Russian High Technologies: Expansion

Russian developers on Western OSS/BSS for telecoms market

Interview with CBOSS President Andrey G. Morozov

CBOSS is one of the few Russian companies, traditionally represented on the largest forums abroad. This year CBOSS takes part in 3GSM World Congress for the fourth time. Could you explain the reasons that underlie the attention CBOSS pays to foreign expositions? Is this an attempt to find clients on new markets or something else?

Naturally, this largest event in GSM industry is the place for companies to show themselves and to look at others. Setting a new record, with 26 thousand visitors and participants from 154 countries, the forum became the ideal place to establish business contacts.

For CBOSS, participation in Congress is an opportunity to display its achievements in the field of complex automation of business processes of telecom enterprise, real-time monitoring and diagnostics as well as universal intellectual platform for VAS development. CBOSS stand featured a line of IT products consisting of more than 30 solutions.

We can speak already about certain success in promotion of CBOSS trademark. This year, CBOSS brought a professional music show (starring a member of national team in rhythmic gymnastics) to the Congress. Experienced Western public is hard to surprise, however, the effect of the show was amazing. People came to CBOSS stand specifically to watch the performance. Metaphorically, we killed two birds with one stone: attracted audience attention to our stand and proved that Russians can go far beyond folk dances, produce a superb-quality modern show, for example.

This is very important, as the West still has stereotypes about Russia, both in cultural and economic aspects. Breaking down prejudices, we at the same time make people understand, that Russia provides high technologies as well as well as raw recourses. Thus, we affect the image of our country, bring it up to date, performing an important social function. Taking part in exhibitions abroad, we represent our company, but generally speaking, Russia too.

What are the results of participation in 3GSM World Congress over the last three years?

It is difficult to assess results of participating in an individual event. Finding a business contact at an exhibition, immediately followed by a new contract is a rare thing in practice. Exhibition is a meeting place. People look at us, compare with other companies, and then make a decision, after a careful and thorough analysis of the information they receive at the exhibition.

Participation in the events of the 3 GSM World Congress level is important. We should, speaking military terms, raise a flag. That is present our capabilities and ourselves decently. Real work starts only when an exhibition is over.

At the same time, the exhibition is the right place to understand whether your business is aligned to the pace of industry. When you see your colleagues, competitors and customers in one place, general picture of the market, supply and demand trends become clear.

You can say that previous Congresses brought us several new clients. You can also say that this is a far-fetched statement, since I would not bet that their decision was based solely on the fact that we took part in the Congress. It is safer to say that our participation in the event was another argument in favor of the contract with us.

Also it is hard to estimate directly the effect of acquainting ourselves with expositions of the Congress participants. However, it can be assessed indirectly through expenses we would have incurred when collecting such information in other ways.

Traditionally, we hold a reception for friends, a special event in the framework of the Congress. This time it was held at Chateau de Fayeres. Those who were not familiar with CBOSS products had a chance to get an opinion from the first hands of the operators who already use them. Companies, who have the system in operation, shared their experience with colleagues from different countries. Guests enjoyed the relaxed atmosphere and met top management of the company. It is impossible to express the effect of such informal communication in figures.

3GSM World Congress, the name of the conference, is self-explanatory. However, it is common knowledge that new generation of mobile telecom technologies has already arrived and stays next door for a few years. Yet, there is no hurry to get it home. Have you seen any changes for the best in this aspect at the conference?

This is true there was no blitzkrieg for 3G networks. The only example of country-wide implementation of 3G cellular networks is Japan. Europe, America and Russia lag far behind in this sphere.

Telecom operators in Europe invested heavily in 3G licenses, however, the manufacturers failed to offer required technologies in time. Investment got frozen that negatively affected financial position of the operators. In such satiation, new large expenses proved unaffordable.

On the other hand, it would be wrong to deny the prospects 3G offer. The Congress brought us another argument in favor of 3G: the trend towards extending the range of services, offered by cellular operators, remains strong. Subscribers display growing interest to broadband Internet and MMS. Operators offer respective solutions of GPRS platform, however, it occupies an intermediate position between 2G and 3G systems, which reflected in the unofficial term 2,5G.

3G has good prospects, however, its time has not come yet. One can draw an analogy to securities market when it is overheated. A company's shares rate can remain high, solely due to the optimism of market players. When it drops, that does not mean the firm has gone bankrupt. It was only a correction. We witness the same thing about 3G: it is the correction, a plateau replaced speculative moods, while 3G "shares" have a growing trend.

Under the circumstances, CBOSS objective is to be ready for mass implementation of 3G systems.

What are the core trends on GSM market in Europe? What was the focus of the reports at the conference?

GSM follows the integration path, so typical to a number of industries today. Cars get equipped with on-board computers, computers receive multimedia center functions, telecom devices get computer functions. Mobile telecom services subscribers today want their handsets to transfer all kinds of data such as text, video, graphics and their combination as easily as it does voice.

A few years ago a modem in a mobile phone made it business class. Today, business class requires Internet directly from the handset and fast at that. Subscribers, at first pessimistic about the promises of 3G technology, now show growing interest in them.

Existing technologies still meet these requirements without a transfer to next generation equipment, but only in part. GPRS, however, is the technological limit of 2G. Modern multimedia technologies in mobile terminals get fully realized only in 3G networks.

Are foreign providers, presented at the Forum in Cannes, far ahead in their IT solutions from CBOSS? Or, are they at one level with CBOSS products?

