International Business Case

International Business Case
Written by Dr M. Spence, A. Laperrière, and C. Sisto
Telfer School of Management and Teldio Inc.
International Business Case
Spence, M., Laperrière, A. et Sisto, C.
Teldio On the Rise1
A Small Company’s Dilemma
The last quarter was coming to a close in four weeks, and it looked like for the first time Teldio
would not hit its sales target. 2010 had been an exciting yet tumultuous year for this small hightech firm from Kanata, Ontario. Nicolas Otamendi, CEO and one of three founding members of
Teldio had seen this company thrive. From three guys building a radio solution to now a team of
14, their growth over the last 30 months had been exponential. The challenges he and his team
were facing now had only been a dream not too long ago. He understood the pressure to keep the
firm growing at the pace it had seen so far. The goals that had been set by equity partners and
board members would not be easily met: last quarter, $ 200 000 in sales; end of this month, $ 300
000... Sales objectives this aggressive were the nature of the game for this company.
Nicholas was heading a brilliant team that brought to market a unique solution in the telephony
world. Months of development has brought forward the RBX +Plus (Radio Branch Exchange), the
first digital radio telephony system specifically designed to allow digital two-way radios to
communicate with the world of telephony. Teldio was giving two-way radios functionalities that
were once impossible: radio users could now make calls to internal extensions in their telephony
network (for example, extensions in the corporate phone network) and to the outside world, all
the while accessing familiar telephony features such as caller ID and speed dialling. The company
had already received very positive feedback from industry peers and research initiatives, receiving
several national innovation and R&D awards in the last 12 months.
Sitting in his office with his VP of Sales, Ken Dumont, and his Director of Marketing, Christopher
Sisto, their discussion revolved around the company’s blooming relationship with Danish radio
application provider Zonith and Teldio’s push to new geographic markets. Reaching the European
market could further advance Teldio in achieving its sales objectives while enlarging its
geographic scope of activities. Working with Zonith also represented an opportunity to increase
the resources made available to Teldio. Although still a small company of 10 employees, Zonith
had spent the last decade perfecting their product and gaining some market intelligence in
1
This case was created in partnership with members of Teldio’s management team for the Jeux du commerce 2011. This
document only serves as an educational tool and is not fully representative of real data.
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Scandinavian countries. The possibilities to leverage the present situation were multiple, some
better than others.
Nicholas and the team acknowledged that the Zonith/Teldio relationship had been fruitful in the
past months. Serendipity had brought these two companies together while working with a mutual
client of theirs, the Electrical Supply Board of Ireland. Zonith had then asked to house its
complimentary technology on Teldio’s server where they lodged their software, the RBX +Plus.
The result of this cooperation was a positive one for all parties involved. From this, the two
companies recognized this opportunity, as they were both solution-based application providers to
the Motorola MOTOTRBO, Motorola’s most popular digital two-way radio. There laid the
beginnings to today’s conversation.
“This relationship with Zonith cannot have a negative impact on our current presence in the UK. I
don’t want to see us struggling to capture or fight for leads in the European and Middle Eastern
markets. We need to focus our energy on generating leads, and pushing them to sales!” strongly
suggested Ken, as he walked through Nicholas’ door. Chris chimed in, instead putting forward
“Zonith’s marketing material isn’t very effective. To me, it says nothing. How am I supposed to
integrate this to ours? I already have three other projects on my plate that you stressed were of
priority.” And such was the situation in this SME: this motivated team wanted to take over the
world, but there didn’t seem to be enough hours in a day to get everything done.
Nicholas understood very well that the radio market was a global one and that to engage their
firm in its expected growth trajectory, international markets could not be overlooked. In fact,
board members expected Teldio’s international sales to increase significantly in the upcoming
fiscal year and Nicolas’ initial research indicated that the European and Middle Eastern markets
were the most alluring for the company given its current state. Some countries in those regions
were culturally close to North-American ones and could be serviced by the resources already
acquired or developed by the firm. Indeed, the relationship with Zonith could not be ignored.
