Flashback to Nov 1998 – TimeStep – Niche Targeting

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Niche Targeting

‘Back in 1992, we saw great potential on the Internet – but we asked ourselves “Can we turn it into a business network?”’ recalled Tony Rosati, VP Marketing and Business Development at TimeStep, one of our local Newbridge Networks affiliates. This question lead to a new business direction for the young company founded by Rosati and his two partners, Brett Howard, VP Engineering and Tim Hember, President & CEO. I chatted recently with Rosati and Sarah Miller, Public Relations.

They reviewed a number of the Marketing moves that TimeStep has done well:

The Product/Niche Market Definition

TimeStep designs products that help business partners handle transactions over Internet technology via Secure Virtual Private Networks (VPNs). As Tony comments, ‘We build secure VPN Gear.’ Niche leadership companies attain better growth and better margins. TimeStep has wisely chosen a target niche small enough to allow becoming a global leader during an early growth phase. Good move.

Strategy – Listen, Listen, Listen – ‘From the beginning, we emersed ourselves in the emerging Internet market, and listened to the signals. We realized that multiple vendors would always be part of the landscape – hence there had to be a single standard for security products. We were delighted when the auto industry showed up at a standards meeting and articulated their need for a secure private network,’ said Rosati.

Study “Market drivers”

In this case, three relevant trends were visible:

1. A dramatic increase in mobile workers, who liked the idea of using local dial access through the Internet.
2. A demand for ‘leased line’ alternatives, at far lower cost.
3. Trading partner networks. The Automotive industry, for instance, has 10,000 suppliers. There is a tiered information flow from the ‘Big Manufacturers’ down through their suppliers to the sub-suppliers and back. A wide diversity of technologies and products cause interface difficulties.

A Target sector – Clearly, ‘Automotive’ had the need, and TimeStep found a number of client innovators willing to invest time and money in nurturing solutions. The industry could make a business case for the payback. To give an example, with supplier Johnson Controls there are 12 sub-suppliers in 4 tiers, and it took 4 to 6 weeks to complete the loop of order flow and confirmation through all tiers. In a pilot project, using a Secure VPN allowed them to do it in 4 days, saving about $71 per car manufactured. It was clear there were advantages to the auto industry, but Auto suppliers don’t want to deal with small suppliers. Their existing large suppliers of technology and Internet services became important to TimeStep’s dance card.

Standards – Auto industry innovators wanted to avoid surprises, so they held ‘bake-offs’ with multiple vendors and products involved. One early demo of interoperability was held at MCI with Cisco, TimeStep and others. It flopped – nothing worked! But this was the catalyst for more focused effort by the whole industry, with TimeStep acting as an industry leader. ‘We were always heading down the interoperability road, and the Auto industry gave it the necessary kick with the ANX project. Because of our early involvement, we were the co-authors of IPSec, which is now the design standard.’ This is giving corporations the confidence to use VPNs based on TCP/IP.

Selling Partners

In addition to Newbridge, TimeStep has a strategic relationship with Bell Emergis, who are selling their ANX service based on TimeStep security products. Selling relationships have been set up with several partners, including Mitsubishi and Network Associates. Also, TimeStep’s technology works with the PKI software designed by Nortel spin-off Entrust Technologies. With these partners a complete solutions is now available to the auto sector, the ‘lead pin’ in TimeStep’s bowling alley.

Hosting a key industry meeting – In September 1997, TimeStep hosted a major interoperability trial for the Automotive Industry Action Group (AIAG) in Kanata. They used an entire floor of one of the Newbridge towers for a full week. The effect? A lot of industry players left Kanata very impressed with TimeStep.

Results -They have established market leadership in a very attractive niche. As Rosati says ‘We are now shipping 2nd generation product based on IPSec; the competition is shipping first generation product without it.’ And they won awards from InfoWorld and Data Communications. Congratulations and good wishes to TimeStep.

This article by Peter Fillmore, was originally written for Silicon Valley NORTH – November 1998

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