Earlier in the month I reported on the Clearwire Earnings Call that went live from Clearwire’s home office in Kirkland, WA. They took the time to review industry metrics, subscribers, cities they would roll out this year and other pertinent investor info. They also took the time to announce two new wholesale customers, Best Buy and Cbeyond. Of course we are all familiar with Best Buy, the nation’s leading retailer in Consumer Electronics. In fact, I wrote a piece about that which took the time to dissect some of what made perfect sense for Best Buy and Clearwire in the agreement, what led up to it, and how I see it culminating going forward. With Cbeyond, I had to take the chance and do some research. Just who are they, what do they do and where do they do it? Have they been successful at it?
I had the honor of joining with Cbeyond’s Brooks Robinson, Chief Marketing Officer (and CO Founder), and Vince Zappa, Senior Director of Mobile Operations. Cbeyond started in late 1999 with the strategy to target the small business market for Dedicated Voice and Data services over T1. They quickly pioneered impressive cutting edge services, such as providing privately managed VoIP services and dynamic allocation of bandwidth for improved QoS. Over the last few years however, their product offering has been evolving, identifying cost effective ways to integrate an entire software suite of services to their customers for a wide range of pro SMB applications.
In addition to hosted services, Cbeyond entered into an agreement with a CDMA provider to offer mobile voice, mobile data (via blackberry and android devices), as well as mobile broadband via 3G USB dongles and so forth as a true-to-life MVNO. Cbeyond has been very successful with this model; so much in fact that they have achieved over 30% penetration of mobile products into their client portfolio. This means over 1/3 of their customers not only purchase landline services but also mobile as well – very impressive indeed. “[The Clearwire agreement] is really an evolution of our business” added Robinson “we’ve been providing 3G laptop cards and we also provide a wireless backup service as well, essentially used for three components of our customers business,
• Backing up the data of their servers and PC’s
• Backing up (redundancy) for the T1 failover
• Cloud based Automated Attendant
It’s in the wireless backup service that the real experimentation is taking place. They have not worked (from an engineering perspective) with point to multi-point microwave devices such as those required on the Clearwire WiMax network. Cbeyond purchases “white label” (non-branded) devices that will be WiMax enabled to use not only for the backup business model, but also for their mobile products as well. “We have been in mobile since ’06, we are confident that we can penetrate our mobile market with our 4G products” Said Robinson.
Initially they will offer these non-branded devices to their customers; USB’s and RSU’s, similar to Clears own consumer RSU. Mr. Zappa took the opportunity to comment on the ecosystem of devices
“Our model around 4G will evolve – we aren’t constraining ourselves to any particular devices or product offerings, and frankly we will evolve just as quickly as the macro model of the WiMax world evolves.”
Cbeyond does business in 14 tier 1 markets, all of which will be lit with Clearwire’s WiMax network by the end of the 4th quarter 2010. Brooks Robinson is excited about the opportunity ahead
“We are excited about the potential of our relationship with Clearwire – I think what Clearwire saw with Cbeyond was a company that understood technology and has a firm grip on the small business [telecom space] and more importantly, distribution. These kinds of technologies can be somewhat underserved to the SMB customer, but with Cbeyond our value is in bringing this product with our trusted brand to the busy small business owner.”
No doubt they understand their customers – Cbeyond, now a publicly traded company (CBEY) has revenues expected to top $450 million in 2010 alone. Certainly their account executives will deliver world class distribution to serve customers with a new blend of connectivity, WiMAX, brought directly to them with the Cbeyond label on their modem. Stay tuned for reports following up with Cbeyond’s progress, both in engineering and marketing, in the coming months!
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