Kristian, Zonith’s CEO, agreed with the potential positive benefits that a relationship could bring
to both parties as his company’s meagre efforts to penetrate the North American market had been
unsuccessful in the past. After weeks of talk, the two had agreed to sign a collaborative
agreement; however, the kinks in this agreement were still being discovered as day-to-day
business routines fervently needed adjustments.
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“Mark Oxley cannot realistically support Europe and the Middle East on his own. Sharing the
geographic markets with Zonith could provide greater coverage and boost our international sales.
With this opportunity we could market ourselves as a complete solution and further our appeal to
the Motorola channel. We need to find a way to make something happen from this situation,
whatever that may be.” replied Nicholas to Chris and Ken’s comments, knowing full well that a
variety of factors would need to be considered in making such important decisions. Indeed, his
heads of Sales and Marketing both argued valid points. There had already been confusions as to
who would take leads in certain markets. Although both companies had become official resellers
of the other’s software, no confirmed sales had originated from either party since this agreement
was signed two months prior. Finally, Chris’ argument strung an interesting point: how could they
market a product without strong marketing collateral. With the existing agreement, the team
didn’t want to overstep their welcome in reengineering their messaging or promotional materials.
One thing was certain: Teldio needed to increase its presence in Europe and in the Middle East
(EMEA) to attain its sales objectives.
After a slight pause, Nicholas pulled over two chairs and proposed to the two men to take a seat
and get comfortable. He had a board meeting the following Monday, and concrete suggestions
needed to be made in going forward with Zonith. Was a strategic partnership the best way to
capture this opportunity? If so, what would be the terms of such an agreement? Should the two
companies divide and conquer geographic markets or find an alternative solution to sharing
markets? Nicholas and Ken had briefly discussed the idea of a merger, whereas Chris had
suggested an acquisition. Was this the proper time for the firm to consider such options? Insights
were needed on how to best leverage the Teldio/Zonith relationship.
Understanding the Radio Industry: A Worldwide Market
In several vertical markets (i.e. transportation, energy, retail, hospitality), professional two-way
radio systems offer capabilities that no other mobile technology can provide. Unlike competing
alternative mobile solutions like cell-phones and Wi-Fi telephony networks, only two-way radios
offer instant, private and cost effective communication in any environment. Also, supporting
infrastructures are not necessary when implementing a two-way radio network, nor is there the
reliance on subscriber-based public networks that may be under-supported or even completely
unavailable. Undoubtedly, two-way radios have become a critical communication tool for many.
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Two-way radios have historically been an analog medium, and to this day the majority of
implemented systems are still of this type. However, it is estimated that by the end of 2010, 50% of
all radios sold in North America will be digital as opposed to analog radios due to changes in
federal policies.
All two-way radio owners who operate a broad spectrum radio network must apply to the Federal
Communication Commission (FCC) for the use of specific frequencies. As of January 1st 2011,
applications for new licences or for licence modifications will mandate the use of digital radios. As
of January 1st 2013, all licences will need to be converted to and operate with digital radios.
Because digital technology is more efficient than analog, more information can be transmitted in
a given bandwidth. Networks cannot use identical frequencies in the same vicinity, as this
impedes on the channel’s effectiveness and security (lines could get crossed). Frequency bands are
presently congested, thus a switch to a more efficient mode of communication is necessary. This
swap to digital radios will double the number of channels per radio frequency and allow for the
creation of additional channels within the existing frequency spectrums.
Digital two-way radios also offer several capabilities that the analog platform can’t provide. In
much the same way that digital technology transformed other media, it is now fundamentally
changing how professionals and tradesmen communicate in the field. “Like the digitization of
music, TV and other traditionally analog media, digital two-way radio technology offers several
advantages over the analog systems of the past. For example, compared to analog two-way radio,
digital two-way radio can offer greater spectral efficiency, enhanced voice quality at the farthest
margins of the radio frequency range, and more reliable coverage – making it easier to hear and
understand conversations, even at long range and in difficult environments.” 2
This change to digital two-way radios signifies future opportunities for software and application
developers, as analog two-way radios have reached the limits of innovations. The new digital
platform provides the necessary foundation to build innovative tools for professional two-way
radio users.
