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Strix Snags Large Customers, Anticipates Profitability
October 17, 2006 -- Wi-Fi mesh vendor Strix Systems has announced a string of new customers, expected to bring it to profitability by Q2 2007. The latest and largest is a 100-city deal with Japan's NTT, which Strix estimates will buy up to 100,000 radio modules.
Strix has also provided more details of its WiMax plans. Similar to competitor BelAir, it has a modular design that enables WiMax to be added to existing WiMax nodes. Its first WiMax modules should ship in mid-2007.
Strix says that it shipped 16,100 radio modules in the first three quarters of 2006, and that its sales are growing 3-4 times annually. We anticipate its year-end 2006 revenue to be about $20m, up from an estimated $6m in 2005.
The 451 take:
Now that the mesh industry has recognized the limits of single-radio nodes, Strix is trying to pin the single-radio label on all its competitors: Although most offer dual-radio systems, one of those radios needs to be used for links to clients, leaving just one for the mesh itself. Strix's argument is that a high-performance node needs at least two dedicated to the mesh, enabling it to transmit and receive simultaneously. There's a lot of truth to this, and Strix's rapid growth shows that the pitch goes down well with customers, some of which routinely bounce VOIP packets across seven hops. But not every network is that big, and the relatively recent entry of Cisco and Motorola into the market threatens all the startup players.
Details:
Strix Systems' recent deals include Beijing, a four-city deployment in Kenya, and NTT West, which will use Wi-Fi meshes to replace PHS cordless telephony in 100 relatively small Japanese cities. Covering a total population of 15 million, NTT will be Strix's largest customer to date, and was won partly because Strix is the only mesh vendor to support Japan's 802.11j standard. Its largest deployment at present is the city of Tempe, Arizona, which uses 3,000 radios in 800 nodes. Strix says that about 40% of its business is now outside the US, and that this proportion is growing.
Like other mesh vendors, Strix will initially use WiMax for fixed links within its mesh, retaining Wi-Fi for links to clients. It hasn't yet decided whether to release a product based on the draft 802.11n specification.
Strix claims that it is now the market leading mesh vendor, measured by number of radios rather than number of nodes or customers. This is probably true, thanks to each Strix node containing an average of three radios (and potentially up to six), rather than the one or two of most competitors. The average selling price per radio unit is likely about 20% less than the MSRP of $1,000, so we estimate that the company has booked about $13m in revenue for the first nine months of 2006. It expects to reach breakeven in about six months, which suggests the company is spending about $3m per month.
Competitive landscape:
The wireless mesh market continues to attract new entrants, but for the moment is growing so fast that few of the existing players are hurting. The closest to Strix in technology terms is BelAir Networks, which also makes a modular, multi-radio system. BelAir is ahead in WiMax, already offering an 802.16 module, but Strix seems to have more customers and can scale to more radios. Tropos Networks is regarded as a market leader in units shipped, as its low-cost, single-radio units enable a large area to be covered relatively quickly. It recently moved to a dual-radio system, and also has WiMax planned for 2007.
Cisco Systems entered the market in late 2005, and has recently been gaining some service provider customers. Motorola entered in July 2006, and looks set to do the same. Firetide and SkyPilot Networks are the other relatively established startup competitors. Two newer startups, Kiyon and Wavion, are focused more on selling platforms to mesh vendors than products to service providers.
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