New Tricks for a Not-so-Old Industry

Winphoria CEO Mike Champa is hoping wireless carriers want a mobile-only switching product. But by taking on big-name vendors Lucent and Nortel, Winphoria must convince the conservative wireless market to take a chance.

If Mike Champa, president and CEO of Winphoria Networks, has his way, the practice of adapting an old wireline switch for the new wireless world is about to go the way of the dinosaurs.

During the last 20 years, the wireless industry has moved from analog to digital, from a business-only tool to a mass consumer product and now into a multimedia wireless world. But one thing that has remained steadfast is the wireless switch.

Major vendors like Lucent Technologies, Nortel Networks and Ericsson have always dominated the wireless switching business by adapting an old product to a new market. But these vendors' dominance actually has violated a key premise: As markets become large, products become more differentiated.

Winphoria aims to change that. For more than a year the company has been demonstrating its full-featured mobile switching center that boasts a fivefold increase in voice capacity, allows carriers to migrate to IP networks and consumes less space and power than traditional mobile switching centers.

“No one has been successful in breaking into that core group of switching vendors,” Champa said. “We think we can.”

What makes Champa so confident? Winphoria has raised $55 million in VC funding and already has scored a deal with a nationwide CDMA operator, which the company won't reveal but sources say is Sprint PCS. That's an impressive feat, given that the country's six nationwide carriers have heavily entrenched relationships with their switching vendors.

Winphoria may be able to woo customers because it focuses on carriers' primary concern: the voice market. A slew of similar start-ups — backed by some generous venture capital funding — have hit the market in recent months, but they primarily are addressing wireless IP data.

Winphoria's MSC, which is air interface-agnostic, can help offset the capacity crunch because carriers can co-locate the product with their existing legacy switches. At the same time, operators can transition from 2G to 2.5G to 3G using the switch because it can be reconfigured to accept different transport modes such as TDD, ATM and IP.

In addition, operators can offer some popular revenue-generating services, such as a global Nextel-like push-to-talk service that Winphoria has named Global Instant Rendezvous service.

All this is done with technology invented by Bell Labs alumni and Winphoria founders Shamim Naqvi and Murali Aravamudan. They developed telecommunications' first softswitch while at Bell Labs but quickly realized few people were trying to apply the technology in the wireless space, where the prospects were overwhelming in light of exploding customer growth and the painful transition to 3G networks. Using this disaggregated architecture, the Winphoria engineers separated the signaling path that carries elements such as SS7 and user profiles from the bearer path that carries actual voice calls. In traditional switches, these elements are combined, making it difficult for vendors to add new features on the signaling path without affecting the bearer path. Transversely, carriers can begin moving TDM traffic to IP packets while maintaining control of network provisioning.

“It allows you to make changes to those primary functions and add scale and capacity,” said Steve Kish, director of product management for Winphoria. “These types of changes would probably take two years and cost $2 million to do in a traditional switch.”

Champa and his team aren't arrogant enough to think the company can compete head-on with the likes of Lucent or Nortel. The conservative nature of the wireless operator community dictates that small entrepreneurial companies must partner with the big players to get any traction in the wireless switching space. Winphoria is searching actively for vendor partners. Infrastructure providers such as Motorola don't produce their own switches, while other switching vendors might be looking for the type of feature sets Winphoria offers, Champa said.

Still, the odds of start-ups like Winphoria gaining significant inroads in the market are slim, analysts said.

“We've been looking at Winphoria and a lot of similar companies trying to break into what has been dominated by the big three infrastructure providers,” said Michael Doherty, senior wireless analyst for Ovum. “A player like Verizon needs constant support. That's a real gap for all of these players. Most of them are trying to get recognized and then trying to get acquired.”

Champa knows the biggest challenge his company faces is transitioning from a R&D organization into a company that can market and support products. That transition is usually the most difficult for companies founded by engineering geniuses that have exceptional ideas for products but are lacking in the marketing and product support area.

Winphoria's CEO has a proven track record in this evolution. He was on the original management team for Cascade, which broke into the landline switching market and was later acquired by Lucent. At Ciena, Champa helped spearhead the unknown company's entrance into the optical transport gear market.

“The odds are clearly against a small start-up competing with vendors,” Champa said. “But if the economics are there and it's differentiated enough, you will get the opportunity.”