2
Motorola (2008). The Future of Professional Two-way Radio: Digital.
[http://www.independencecomm.com/downloads/whitepapers/why_digital_wp.pdf]
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Manufacturing and Selling Two-Way Radios 3
Reports indicate that the greater majority of manufactured two-way radios come from Greater
China. This region comprised of Mainland China, Hong Kong and Taiwan “is leveraging its huge
production capacity and lower costs to secure a bigger share of the international market.
Mainland China has, in fact, surpassed the two traditional production hubs for two-way radios
Japan and the United States and makers are keen to further boost their competitiveness by
focusing on improving their products' quality” 4. The two-way radio market has experienced
continued growth over the last decade, and manufacturers in this sector indicate strong export
patterns as the majority of these companies are suppliers to professional two-way radio
distributors. “The combined output [...] in 2006 reached at least 6.20 million units, with 81
percent or 4.99 million two-way radios shipped overseas. Their projected aggregate production
for 2007 [was] at least 7.42 million units, equivalent to nearly 20 percent growth. Exports [were]
projected to grow 20 percent in 2007 to hit 6 million two-way radios” 5. Europe and North America
have consistently been the main export destinations of profiled Asian manufacturers 6.
Comparing Continental Markets
Interoperability has been an issue in ensuring that two-way radios can communicate with each
other. Considering the use of two-way radios in public safety governmental branches (i.e. police,
ambulance, homeland security, etc.), the need to have set standards becomes necessary. Several
standards exist world-wide and their adoption differs by geographic market; however, TETRA and
DMR are two of the most important digital two-way radio standards at present time.
TETRA 7: The TETRA radio standard was developed by the European Telecommunications
Standards Institute (ETSI), as a digital alternative to analogue systems. However, TETRA, with its
enhanced encryption capability, has developed into a higher tier (public safety) product, currently
mainly used by governments, some larger airports and government-owned utilities. TETRA is
available in almost every country in the world with the notable exception of North America where
it is kept out by Motorola who refuse to licence key patents (on reasonable terms) for this market
3
See Appendix C for market trends in two-way radios
Report Linker (2007). Two-way Radios. [http://www.reportlinker.com/p054717/Two-way-Radios.pdf]
5
Ibid
6
Bharat Book Bureau (2007). China Sourcing Report Two-way Radios & Accessories. [http://www.prlog.org/10017428china-sourcing-report-two-way-radios-accessories.pdf]
7
Wikipedia (2010). Terrestrial Trunked Radio. [http://en.wikipedia.org/wiki/TETRA]
4
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and also do not offer the technology themselves. Manufacturers of digital two-way mobile radios
operating with the TETRA standard include HYT, Motorola, Selex, Sepura, and Teltronic.
DMR 8: DMR (Digital Mobile Radio) is a digital radio standard for professional mobile radio users
developed by ETSI. The standard is designed to operate within the existing channel spacing used
in land mobile frequency bands in Europe. DMR is specifically targeted at small to medium sized
professional mobile radio systems where analog technology is currently applied. The primary goal
of the DMR standardization is to specify a digital system with low complexity and low cost levels.
The DMR Association was founded with the purpose to help grow the DMR market by removing
barriers to interoperability and supporting innovation and adoption of the standard via the
creation of new devices and services. The DMR Association includes members representing a
broad cross-section of the industry, including some of the world’s leading device and network
suppliers. Founding members include: CML Microcircuits, Funkwerk Koelleda, Fylde Micro, Icom,
Kenwood, Motorola, SELEX Communications (a Finmeccanica Company), Tait Radio
Communications and Vertex Standard. Today, DMR systems are in operation in over 100
countries around the world. Although this is a new standard, some manufacturers have begun
selling digital two-way mobile radios operating with this open standard. Among them are Icom,
Kenwood, Motorola and Hytera.
