ADVA’s Woes are Systemic in Nature

Implications: 1.      In its recent dealing with major telcos, ADVA has not appeared ready for prime time. 2.      ADVA is apparently trying to convince people that a change in top-level management will make a substantial difference in reversing its downfall. 3.      The supplier either needs to take a step back and refocus on vertical markets, such as the education space, or get acquired.

Analysis:  In the past, ADVA became a significant optical player by solving practical problems of networks in a low-cost way – and by adopting an effective strategy of using OEMs.  But when it recently came to stepping up to the plate with the big carriers, it struck out.   

Although the RBOCs do not like to go through OEMs, Verizon would have made an exception with Fujitsu/ADVA because of the Japanese supplier’s large installed base there.  British Telecom certainly would have used ADVA’s solution in a big way.  And it appeared that AT&T was at least willing to consider its access device.  In general, the system did not ultimately work to the satisfaction of any of these telcos.  

ADVA evidently decided to make a scapegoat out of a loyal executive of a dozen years, who was mostly responsible for its success in the US. – in effect, demoting him,   After being thrown under the bus, it was not unexpected that he has decided to leave the company.  

Superficially, ADVA’s appointment of its new Chief Marketing and Strategy Officer,  with “big-company management experience” might make a difference in some people’s minds.  However, his major role at Cisco Systems involved optical systems, which tended to be used more in support of Cisco’s major products, rather than leading the way for growth by itself.  In addition, ADVA undoubtedly figures that his former experience at Fujitsu will help to better solidify its relationship with its OEM partner in order to make further penetration on the public networking side.  But, especially in recent times, Fujitsu’s North American business is firmly under control by the executives in Japan, and any new influence coming from the States is likely to be minimal.  Most importantly, ADVA is really replacing one marketing/sales guy for another – at a time when it needs more engineering resources in the US, if it ever expects to get RBOC business in a big way.  So, the new executive’s relationships with these service providers will only go so far.  

On a final note, it seems that ADVA has been resting on its laurels a little bit too much.  As it moves forward, it needs to become more aggressive on product development.