Ten months has hardly passed since its establishment, and it has already won first prize in the most important competition in the communications industry, Comnet. NetReality, set up last year by Ilan Raab, 32, will deliver the first of its products at the end of this month.
The young company from Rishon LeZion beat AT&T and Digital Link, which competed against it in the final round, in the "WAN services/telephone companies" category. Among the winners in the seven other categories were MCI, Cisco, Siemens and 3Com.
The night of the award, the number of visitors to NetReality’s Internet site jumped enormously. Journalists, analysts, potential customers and competitors tried to find out what was new. What really is new? In a nutshell, NetReality’s winning product presents an original solution to the problem of overloading and maintenance costs of regional WAN networks in organizations.
LAN local networks, which network a single site in an organization, received great amounts of attention, say NetReality, at the expense of regional networks, which are entering the market more and more, due to the trend of globalization. Regional networks are the spice of life, says Raab. Each time one rents a car, orders an airline ticket or uses bank services, regional networks are used.
For all their necessity, these networks are slow, very complicated to work with and expensive, say NetReality. Telephone companies have a monopoly, and charge a fortune: a one megabyte per second line costs more than $10,000 a month. Then, when the line collapses, the cost is enormous - it harms work efficiency and could cause loss of customers and reliability.
Opposite NetReality’s winning product, WiseWAN200, are veteran and tough competitors, such as CheckPoint with its FloodGate.
The uniqueness of NetReality’s technology lies in its location in the system: instead of being placed in the local network, where quality is high and maintenance inexpensive anyway, it is placed on the wide network. That means, it directs the transmission at the point it splits off to the various users in the organization, such as, for example, different bank branches, in other words, before problems begin. As an analogy, this is like trying to verify in advance, from Jerusalem, that the prime minister’s car will successfully maneuver the Ayalon highway traffic jams and enter Tel Aviv, compared to trying to verify it from inside the car, in the middle of the Ayalon highway.
Apart from the location, there is another difference between the two companies’ technologies. Nimrod Shwartz, deputy general manager for business development and technology at NetVision, which will serve as NetReality’s beta site, says "Floodgate comes from the policing side of the Internet - it says "yes" or "no". NetReality’s product is more like "who should get which resources and when".
"Globes": The "Big Brother" element?
Raab: "You can see it that way, but organizations don’t tell people ‘you are using the Internet too much’; it is of interest more at the accounts and statistics level. For example, if it transpires that Internet use is high and essential, perhaps the quality of the line should be improved."
The company targeted three markets for its products: organizations, large telephone companies, and large Internet access providers.
NetReality says that, for organizations, the product will enable more efficient transmission management of the line. This will save the cost of renting lines, thereby saving tens of thousands of dollars per month, per line.
The large telephone companies will be able to solve customers’ problems by remote control, instead of sending a technician for field work. Like Internet access providers, they will also be able to offer their customers various rates for the same lines they are using today, based on the transmission width in the actual line. Sales and marketing vice president Valent says that it is added value to services the companies offer, and can provide them a competitive edge.
Internet services providers, says NetReality, will be able to cut costs of lines by making better use of the existing lines infrastructure. Shwartz, of NetVision: The company presented its technology to us and we held a real life experiment here. Today, there are several products doing this, but with inferior quality and very specific hardware, which costs hundreds of thousands of dollars. Here they have much less expensive hardware, about 10% of the others’ prices, and a very high quality product. The product looks extremely promising. Companies such as Intel spend tens of thousands of dollars on international data communications. This can mean a tremendous monthly saving for them. The product appears to have a very rosy future, on condition that they keep to schedule, although this can be said about any company.
We were most impressed with NetReality."
NetReality’s marketing policy is discernibly oriented to the US market. A branch in Sunnyvale, Silicon Valley, California already exists and aggresive marketing will soon begin there. "We will not neglect Israel," says Valent, "but that is not the core."
Ownership: Iscal Holdings, UDI parent company - 41%, ComSor Investment Fund (George Soros and Comverse) - 33%, and the employees own the remainder.
Business plan bottom line: Raab: "A market worth hundreds of millions of dollars, in which we are the first, with the ability to take a slice."
Employees: twenty-five workers, mostly with experience in the telecommunications market. Management represents 20%, and development accounts for 80%.
Published by Israel's Business Arena February 10, 1998