A Key Player in the Two-way Radio Industry
In an effort to separate its consumer products to its business product lines, Motorola announced
in early 2010 that it would split into two publicly-traded companies in the first quarter of 2011. As
of January 4th 2011, Motorola Solutions will be the standalone portion of Motorola tasked with
providing “enterprise mobility networks, services, applications and devices. This includes the
design, manufacturing, selling, and installation of analog and digital two-way radio, voice and
data communications products and wireless broadband systems” 9. Prior to its split, the Enterprise
Mobility Solutions Segment represented 34% of total Motorola sales in 2010’s 2nd quarter,
accounting for $1.9 billion. Its main market for its Enterprise Mobility Solution is North America.
8
Digital Mobile Radio Association (2010). General Association Information. [http://www.dmrassociation.org/DMRFAQ.htm]
9
Wikinvest (2010). Motorola. [http://www.wikinvest.com/stock/Motorola_(MOT)]
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Table 1 Estimated MOTOTRBO Sales
Year
2007
2008
2009
2010
Total
North America
35000
70000
94000
132000
331000
Latin America
6000
10000
14000
19000
49000
Europe
24000
52000
78000
102000
256000
Middle East
21000
37000
62000
86000
206000
Total
86000
169000
248000
339000
842000
Nonetheless, the overall global market view is promising. More than half a million digital radios
were deployed by Motorola at the end of 2009, and for the first time since digital radios were
introduced, the number of digital radios sold surpassed the number of analog radios. This growth
will continue through the next three years as FCC regulations force all radio users in the North
America to purchase compliant digital radios.
Teldio’s Core Product: The RBX +Plus
For years, digital two-way radio networks were impossible to integrate to corporate telephone
networks because their technologies simply couldn’t communicate. Their functionalities were
constraint to communicating only with other two-way radios within their network. With the
advancements in telephony networks, and a continued use of two-way radios in several sectors
(notably manufacturing, utilities and natural resources), Teldio identified a need to incorporate
an organization’s two-way radio network to its communications infrastructure. This motivation is
what brought the three founding members of Teldio together: building a revolutionary solution
that would significantly increase the efficiency of two-way radio networks in business.
Figure 1 Teldio: Connecting Radios to the world of telephony
Months of development brought forward the RBX +Plus (Radio Branch Exchange), the first digital
radio telephony system specifically designed to meet the needs of industries that require a
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customizable private mobile telephony network comprised of two-way radios. This product allows
digital radios to communicate with phones while accessing familiar telephony features. The RBX
+Plus unlocks a variety of advanced telephony features (i.e. caller ID, phonebook, speed dial) for
the Motorola MOTOTRBO digital radio, essentially turning two-way radios into cell phones and
enabling them to communicate with the outside world. In addition, the RBX +Plus enables these
functionalities through an intuitive graphical interface. In all, Teldio’s technology brings all the
benefits and functionalities of corporate communications (for example, individual extensions or
multiple user call groups) to digital radios, enabling industries to operate under one private
critical mobile telephony network.
The software application is installed on the customer's digital radios and onto a standard server
which connects radio networks to the world of telephony. RBX +Plus was specifically designed for
Motorola MOTOTRBO digital radios. The solution is a cost effective alternative to cell-phones
and Wi-Fi telephony systems for corporate mobile workforces.
Understanding the Technology
RBX +Plus is a software application installed on a server which connects two-way radios to the
world of telephony. When a phone user calls in, they are patched through the RBX +Plus server
and connected to a MOTOTRBO Control Station. The RBX +Plus interfaces with radios using
MOTOTRBO control stations which are connected to the server using a customized USB cable.
This control station converts the call and the user can then talk to other radios.
Figure 2 RBX +Plus System Architecture
Teldio’s technology is capable to adapt to all telephony infrastructures, such as IP and analog
corporate phone systems, public telephone lines (PSTN lines), internet telephony service
providers as well as cellular networks.
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When implemented in a company, Teldio’s radio solution can have several value adding benefits
to employees and managers. The company’s messaging has put emphasis on the following four
benefits, as these are key factors influencing buyer decision.
