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When Winstar Communications Inc. first brought fixed wireless access to businesses in New York, success was measured in the number of buildings served, spectrum licenses acquired, and the amount of capacity provided.
Today, with thousands of customers in metropolitan markets across the country, Winstar's success is becoming increasingly dependent on offering services to its customers and helping them take advantage of new business opportunities with the applications it provides.
According to James Mendelson, an analyst with the Strategis Group, "by providing services, Winstar is in a better position to compete with the ILECs.
By focusing on the delivery of services, Winstar apparently has embarked on a different strategy than fixed wireless providers concentrating simply on broadband voice and data access. Whereas some service providers highlight their access options, bandwidth speeds and ancillary businesses such as Web hosting, Winstar promotes such offerings as e-business solutions and advertises Office.com, a service that delivers in-depth business content and tools designed for small and medium sized businesses.
"Winstar is becoming a broadband services company," says Winstar spokesperson, Kevin Cavanaugh, focused on delivering applications over its broadband network and realizing its vision of providing communications solutions that enable customers to participate in the so-called "e.conomy."
Recent agreements with Microsoft, Oracle, and other application vendors have been milestones for Winstar on the road to transforming itself from a broadband wireless access provider serving metropolitan areas into a national carrier offering customers a full suite of business applications. In this regard, Winstar's strategy is consistent with the strategies of a growing number of high-tech companies that are rapidly building out their service business as a way of offsetting commoditization of core products and ensuring future financial and competitive success.
But offering services does not represent a change in strategy for Winstar, Cavanaugh says. As early as 1993, just after the company's start, its management formed a new media division to focus on developing services that would run over the network. From that initial step Winstar's service delivery efforts have evolved into a strategy oriented along complementary axes: Serve a wide range of customers by delivering broad-based applications from vendors such as Microsoft and Oracle, and target specific vertical customer segments with focused applications developed by companies such as Cyntergy or Savvis.
Winstar's agreement with Microsoft, for example, enables the company to act as an ASP offering Microsoft Office. Winstar's arrangement with Great Plains Software, concluded in July, stipulates development of joint sales and marketing programs in addition to distribution of Great Plains applications-financial services, distribution, enterprise reporting, project accounting, e-commerce, human resource management, sales/marketing, customer service support functions-over Winstar's network.
Specific vertical segments Winstar targets include financial services, hospitality, higher education and government. The company's rationale for focusing on these sectors is that they are all well-represented in many of the buildings Winstar already serves. This experience gives Winstar good insight into the needs of these customers and a greater potential for success. Winstar's deal with Cyntergy, a provider of technology integration services to the hotel and food service industries, enables Winstar to better serve the hospitality segment. Likewise, recent agreements with Bridge and Savvis give Winstar applications it can offer to the financial sector. In turn some of these applications developers are making use of Winstar's Office.com content.
Winstar's motivations for pursuing this service development strategy are numerous: Services hold the potential for sustaining profitability as bandwidth increasingly becomes a commodity. "Nobody wants to get caught where the long-distance market was," says Strategis' Mendelson. And the more applications Winstar offers its customers, the more bandwidth it sells so that customers can make use of those applications. Finally, service offerings provide an additional differentiating factor that Winstar can use to distinguish itself from competitors.
What makes Winstar attractive to applications developers is the fact that Winstar's network, which makes use of wireless and fiber technology, is broadband end-to-end and well-suited to handle bandwidth intensive applications. "There is no copper to slow things down," notes Cavanaugh. Moreover, Winstar's geographic coverage is broad with representation in 60 markets domestically and five outside the United States. The company also boasts a solid hosting infrastructure with seven data centers and plans to build up to 50 in the near future. Finally Winstar has detailed knowledge of its customer base because it targets businesses primarily in buildings it already serves.
"(Winstar's) model is where we see the market moving," says Mendelson. "This is a natural progression for a facilities based provider," he adds. Winstar expects to continue supplementing its service portfolio with new applications targeted at specific segments of the market while increasing the number of buildings it serves from 3,000 today to a projected 9,000 in the next 12 to 18 months.
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