In most parts of the world the Wi-Fi equipment market is dominated by US vendors, but there are exceptions. Lancom Networks is a major supplier in its native Germany with a particularly strong presence in the retail and hospitality sectors.
Lancom is now in its fifteenth year of operation and has grown from 25 people to 270, while revenues have increased form €3m to €50m. It has delivered an impressively steady growth of 14-15% a year. It is privately owned and very profitable, says managing partner Stefan Herrlich.
‘We want to stay that way, so we have no intention of changing how the company is run. We are not looking to rule the world; we want a sustainable and profitable business with step by step organic growth,’ says Herrlich.
‘We are not looking to buy digital businesses or raise money from outside. Everything is financed from our own resources. We do not have a hire and fire culture either. We treat the staff well, so they feel at home – it’s a family style firm,’ he adds.
Lancom has two main areas of focus. The first covers network connectivity products in the shape of routers, VPN gateways, concentrators, and so on. ‘We focus solely on enterprise customers from very small and medium sized firms deploying a safe VPN from the home to the office, all the way up to the world’s largest discount chain where all 20,000 offices around the world are connected by Lancom,’ says Herrlick.
For example, DATEV, a software company and IT service provider for tax consultants, auditors and lawyers, and their clients is connected to a data centre where all the finance work is carried out via Cloud services. Lancom provides VPN connectivity to 60 of its sites in Germany.
The second area of focus is wireless LAN infrastructure. Lancom provides a range of indoor and outdoor Wi-Fi solutions for industrial environments, including access points, antennas, controllers, switches, along with cloud networking and management tools – the complete end-to-end network portfolio.
Customers range from the small café using the connectivity solution so a waitress can send orders to the kitchen from a handheld device, all the way up to international hotel chains – all are connected by Lancom.
‘Our model is to concentrate on the design and development of products,’ explains Herrlick. ‘Sales and services are provided by a huge network of partners, resellers, system houses and system integrators. So, we rely solely on an indirect sales channel of some 7,500 resellers across Europe.’
Made in Germany
All Lancom’s hardware is designed and manufactured in Germany from two sites, but it also develops its software in-house too. Herrlich argues that this allows the company to be agile in bringing products to market and to develop customised solutions for its clients.
As an example of the latter, he cites one big retail customer who wanted to digitise how prices were shown in the shop by moving from physical price labels to electronic ones, but it wanted to do so without having to deploy new infrastructure.
Lancom developed a solution using beacons and its E-Series of Wi-Fi access points to wireless connect electronic paper price tags. ‘Our APs are the only ones able to communicate with electronic paper and act as a beacon in 2.4 GHz and 5 GHz band – it’s been a tremendous success for us,’ says Herrlich, who adds that two large retail chains have now rolled out this solution in 4,500 and there are many more projects in the sales pipeline.
A similar solution was implemented at a Fujitsu plant in Augsburg where electronic products such as laptops are manufactured. The Lancom solution is designed to support Fujitsu’s logistics process. In this instance, large electronic labels are stuck on shelving in the factory where different boxes get moved around, so workers can easily understand where to find components or what box to put things in.
Herrlich adds that Lancom is particularly strong in the German retail sector where there are lots of PoPs that need to be networked. ‘Our network connectivity and our Wi-Fi products come together here and we think we have a very strong and powerful integrated solution. Almost every retail chain in Germany uses Lancom products.’
The company is also active in the hospitality sector including hotels, bars, harbours and somewhat unusually ski areas. Three quarters of all Swiss and Austrian ski resorts use Lancom products.
For example, the Austrian-Swiss company Doppelmayr, which manufactures chairlifts, cable cars, gondolas, surface tows for ski and amusement parks, as well as urban people movers and material handling systems, now installs Wi-Fi via a small APs in each lift or gondola.
More recently, Doppelmayr has moved into public transport systems. It is building lifts with gondolas with an integrated WLAN system for the city of La Paz in Bolivia, which is very hilly. It has built two lines across the city so far and as passengers cross between lines they can roam on the Wi-Fi system as they move.
Jan Buis, director of business development & OEM sales, says: ‘This is a big and growing market, and because we are a small company, if a partner says we need this solution, we’ll go for it.’
Herrlich adds that Lancom also provides WLAN systems to oil rigs and similar installations in remote areas and locations. It has supplied Wi-Fi on Formentera, the smallest of Spain’s Balearic islands in the Mediterranean.
Single operating system
A key thing to note about Lancom is that all its product lines use one common operating system be it Wi-Fi, switches or the routing and gateway products. This makes them easy to integrate as an end-to-end system.
But Lancom has a new and major enhancement the works. In January 2017, it is due to launch the Lancom Management Cloud. ‘This marks the first time we have embarked on software defined network (SDN) technology for Wi-Fi LAN and WAN solutions,’ says Herrlich.
He explains that the impetus behind the idea came via feedback from the company’s existing partners and others who had never worked with it. They were aksed what they liked and didn’t like about Lancom’s products.
‘They said we really love and enjoy having 6,000 switches, which you can switch on and off to suit particular environments and situations; meaning we can cater for complicated situations, but the downside is we have to learn about all the 6,000 switches,’ recalls Herrlich.