Table 2 Value Adding Benefits of the RBX +Plus
Benefit
Enhanced
Worker
Security
Significant
Cost Savings
Increased
Productivity
Greater
Coverage
Description
‐ Access to 911 or security call number at the push of a button via MOTOTRBO
radio
‐ Broadcast emergency messages and enable quick notification
‐ Access to emergency channels from locations with little or no cell-phone
coverage
‐ Eliminate recurring cell phone costs by replacing them with two-way radios;
long-term solution
‐ Extend the corporate telephony network’s to two-way radios and maximize use
of investment
‐ Cost-effective alternative to expensive Wi-Fi telephony systems with better
coverage at a fraction of the cost
‐ Provide reliable and flexible communication tools to personnel by enabling
them to stay connected with peers and the outside world
‐ Give managers and supervisors the ability to reach employees from anywhere,
anytime, or for employees to call supervisors from their two-way radios
‐ Mobile telephony coverage is provided where cell-phone providers cannot
‐ Greater control over a company’s private mobile telephony network and
reduction of dependency to cell-phone carriers
About Teldio
The Team
Teldio is an innovative and agile company committed to delivering value-added two-way radio
solutions to enterprise customers. The company employs a mix of highly skilled engineers and
motivated business graduates to tackle the most complex challenges faced in the two-way radio
market. Howbeit, the company is characterized by a young team. Key individuals in the company
have considerable experience, although this knowledge is mostly specific to the sales department.
Ken Dumont, VP of Sales is responsible to ensure that Teldio arrives to its sales objectives,
something he has achieved in the past with other high-tech high-growth organizations in
Ottawa’s tech bubble.
Teldio's Board of Directors is comprised of industry thought leaders and staples in the
communications and technology sectors. Big names make up this group, and to external investors
Teldio has always been perceived as a steady bet. Collectively, the group oversees the direction of
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the company and provides access to a vast network of connections and organizations globally.
The company also employs a Board of Advisors which is comprised of business veterans with
unique functional and industry specific skills. The Board of Advisors is responsible for providing
insight and direction to Teldio's short-term and long-term objectives. The company's world
headquarters are located in Ottawa, Canada with one regional office in Cambridge, England and a
sales office in Texas, US.
Teldio has started to make its mark on the two-way radio application’s market by working hand in
hand with its customers and building solutions that completely answer to their technological
problems. Challenges are met with unique and innovative answers to customer's most commonly
recognized problems - some of which are masked by ambiguity and technological uncertainty. In
fact, employees pride themselves in building custom telephony solutions and in being flexible in
creating these for their customers. A large part of Teldio’s reputation is due to great team
cohesion and energy, and a small number of key corporate reference customers (i.e. JW Marriott,
WE Energies, Bridor, Frito Lay, Abbott Nutrition). A change from reactive marketing to proactive
marketing, as well as the endorsement of key reference customers has initiated a strategic change
at the firm, as it can now start building on a pull strategy.
Current Situation
The company puts forward solutions based on selling propositions focused on cost-savings,
worker efficiency, and worker safety as these resonate most effectively in its preferred verticals
(i.e. industry sectors). As of present, Teldio has focused its efforts in three verticals and is putting
greater efforts on a fourth; respectively, natural resources, utilities, education and hospitality are
Teldio’s current vertical market interests. At the present time, the company’s sales are broken
down as such: approximately 75% come from North-American sales, 13% from EMEA and 12%
from other countries. The company has focused its efforts on expanding into the European
market by opening a regional office in Cambridge, England. Mark Oxley is responsible to manage
the office, heads the sales departments and is also tasked with shipping his orders. The company
has put in motion hiring staff for this office in response to an increase in sales of 150% over the
last 12 months.
