Concept Arbitrage: Juniper

Tejas Networks is the emerging leader in India building next generation optical networking products for the global market. Tapping into the exploding need to deploy broadband data services based on Ethernet while still supporting traditional voice services, Tejas pioneered the development of cost effective, software-differentiated, next generation SDH/SONET products that enable telecom carriers to converge traditional voice-based networks with the new data-dominated networks.

This company is a somewhat unusual bet coming out of India, although the fact that its founder and Chairman is Desh Deshpande, who had also founded Sycamore and Cascade explains the anomaly.

In 2005, Tejas did $10.5 M in revenues, mostly catering to Indian Telcos and Utilities. It is being wildly publicized as the poster child of Indian innovation: Built In India, Built For India, and Built For The World.

It’s a good effort, and so far it is going well. However, as a model, especially in Telecom equipment, I am not sure that this is one to replicate. It is not a sector that I track very much, but selling to global Telcos is not easy business, and before anyone declares this as a trend to emulate, I would think not twice but twenty times.

For hardware products, I would look more in the consumer electronics areas, especially, communication+computing devices, learning devices, medical electronics, and other non-mainstream application-specific consumer devices. Digital cameras, DVD players, and cell phones will be tackled by the major global brands. But the opportunity will be in the niches, where the price sensitivity is so intense, that the global players may not be able or willing to play. (Hint: Think LeapPad from LeapFrog.)

An extremely key technology for India to build core competency in, if it wants to play in electronics will be System-In-Package. Most of East Asia has mastered this, and are rolling out mid-volume gadgets at a fierce speed.

India needs to learn this game, now.

This segment is a part in the series : Concept Arbitrage