Making a Business of Commodities

Last week, Allied Telesyn International Corp. announced two new media-conversion products designed to connect multimode fiber optic network segments to single-mode fiber optic segments. There were no catered press conferences or bicoastal analyst teleconferences to unveil the new products. In fact, Allied Telesyn, a 12-year-old, privately held networking company, doesn't hold too many lavish events in conjunction with the release of its new products.

Allied Telesyn is a second-tier vendor with a large portfolio of commodity products ranging from transceivers, repeaters, network interface cards and media converters to unmanaged hubs and switches. The company also markets Gigabit Ethernet switches, but leaves the leading edge to companies such as Cabletron Systems Inc. and 3Com Corp. Instead, Allied Telesyn's business is built around commodity products and its VARs. It seems like an anomalous strategy in an industry geared to innovation, but Allied Telesyn's VARs believe the view of the industry from the leading edge can be misleading.

"Innovation is important, but to most of the market, cost and reliability are far more important," says Scott Burkeholder, president of Fiberworks Inc., a Lawrenceville, Ga., VAR that specializes in networking schools K-12 in the southeastern United States. "We chose Allied Telesyn for two reasons: Its products are reliable, and it is loyal to the channel. "I am not one of 10,000 VARs. I am one of a manageable number of VARs that are vital to Allied Telesyn."

VARs such as Fiberworks are the mainstays of Allied Telesyn, which is now a leader in the media converter and unmanaged hub markets.

"Media conversion is not out there in the high ground of technical sophistication, but it's a strong sell for resellers," says James Mustarde, Allied Telesyn's director of marketing. "It helps its customers minimize their costs when they make some kind of topological change. These are the areas where customers really need resellers."

Media converters are boxes that translate the signals traveling down one type of media to the appropriate signals for other media. You literally plug in one media, say 10Base-2, at one end and another media, say 10Base-5, at the other, and you've saved the cost of extensive rewiring.

It's a clear value proposition that keeps Allied Telesyn and its VARs in business. "We are sometimes called bottom-feeders," says Mustarde,

"but I remind those who make that charge that the bottom is where the richest nutrients are."

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Allied Telesyn International Corp. Sunnyvale, Calif. (800) 424-4284, www.alliedtelesyn.com

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What's In It For You

Media Converters Offer a Cost-Saving Solution

Media converters offer clear cost savings for customers working within a restricted budget and a solid value proposition for VARs. Second-tier networking companies such as Allied Telesyn International Corp. possess smaller channels, which are vital to them. As a result, they can give the focused training and support the channel needs. In addition, these companies must provide value over and above first-tier vendors, including higher margins, greater product reliability and superior product customization.