Competition in the radio industry is truly international in nature; however, Teldio still holds its
first mover advantage in North America and no other product provides the same functionalities as
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Teldio’s RBX +Plus. Two companies (TABLETmedia and SmartPTT) continue to provide a basic
text messaging based telephone interface for MOTOTRBO. Teldio has yet to lose a sales
opportunity to either of these competitors. The company’s competitive advantage continues to be
the advanced functionality provided by the RBX and its “high-price, high-functionality” pricing
strategy is still effective. Where competitors provide a basic telephone interconnect, Teldio’s
product empowers two-way radio users with functionalities providing them with an advanced
feature rich telephony solution. No one else on the market can recreate the cell-phone experience
in two-way radios; none have a graphical intuitive interface. The ease of use and enlarged
capabilities are the current competitive advantages Teldio has under its belt. In addition, these
companies are not marketing their products as a solution for specific verticals; rather, they are
adopting a horizontal market approach providing similar solutions to all market sectors. A third
competitor has entered the market over the last quarter. NeoCom Software, who develops
TRBOnet, a software-based virtual radio dispatcher from computers, has announced it will bundle
a telephone patch into their enterprise software package. As such, NeoCom will be coming out
with a basic version of a solution connecting phones to radios. NeoCom Software is based in St.
Petersburg, Russia and has been unable to successfully penetrate the North American market due
to staffing, language barriers, and time zone challenges.
About Teldio’s Strategic Partnerships
Teldio: A Wesley Clover Company
Wesley Clover is the private venture capital firm of Sir Terence Matthews, a successful Ottawa
business man, focusing on new technologies that are likely to have considerable impact and first
mover advantage in the telecommunications, computing, and networking markets. With active
interests in networking and telecommunications, Wesley Clover has an outstanding and enviable
track record in creating new companies and making strategic investments in high-growth
industries. As an angel investor in new technology start-ups, Wesley Clover has developed a
unique model that leverages the many decades of experience and knowledge of a veteran
management team while creating career and business opportunities for selected college and
university graduates as well as experienced professionals. Teldio has thus leveraged its
relationship as a Wesley Clover company and gained key market intelligence from their network.
The company has also received considerable support from Wesley Clover employees, both from
entrepreneurs and members of the management team. In return of this support, the expectations
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are clear. Teldio reports monthly to its Board of Directors that has set aggressive quantitative
financial objectives to attain on a quarterly basis.
Teldio: A Motorola Certified Application Provider
Motorola, Inc. has been at the forefront of communication inventions and innovations for nearly
80 years. Teldio has partnered with Motorola to develop on their newest professional digital twoway radio product line, the MOTOTRBO. The Radio Branch Exchange works seamlessly with the
MOTOTRBO platform and has built in features that are unique to this two-way radio. As an
official Application Provider, Teldio has been able to build a strong and important relationship
with Motorola. The company is now seen as a dependable company providing a unique solution
of quality to Motorola’s customers.
Teldio must foster this relationship because as of yet, its solution is only integrated to the
MOTOTRBO platform and its distribution strategy is largely dependent on Motorola’s
distribution channels.
Teldio: A Global Zonith Distribution Partner
Zonith A/S develops software specialized in alarm handling and notification solutions ranging
from simple notification solutions to large alarm handling systems. Zonith’s solution is
complimentary to Teldio’s as it acts as an autonomous alarm dispatcher; messages sent in
response to these alarms are received by the end user via Teldio’s radio interconnect solution.
Presently, Teldio and Zonith are global distribution partners; Teldio serves as Zonith’s primary
channel in North America and Zonith for Teldio in Scandinavia. However, market delimitations in
Europe and the Middle East are murky and unclear, as this has yet to be addressed in the
collaborative agreement.
Teldio’s Current Sales and Distribution Strategy
As the Motorola MOTOTRBO digital radio is the necessary platform for Teldio’s RBX +Plus
solution, the company has put major efforts in becoming recognized as a certified Application
Provider and in developing relationships with the Motorola sales team. Currently, Teldio utilizes
the Motorola sales and distribution channel to communicate with end-users, as the company
itself does not sell radios.
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Motorola has approximately 1200 two-way radio resellers in North-America, and many of them
carry and sell the MOTOTRBO radio among their inventory which Teldio interfaces with. The
team chose to adopt this as its primary distribution channel to ensure that its products are
pushed with the occurrence of MOTOTRBO sales. The Teldio sales force works closely with
Motorola resellers to educate them on the functionalities of the product, the added benefits to its
end customers, the pricing and quoting tools, and the installation and support processes as they
are the party that sells the RBX +Plus solution. Indeed, the company has little direct
communication with end users, other than for support purposes. The current sales and
distribution strategy has proven to be effective, although the team is now hitting hurdles in
keeping its growth pace.