This prompted Lancom to research how it could make the configuration of its equipment much simpler and easier to execute even in the most complex network environments. In short, how could it automate the process?
For example, to set up a WLAN five questions need answering: what is the SSID; which frequencies are required; open or closed access; provision of unlimited bandwidth or not; does it require a time limit or not - if so, how long; and what is the location?
By automatically knowing the topology and other key parameters, the configuration script is automatically generated and executed. So, what used to take hours will now take seconds, what took days or weeks before, can now be done in minutes or hours, explains Herrlich, who adds: ‘We are providing a completely new architecture.’
German users do not like this functionality residing in a private or public cloud; they want it in their data centre or that of their data centre provider,’ says Herrlich. ‘We therefore developed versions of the Lancom Management Cloud for both public and private cloud, so it has an unmatched flexibility in terms of how and where you can deploy this solution.’
New business models
Lancom believes this kind of approach will trigger new business models for service providers, as end users move from capex based models to managed service environments. ‘They are moving from a one-time investment in infrastructure to a more opex style model where they just want to pay for their connectivity as a service,’ says Herrlich.
He points out that another aspect of this kind of architecture is that if the customer is using a private Cloud vendor’s solution and fails to pay the license, then the Wi-Fi hardware is useless.
‘This is not a problem with Lancom APs and our other products as they can all work without the Cloud if necessary. All other vendors only work through a combination of Cloud software and the hardware. It also means you can make changes more quickly and in a less costly way using our systems.’
Herrlich adds that all Lancom products are upward and downward compatible, and from day one they can be connected to the Cloud and that goes for the existing installed base too. They do need a firmware update from Lancom Vsn.9 to Vsn.10 and then the installed base can connect to the Cloud.
‘We think the Lancom Management Cloud will be a very powerful tool, particularly for our partners, as it will enable them to establish a deeper relationship with their clients,’ asserts Herrlich
‘The service comes with a comprehensive monitoring capability too so end users can have reading rights and see the health of the network, but they cannot do anything to it because everything is done by the service provider. But we can configure the system to share the ability to do things to the network. So, we provide absolute transparency around the network.
Lancom has also incorporated M2M and IoT type applications. For example, it has temperature sensors on its APs, enabling network manager to monitor what’s going on. They can even monitor the power consumption of every switch port and see if it is drawing more power than usual.
Buis says: ‘What makes us a really effective network provider is that our routers, switches and APs use the same OS from end to end. But if you go into the domain of SDN you have to be able to see what is going on behind SDN.
‘It needs orchestrations to bring all the capabilities together, and hence our Cloud management product, as you need a dynamic view of what’s going on and we think this is a big difference to what others vendors are offering.’
Lancom got a major boost in SDN expertise after US firm Riverbed acquired German SD-WAN company Ocedo in January 2016, because in October this year the whole Ocedo team jumped ship to join Lancom.
‘It was very fortunate for us,’ says Herrlich, ‘as this team had worked on and built a European scale channel for SD-WAN, so when we launch our product in January we now have an experienced SD-WAN sales and marketing team behind us. We think the Lancom Cloud Management this will take us to a whole new level.’
Targeting the UK
Lancom is now turning its attention to Europe’s second largest market – the UK. Herrlich says the company has been doing business in the UK for eight years, but this has mainly been driven by opportunity and it did not have a well developed indirect channel in place.
He reveals that Lancom has three major deals in the works in the UK and has also signed a deal with UK distributor Westbase for it to build up the sales channel. The retail sector is seen as the firm’s best opportunity in the UK.
Herrlich concedes that the big US WLAN players have more marketing firepower than Lancom and can make more noise and invest more in marketing. But he says: ‘I think we have the right products, but we will have to build up our presence in the UK the hard way. We are working with Westbase to develop a channel strategy and to create some visibility and presence.
‘We will then work with our partners to pursue the big opportunities. We have hired a country manager to build a new team. We want to be seen as a stable, reliable and trusted partner. We don’t want partners to be wary about whether we will be sold or buy other companies and the strategy keeps changing.’
He continues: ‘We want customers and channel partners to understand what Lancom is about. It is a company that develops creative solutions which we can adopt quickly and bring to market fast; and one they can rely on not to be sold. What Lancom says it will do is what will happen. We are not looking for a quick buck and we are not driven by having to hit targets.
‘We may be limited in size but we can keep up with the pace, such as with SDN and the Lancom Cloud Management. We also provide guarantees that there are no back doors in any of our products. That is extremely important in Germany where security concerns are paramount.’
Most vendors work with open source products somewhere in their offering,’ Herrlich points out. In contrast, Lancom provides an enclosed operating system where every line of code is written by the company. ‘That can mean we are a bit slower sometimes,’ he concedes, ‘but we can guarantee what our products can do and what they are not supposed to do.’
The advent of software based applications is providing manufacturers and their partners with an opportunity to offer value added services.
Summing up, Herrlich says:’ We feel we are well positioned as a company and we think we will be able to control our growth trajectory. We are very positive as far as that is concerned.’