Interview:
Michael Gardner and Richard Lamping of Ungarmann-Bass

To set the stage, can you tell Computing Japan readers briefly about Ungermann-Bass?

Gardner: Ungermann-Bass (UB) was founded in 1979. Our mission has historically been focused on solving end users' enterprise networking environments and problems. The company has grown to 1,300 people, a $400- million company worldwide. We continue to position ourselves as a provider of solutions using LAN and WAN technology across the entire enterprise. Over the years we have cultivated and developed a unique set of skills in each of our subsidiaries that allows us to address customers' requirements, both at the workgroup and the department level as well as at the division, the campus, or the enterprise level.

When did UB enter the Japanese market?

Gardner: We opened our offices in Japan in 1982, so we've had a direct presence here for 12 years. We've always held the view that if you want to have strength in a market, you have to have a local presence. You have to stick close to your customer's r equirements, and understand the unique environments of the country in which you operate.

Lamping: The local company pretty much started off in Japan by adapting the products that were developed in the US. Those were the intelligent adapter cards, which had the memory onboard to enable data buffering to be carried out on the card rather tha n using up memory within the PCs. We had our first adapter cards out here in about 1985 and had a reasonably good track record in this market. As PC power increased, the market began to change to one that used dumb adapter cards. The number of vendors in the marketplace increased rapidly, so our market share went down, although the our sales volume has remained fairly significant.

Has the Japanese networking market generally followed the trends of the worldwide market?

Gardner: The market in Japan has evolved differently than a number of the other markets. Let me give you an example, a simple thing such as structured wiring in 10 Base-T. There's a lot of 10 Base-T used here, but there is no preponderance of structure d wiring; buildings don't have raised floors, and wiring closets are rare because space is at a premium. All of that flies in the face of providing structured wiring. So what has evolved here, unlike the midrange to high-end structured wiring smart hub bu siness, has been a distributed, incremental, stackable kind of wiring concentrator.

Lamping: We didn't introduce Access One, our intelligent wiring hub product, into Japan at the same time as in the US -- the market wasn't developed enough. Even today, the Japanese market is not ready for many of our higher end products. The hub marke t in Japan is lower based: lower functionality, lower port density. We have developed some products locally for Japan that we use to sell into that lower end marketplace, products that we don't sell anywhere in the world other than in Japan.

What do you see as the role of communications within the overall computer industry?

Gardner: Companies are coming to the realization that they've already laid in a lot of infrastructure -- now they need to integrate those technologies in a cohesive way and deliver some applications. I think communications is the key in this regard. Yo u could argue, "Let's go invest in databases, or invest in PCs, and we'll make our people more productive." I would argue, though, that people have bought databases, they've bought PCs, bought routers -- the question is: how do you make all that more prod uctive? And communications is the glue that holds that together. I think the communications market segment will be an early leader in some of the technology rebound that we're going to get, particularly in Japan. If you can communicate, you can start to d eploy applications, you can share data. I think communications is a place where the investment is going to be made.

Ungermann-Bass has been described by some as having a solid reputation but low profile. Do you agree with this assessment?

Gardner: That's a fair question, and the assessment is correct; that's actually been the history. What you'll see unfold over the next couple of months is a concerted effort to change that perception.

We are becoming much more market focused and market driven. We realize that to be a successful company, you have to have a market presence, you have to create brand preference somehow. We haven't done that -- yet. In order to create brand preference, you've got to get your name out there. We're making a concerted effort in Japan -- a humongous effort -- to raise our visibility.

We've been very low key and quiet, and somewhat invisible so far, and we know we've got to change that. You'll see a concerted effort. We'll be here in a big way at Interop in July, and we're going to have a major reception and company relaunch on Ju ly 20.

I understand that 50% of UB's revenues come from non-US sales. What is the percentage for the Asia-Pacific region, and Japan in particular?

Gardner: If we take Asia-Pacific as a region, it would be about 20%. Japan itself represents about 14% of our revenues. So it's a big market for us.