As of present date, the company has gained highly specialized knowledge in R&D focused on
Motorola’s MOTOTRBO platform. However, that knowledge is extremely concentrated in its
intellectual capital. The company has already lived a defining crisis when one of its core team
members in charge of the firm’s R&D department left Teldio for personal reasons. Nicholas
acknowledges that Teldio’s current position with Motorola is a risky one, yet this is the direction
the company has taken to ensure its continued growth in the short term. In light of this, team
members have also fostered important relationships with the Motorola sales team; they are now a
key reference suggesting to their resellers Teldio’s product. The team estimates that their
relationship with Motorola is among the top three in North-America when considering all of its
certified applications providers.
Currently, the Sales and Marketing teams have worked together to create a dealer program in
which Motorola resellers sign an agreement to resell Teldio’s product, purchase a demonstration
kit, and invest the time in learning this technology. Since the beginning of 2009, 60 dealers have
joined this program. Most of these resellers are North-American, although some are located in
South America (Brazil, Argentina) and EMEA (United Kingdom, Denmark and Tanzania). The
marketing department understands the need to solidify these relationships, and a more robust
dealer program is in the works. In all, much potential exists in creating a community of Teldio
resellers; however, this has been beyond the company’s reach since it began the dealer program.
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Teldio and Zonith: A Symbiotic Partnership
About Zonith
Founded in 2000 by a group of Nokia engineers, Zonith develops software that eases alarm
management within a business setting. Their Alarm Control System (ACS) interfaces with various
media, notably two-way radios (i.e. MOTOTRBO, TETRA SDS), mobile phones and email. Briefly,
if an alarm is raised the ACS will immediately identify the available employees and escalate the
alarm until it is acknowledged, resolved and closed. Zonith’s technology brings to organizations
several value-adding benefits, and the company’s messaging resolves around efficiency,
productivity and security.
Figure 3 : Understanding Zonith's Alarm Control System
Much like Teldio, Zonith has been recognized as a Certified Applications Developer for Motorola,
as its product interfaces with MOTOTRBO among other types of radios. The company identified
radio resellers as one of their primary distribution channels because their solution can easily be
coupled with these products. However, their application may also be used as a standalone, as it
communicates notifications via various media.
Zonith in the Eyes of Teldio
After months of interactions with Zonith, two visits to Copenhagen and countless discussions,
Nicholas now believes he has a better understanding of his Danish partner. Although his
interactions have mostly been concentrated with three individuals, Kristian (CEO, Marketing and
Scandinavian Sales), Klaus (R&D, Finances, Operations) and Eoin (UK Sales), he believes he has a
good understanding of the company. In his opinion, Zonith is characterized with a heavy focus on
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R&D at the core of its operations. The majority of the company’s employees work within this
section of operations, and established processes are in place to engage the company in continuous
product development, testing and support. In comparison to Teldio, their R&D department is
more experienced and Klaus and Kristian’s past work experiences with Nokia transpire in Zonith’s
product roadmap. Their established presence in Europe, particularly in Scandinavia, is one that
they have built over the last decade and their list of key reference customers (i.e. HSCB, Dong
Energy, Eurostar, England’s Department of Health among others) is impressive.
Their age also plays to their benefit in comparison to Teldio, as they’ve established long term
relationships with several resellers in Europe, although these are mostly located in Nordic
countries. Furthermore, Zonith has penetrated the Australian market, something Teldio has been
unable to do as of yet. In terms of size and geographic representation, the two companies are in
similar positions. However, Nicholas acknowledges that they differ fundamentally in their growth
aspirations. In three years, Teldio’s sales have surpassed Zonith’s and its organizational structure
is much more decentralized in comparison to its partner’s. Where Teldio has grown quickly
fuelled by rounds of equity financing, Zonith’s growth has been organic and autonomously
funded. As a result, Kristian and Klaus are majority owners in Zonith, whereas Teldio’s equity
stakes are divided amongst several shareholders.
