going to do chipsets, but it became evident to us very quickly that this was an early stage, emerging technology and one could not rely on third-party manufacturers to get into the business and consume our chipsets in any appreciable volume. And that was the right decision, definitely. Chipset volumes, for a number of years thereafter, were disappointing. If we had been selling chipsets for $50 a unit, instead of wireless modems, which for a while had an average price in the $800 range, then we would have been out of business early. So we decided we needed to create the whole device, rather than component technology at that early stage. So we set out making end-user products that could wirelessly enable laptops. At that time, PDAs hadn't emerged. It was a vertical market then-not even road warriors wanted wireless laptops until a few years ago-and our first product breakthrough came with a mobile device that we created: a highly ruggedized, high-powered device designed to withstand extremes of temperature, shock, vibration and humidity, three-watt CDPD modem designed for in-vehicle use. We sold about 800 of them to PSE&G, a big utility in New Jersey in 1995.

WIM: Seems you and your company have a strong streak of pragmatism...

Harries: We have a good nose for b.s., I think. In any emerging technology business-wireless data is no different-there are hundreds of ways to spend money and only a few ways to make money. You have to be sure that where you're spending money is where you can make money. It sounds simple, but it's just extraordinary to me how much money-I'm talking literally millions, even billions, if you look at what's going on in the fiber networking business right now-is being spent without anyone seriously applying reasoned thought to whether a return can ever be made from it.

WIM: There's a lot of romance to bright ideas...

Harries: Of course! There's romance in being first. Everyone wants to be remembered as the true pioneer. And the market rewards the first into a market that takes off. The trouble is that, if you look beyond that, the corporate burial ground is littered with the bones of companies that have tried to be first and failed because their market didn't take off-more so than those who timed it just right.

WIM: At CTIA Wireless Agenda in May there was a murmur of assent when you spoke on Sierra Wireless' current case studies, rather than what it hoped to do tomorrow.

Harries: Well, you can't be myopic and miss opportunities either. We often talk amongst ourselves, when we're strategizing, on that delicate balancing act between fully exploiting the opportunities before you and not developing myopia to future opportunities. That's a true balancing act and I believe that very few companies really pull that off. Just being conscious of that tension is half the battle.

WIM: That pragmatic view seemed to serve as a balm to an industry often addicted to "The Next Big Thing." What's your view of the size of the horizontal market yet to be served by currently available, 2G technology?

Harries: I won't quantify my answer, because there are many firms paid to think about that. Qualitatively, if I were running an enterprise today that had a large service organization that presented me with some significant inefficiencies and, therefore, opportunities to make them more productive, I wouldn't hesitate to take advantage of available technologies. So where you have an organization that's customer-focused and has to operate with precision to be efficient-scheduling, being in the right place at the right time-there are enormous productivity-enhancing opportunities that you can fully capture with today's technology. And that's where the business is today. Big deployments are coming from those organizations that see the productivity-enhancing opportunity in customer-facing disciplines.

WIM: I passed an Alliant Foodservice Inc. truck on my way to work today-that was one of your case studies.

Harries: Aha! There you have a customer-facing organization where scheduling is all-important. They have particularly high stakes, because what they deliver is perishable. Therefore they need to be sure, first of all, they've got the right stuff in the truck when it leaves the depot every day, because it really can't go back. The faster they can compress the cycle of the customer needing something to it being on the truck, the better. Once it's on the truck, you have to be sure that truck has the most productive route that day, getting to as many customers as possible. Wireless technology really enhances that.

WIM: That's a quantifiable case study. Some observers say there haven't been adequate models for calculating return on investment-the crucial selling point for your value proposition.

Harries: Our perspective is that it's important for vertical market fleet deployments. The technology goes through a fairly classic buy-in cycle of pilot, return-on-investment calculation, end-user feedback, technology qualification-in terms of interfaces to existing backend systems-and then deployment. It's really hard to compress that cycle. One way to compress it a little is to make visible to the company in question the experiences of like companies. It's important to develop those models. We have a few. We tend to look to our partners and our customers to show us those models because we're simply a part of the entire chain; for instance, we typically don't do the systems integration part. There are systems integration firms who do have that modeling down to a fine art.