It is hard to compare complex packages offered by our company and our competitors directly. The Forum explicitly showed that, speaking metaphorically, there is no abyss between us technologically, and we represent our country decently. On the other hand, it is better to compare conceptual approaches.

We noticed that since recently our competitors have followed the concept that CBOSS implements from the very beginning, and they try to apply our model. Namely, our company strives to provide the customers with complex solutions that automate all business processes.

Do you think that CBOSS solutions have competitive advantages over the similar products of Western providers? What are they?

CBOSS is a young company as compared to its competitors. This is our advantage. We started business when the majority of standards in cellular industry were already mature and available and we were free to choose a development platform. We preferred the most modern ones. We see that we made the right choice.

Unlike our competitors, we do not have the restrictions of the old technological platforms. Besides, our production is more attractive financially, as the brand constituent in the price structure of CBOSS products is miniscule.

It is possible to consider a price of any production consisting (roughly) of cost, profit, and cost of brand support. Large Western companies have to include coverage for losses of, say, its less profitable divisions. Spending less on brand management and administration, CBOSS makes its products more available. To put it simpler, our products have more intellect per dollar.

In automobile industry, this is termed power density, measured as power per weight of the vehicle. Comparing two cars by the power of their engines often shows no difference. If we take horsepower per kg rate, on the other hand, we see which auto is faster, more dynamic.

Russian solutions go a hard way to penetrate into the Western market, don't they? As far as we know, the competition on the market is equally fierce among telecom operators as well as among IT providers.

Exactly. Remember relatively modest expenses on branding in CBOSS? That's why a priority task at the given stage of company development is to make CBOSS brand recognizable and to gain confidence of consumers.

Besides, it should be noted that migration to a new B&CC system (independent of the provider) requires huge expenses from the operator. Thus, even if an ideal system would be created that doest not mean that all operators would immediately switch to it.

There is yet another obstacle on the way to Western markets. Russia in the West is usually considered a supplier of oil and gas rather than a hi-tech provider. Consider, for example, Irbit Motorcycle Plant that resumed production of "Ural" motorcycles. Imagine they attract huge investments, take "space" technologies and produce a motorcycle that is the best in the world. I wish them every success in that. But to sell it outside Russia would be next to impossible. An obsolete model of the Ural motorcycle has more chances here, as it is considered a rarity.

America has its own legend. Harley Davidson. Its characteristics are significantly behind those of BMW and Japan models, however, it still sells well. It is not just a vehicle. Rather, this is a name, a lifestyle, a legend. It took decades and decades to create the legend. Generations of Americans changed but Harley remained. Now it is hard to sell them even a BMW that does not lack branding, to say nothing about "Ural". In the mind of Americans it will be still Harley, but for those who like exotics and have less money to spend.

It is more difficult to overcome such stereotypes than to promote a trademark. A national producer abroad support program would be more appropriate rather than one-company efforts. That does not mean we are looking for somebody to find fault with or decide to quit. Those that need a tool rather than a name would consider all variants. And CBOSS has something to offer the West.

Do Western operators accept the complex approach implemented in integrated solutions from CBOSS? As we know, European mobile telecom market emerged earlier and developed faster than in Russia. On a mature market, established operators prevail, who have a full range of interacting multi-provider solutions on a mature market.

As I have mentioned, a number of our competitors have taken up a complex approach recently. Indeed, a purchase of integrated system, when a provider does the selection work for the customer, has more benefits than drawbacks. Certainly, a customer can choose the modules to build the system by himself, but it is better to have a professional do this job. In this way, the customer saves a number of potential equipment and software compatibility issues. It is the provider that has found the safe path between the pitfalls.

Providing integrated solutions, we reduce both direct and indirect expenses for the customer, we save time and money for him. Western companies now have tight IT budgets. Taking into account a lower cost of integrated packages per module, this variant offers new attractions for them. Being more affordable financially, as compared to the solutions offered by our competitors, CBOSS should become the system of choice.

In Russia, in most cases, it is companies from MTS group that become CBOSS customers. In my opinion, working with one large customer or its branches impose certain restrictions on development of the product line as well as, on a larger scale, on corporate marketing strategy. Is CBOSS a victim of one-operator policy?

Often, we are considered a company that works exclusively for MTS. This is not true. Indeed, MTS branches constitute a considerable part of our customers. If we look back, at the history of our cooperation, it becomes clear, that a lot of MTS branches became our customers when they were independent businesses. For example, our work with SSS-900 and Kuban-GSM started when the companies were outside MTS. One should consider the fact whether it is occasional that a number of our customers were purchased by MTS over time. MTS bought the most successful businesses, and the performance of any business depends also on the utilized technologies. For me, it is pleasant to think that the choice our customers made in favor of CBOSS made its contribution to their success on the market.

It is true that MTS is the most prominent among a few dozens of customers CBOSS has. But this does not mean that other customers do not have our full attention. Instead, close CBOSS-MTS cooperation is beneficial for them. MTS, a leader of Russian mobile telecom market, imposes the most strict requirement to its providers. This is another incentive for quality, functionality and scalability of our products, that all our customers value and appreciate.

Specifically, a recent success of our specialists relates to application of Sun Microsystems database servers for processing of exceptionally large volumes of data. Obviously, this result has practical value for all large and fast-growing CBOSS customers.

In conclusion, do you think CBOSS has become a recognizable brand among CC&B providers in the West?

There are a few Western CC&B providers of the same level. There are no strangers there. What is more important for us is whether our potential customers know us. Do they know us? This is a question to the market players.