Partnership Agreement
CEOs Nicolas Otamendi and Kristian Hartvig Stiesmark were confident that the two companies
would profit from this symbiotic relationship when they signed a sales and marketing agreement.
Currently, the agreement states that the companies will collaborate in three major areas: Sales,
Support, and Research and Development. This is designed to mutually benefit both companies by
better serving their Motorola MOTOTRBO channel partners and end customers globally. As of
now, the two companies collectively have deployments in over 25 countries with installations in
all major vertical markets and boast a reseller community of over 150 worldwide. However, the
terms and conditions to this agreement are still under discussion and review.
One of the major goals of the partnership is to provide a single point of contact for Teldio and
Zonith customers and channel partners. The agreement states that each company will now have
the ability to cross-sell both product portfolios to their individual reseller communities. As of
October 2010, Teldio began representing Zonith products and services in North America and
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Zonith, Teldio products in select European markets. However, a division of European markets has
yet to be completed.
The two companies share similar thoughts on their expansion into new foreign markets. In
addition to both wanting to cross-pollinate in the each other’s home country, both Teldio and
Zonith agree that the Asian market is unattractive at present time. The two management teams
do not understand the market, neither have the resources available for such a move, both are
scared of intellectual property leaks, and they understand that they have little legal power or
defence mechanisms due to the complexity of the market. Indeed, after careful thought, Kristian
and Nicholas are only interested in developing the North American and EMEA markets,
respectively.
The Teldio and Zonith partnership also promises to deliver value driven solutions customized for
utilities, natural resources, hospitality, manufacturing, government, and education, among other
sectors. Both companies individually have a proven track record of success in delivering vertically
focused solutions. This strategic partnership is designed to allow both parties to deliver a highly
capable and unified solution on a single platform to the verticals which they address today.
Collaboration on product roadmap activity between Teldio and Zonith could focus on seamlessly
integrating the existing product lines to provide a single unified solution for end users. Be that as
it is, no concrete plans have been put forward to establish a plan to solidify such a resource
intensive collaboration.
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Appendix A
Teldio Organizational Chart
CEO
Nicolas Otamendi
Operations
R&D Manager
VP of Sales
Marketing
Jason Leduc
Mark Dabrowski
Ken Dumont
Christopher Sisto
System Engineer
Account Manager
Benjamin Willis
Byron Martineau
System Engineer
Account Manager
Jamie Gwatkin
Robert McCook
System Engineer
Account Manager
Charles Xie
Ed Center
Account Manager
Mark Oxley
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Appendix B
Zonith Organizational Chart
Kristian
CEO, Marketing,
Sales (Scandinavia)
Klaus
Eoin
VP R&D, CFO
Sales (UK)
System Engineers
(total 4)
Operations
Manager
Support Team
(total 2)
Testing Engineers
(total 2)
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Appendix C
Two-way Mobile Radio Market Research
Key findings from 2007 market reports indicate the following trends 10.
‐
Handheld two-way radios dominate Greater China's two-way radio production.
Professional analog models account for about 70 percent of total output.
‐
Digital models promise wider frequencies and better security. However, high production
costs and low demand will delay the segments' take off. Other roadblocks are the lack of
standards for digital operation, high cost of key components and immature infrastructure.
‐
The digital two-way radio line is expected to gain more traction in 2008 or 2009. Although
several makers have developed and introduced digital two-way radios, these companies
are deferring mass production.
‐
Makers' R&D priorities focus on extending operating range, adding channels and
increasing power output. Some makers are integrating GPS and dispatching software
functions.
‐
Prices will generally be stable in the next six months. However, increasing labour, material
and production costs could influence prices at the entry-level and midrange sectors. Prices
of high-end models could slide as new product rollouts intensify the competition. On the
other hand, new functions such as GPS could increase unit FOB prices at the high end.
10
Report Linker (2007). Two-way Radios. [http://www.reportlinker.com/p054717/Two-way-Radios.pdf]
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Appendix D
Motorola MOTOTRBO
Source: Motorola (2010). [http://business.motorola.com/mototrbo/mototrbo.html]
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