January 18, 2001, 4:37 PM —
ROCKVILLE, MD.-- Network monitoring powerhouse Visual Networks is dumping its bid to sell products directly to companies, but network executives can still expect Visual salespeople to drop by.
Visual still needs firms to press carriers for services that Visual equipment supports so these service providers will keep buying Visual gear, says Scott Stouffer, Visual's president and CEO.
Therefore, the Visual salesforce will continue to spend time with corporate network executives to stimulate this demand. If customers say they want ways to check that service providers actually deliver the service qualities they promise, service providers will continue to buy Visual gear, Stouffer says.
Visual lists AT&T, British Telecom, Sprint, WorldCom and the former Bell Atlantic as customers of its network monitoring hardware and software.
By retreating to its earlier strategies, the company hopes to stem plummeting revenue that resulted in an $11.2 million loss for the third quarter of this year and has the company's stock price scraping bottom (see graphic). Revenue for the quarter was $14.6 million, compared with $27 million for the same period last year.
Stouffer says the income drop came because the attempt to sell to companies undermined its efforts to sell to carriers using what he described as a push-pull strategy.
When Visual bought Avesta Technologies in May, it attempted to sell Avesta's event management and application monitoring software directly to corporations. "The activity was a direct sell of products to the enterprise," he says.
That direct sell went to corporate IT executives, whereas Visual salespeople previously talked to corporate telecom and WAN executives to create the pull Visual needed to push its products into service provider networks. That shift in focus hurt the push-pull strategy, according to Stouffer.
"We had it working pretty well, but it broke down. We took our eye off the traditional service provider-centric model and got somewhat enamored with growth in the IT portion of the enterprise," he says.
Without corporate demand for service-level monitoring, sales to carriers dropped off, he says.
Analysts agree the strategy is good for the short term.
"They're getting back to the basics that made them successful," says Tere' Bracco, an analyst with Current Analysis, a market research firm in Sterling, Va.
Visual has an advantage in that it is attempting to make its monitoring and service-level management independent of whether the network is frame relay, ATM or IP, says Paul Bugala, a research analyst with IDC, a market research firm in Framingham, Mass. He says the demand for service-level monitoring and management, which stood at $300 million last year, is growing. "With growth of managed services, Internet use, Web hosting and [application service providers], there's lots of opportunity there," Bugala says.