WIM: In contrast to the Alliant Foodservice case study, you also presented one on a law firm that rested on anecdotal evidence, rather than a quantifiable ROI. Tell us why that's important.

Harries: The two case studies couldn't contrast more. One is an earlier adoption cycle application: field service. Vertical applications are going to happen earlier in the technology adoption cycle. But they're going to be more expensive and there's going to be a lot more hand holding and custom integration involved, some custom applications work-and the customer is going to face a big bill. So we'll go through a fairly comprehensive payback model to help them reach a financial decision. The next phase in the technology adoption cycle is where you hit that inflection point in the curve and things start to really accelerate. Individuals within enterprises are making almost impulse decisions-"Hey, what the hell, that sounds like a great idea. I need it!" And that's what we're just starting to see now. We're starting to see individuals say, 'You know, I can't count the number of times I've sat in an airport or a meeting room or in court, and I wished I had access to my network or to the Internet, because there's information there that would have helped.' Right now they're typically looking to value-added network service providers-the buzzword now is MVNOs. They'll ship you client software, sell you the service. You go through their service bureau so the IP address that you tune to is their server or their gateway, then they take care of the backend connection to your IT department, using a socket to go through the firewall. Typically that's how these solutions are getting sold right now. I can't say what the law firm is doing, but here we transfer confidential documents, using the appropriate security software, and we're fine.

WIM: One of your mantras, in an industry addicted to "The Next Big Thing," seems to be, "Don't wait." How do you argue your point to prospective clients?

Harries: I think there is a technology overhang. And I do think that some enterprises will wait for the next technology to arrive. Many organizations will be forfeiting immediate opportunities to significantly reduce their bottom line by waiting. There are enough companies that won't wait-and they'll get a leg up on their competition. Right now we're seeing a double whammy in the market, in a sense. It's not affecting us as badly as it appears to be affecting others in the industry. You're seeing this technology overhang, plus the downdraft in the economy. Both of those things are contributing to more companies waiting to deploy than they otherwise might.

WIM: So you're counter-argument is that hard times are the best times to institute productivity gains?

Harries: Well, they are. But these are not purely rational times. I'll make my argument to a company and they'll say, "Yeah, but cash is king. We've only got so much." Those companies that are in robust financial condition-on the balance sheet, primarily-will be well advised to make these investments now, while they have the time. While the competition is on the ropes, they have a bit of time. For our own part, I can point to an illustration of the kind of leadership move we're making. We just made a multi-million dollar commitment to a new ERP [enterprise resource planning] system from J.D. Edwards. That is, I think, a bold move, given the times. The temptation-and we talked about it a lot-would have been to say, "Hell with it, we're going to postpone all major capital expenditures until we figure out just how long and how rough this downdraft will be." But our view is that these times of turbulence are exactly the right time to get ready for when the market stabilizes and you have to emerge leaner and meaner than everyone else. So we're walking the walk in terms of implementing productivity-enhancing technologies in times of difficulty. And we counsel others to do likewise.

WIM: Name other objections from enterprise to exploring the wireless data option.

Harries: As a student of technology adoption you recognize phases it goes through. One of them is: "There aren't enough companies just like yours or mine, who we know about yet, who've adopted this kind of technology." So we need to proliferate more case studies of companies like the small law firm, or like Alliant Foods, to make prospects more comfortable in choosing a technology. Or to makes it easier to sell, if you're the champion for adopting a technology, but not the ultimate decision-maker, is the ability to point to the successful adoption of the technology by companies like yours. And, even more compelling, by a competitor. So you need to leap across this whole series of small chasms, if you will, between market segments. The way to do so is to market good case studies, establish beachheads, then use specific customers to leap the chasms.

WIM: CTIA's Tom Wheeler posed a rhetorical question at Wireless Agenda: "Should we banish 3G from our vocabulary?" The responses ran the gamut from "Yes, let's focus on capabilities available today," to "No, we need a technology roadmap." Your answer?

Harries: If you're involved in selling infrastructure, then all you talk about is the new, new thing. It's just astonishing to me how there's this treadmill of new technologies in wireless, and it's the same in any communications field. Infrastructure vendors need to create next-generation technologies. The trick for us all-infrastructure, service provider and subscriber vendors alike-is to make what we currently offer sufficiently compelling that it's not overshadowed by the new, new thing. So, my response to the 3G question is: "Yeah, you need to stop talking about it because it's just a distraction for end-users. And if end-users are distracted they won't deploy. And if they don't deploy, there'll be fewer of us around when 3G finally arrives."

WIM: Compare and contrast available 2G and 2.5G technologies with the capabilities coming with 3G.

Harries: Let me give you one fundamental truth of technology deployment, one of the immutable laws of the universe as I've discovered. That is, any network technology takes at least three times as long to deploy as the optimistic proponents would have you believe. Probably twice as long as suggested by people who think they're being realistic. So, two to three times as long, depending on the source of the original forecast. One of the major problems in talking about the new technology is that the most vocal commentators on those new technologies are the most optimistic proponents. End-users tend to hear the loudest, most optimistic view of the availability of those services. Depending on how many of these technology transitions the end-user has been through, they may or may not believe it. We're starting to see buyers in IT and in functional areas starting to apply healthy skepticism to dates they've heard. But there's a whole generation of younger IT managers who haven't been through these kinds of transitions before, who say, "Hey, I hear 3G is here next year. I'm waiting for that." Those of us who've been through this before know well that it's not likely to be next year. It's likely to be two years after that before sufficient, ubiquitous service available to meet their needs. So you know that the decision to wait a year for 3G services means probably a three-year wait. It requires experience to tell the difference between reality and hype. That's one of the immutable laws of the universe! One has to work within those constraints, both as a vendor, planning your technology roadmap, as well as an end-user planning your adoption profile.

WIM: By the way, how do you define 3G? Is it the International Telecommunications Union's definition, or another?

Harries: I define it as it originally was meant to be defined: as generations of technology. I think it's a fool's game to measure it by speeds because somebody out there always has some way of accelerating network speeds. It's usually a proprietary overlay scheme. It doesn't represent a fundamentally discontinuous technology and, therefore, shouldn't in my opinion, get the label of a new generation of technology. Broadly speaking I think it's generally understood that 3G services are going to deliver you something in the neighborhood of 300 to 500 kbps of data speed when you're mobile. Anything significantly less than that is, broadly speaking, 2.5G. The current technologies support a narrower set of applications than 3G will. That's a basic truth. But it's not that 2G technologies don't support useful applications. To the contrary, I'd say that if individuals who are heavily mobile are like me, e-mail, Web, Internet and intranet are the key things they need. Once we deploy our CRM [customer relationship management] system, then CRM will be very important as well. If you're an internal operations type, then ERP [enterprise resource planning] also will be important. You could bunch those two together and call them "enterprise applications," as opposed to foundation applications such as e-mail and Internet. I'd say that e-mail, Web and Internet are well supported today by 2G technologies. It's slower than the LAN, you just need to learn to live with that, and there's good middleware available from companies like, for example, InfoWave, who have ways of making wireless e-mail experience quick and palatable. In addition to sending you only small messages, and giving you the option to download big messages, they also have a client-and-server piece of software that does a fair amount of compression, too. So there are ways today to significantly enhance the performance of what looks like a relatively slow network. And most people use a piece of middleware. In the future, you're going to start to be able to run any applications you want, including your enterprise class applications, without much thought-and certainly without the need for middleware, although middleware will always accelerate the process. So if 128 kbps is still not good enough for you, you can use middleware to accelerate the useful speed. But if it's true that e-mail and Web are some of the most useful communications applications, then a large segment of the market can take advantage today.

WIM: Are you the proponent of the possible? The champion of 2G?

Harries: We are proponents of customers, real end-users, deriving productivity benefits from wireless, as soon as they can. That's not primarily a technology issue, although some customers will feel that they simply can't do what they want to do over today's networks. For those customers, I'd say, look very carefully at the middleware options, if you feel network speeds aren't fast enough for you. And if you still remain unsatisfied that you can't do what you need to get done today, then we'll be there for you when next-gen technologies roll around. Because notwithstanding that we are champions of taking advantage of networks available now, we are actively engaged in developing next-gen technologies such as CDMA 1X and W-CDMA/UMTS. We're developing those technologies while championing what's available today. So we're involved in getting customers the best they can get at any given time.