Looking at the other side of the coin, what is your market share in Japan?

Lamping: That's a difficult question. We're in so many different market places that it's extraordinarily hard for us to come out and say our market share is "X%" in any particular segment. We have shares anywhere between 5%, and 15%, in various market segments.

Gardner: I think 10% is a fairly reasonable number across the board.

How do you localize your products for Japan?

Lamping: Historically, on all the adapter cards, we used to do the drivers necessary for the PC-98, adapt stacks, etc. We also used to, and still do, make hub products specifically targeted to the Japanese market simple, unmanaged products that contain some of the requirements here in terms of durability of the product, which is often different from that outside of Japan.

On our mainstream products, there has not been a great deal of localization. We do all of the documentation, we do much of the training, etc., in Japanese, but we do not alter the product significantly. We are currently investigating whether it is to our interest to localize the net management software we offer here in Japan. In essence, we do not do an enormous amount of localization today. But if we find that it is a requirement for the marketplace, we will do it.

What kind of products and services do you supply?

Gardner: Our products are essentially networking connectivity and infrastructure, network software, and network management. On the services side, it's not just maintenance and warranty etc.; it's consultative integration, services consulting, network d esign and planning, and the like which I would say is at the higher end of the services foodchain.

Who are some of the major companies in Japan that use UB enterprise network solutions?

Lamping: Multinational companies in Japan, like Proctor and Gamble and Texas Instruments. Other users of our Access One equipment include Nomura Research, Canon, Microsoft Japan... Microsoft worldwide is a big user. We have several universities and hos pitals; in all, we have 800 active customers in Japan.

We have a fairly broad spectrum of accounts in Japan -- a very large number of accounts, but many of them not as big as we have outside of Japan. In the US we have several multimillion dollar accounts every year; we have less of those and a lot more small-volume accounts in Japan, predominantly because of the difference in the market. You don't do such a large business out of selling adapters as you do out of selling the hubs

I believe you currently have three sales offices in Japan?

Lamping: Yes, we have sales offices in Tokyo, in Nagoya, and in Osaka.

What is your current staffing situation in here?

Lamping: We currently have 88 employees; in that respect, Japan is our largest overseas subsidiary.

And how do you carry out recruiting in Japan?

Lamping: I can only answer that one diplomatically -- that we are looking at new sources at the moment. Recruiting has certainly been a problem that we've encountered in the past, in terms of attracting people. Japan doesn't appear to be as mature a ma rketplace in being able to secure network professionals to move from company to company.

What do you foresee as the biggest change in the Japanese market within the next year?

Lamping: That's a difficult one.... I think the impact of the Interop show on the marketplace will be significant. More people in Japan will become aware of the benefits of networking. I think people will start to see that a network can be used for mor e than they believed it could previously. I anticipate that Interop will enable many of the IT managers to bring along senior people to show what is possible with network management.

More than anything else, Japan needs an incentive to get the networking market moving, and 1 believe that Interop could help that. There are many companies here at the high end that are interested in using the latest technology but it's going to take something to move the middle market. And that's what I hope will happen.

Other persons I've talked with predict that Interop '94 will be the show of year, if not the show of the decade.

Gardner: I'm hearing the same things, but people may be oversetting their expectations with regard to what products will be shown. I think just the fact that so many people are going to converge on one location, and it's going to have so much visibilit y, will bring networking into the mainstream, strategically. It will have a major effect on the psyche. I think that Interop is going to reposition the networking dilemma, and maybe supercharge companies. 1 hope the people at Interop will start talking ab out how this stuff is deployed as opposed to how fast it is or how cheap it is.

Lamping: When you consider the huge number of stand-alone word processors in the Japanese market -- you've got to cure the thought process that says this is the only way to do business correspondence. I think many of the people who use them are unaware of what networking can do over and above that. Interop will show to the skeptical, to the unknowing senior manager, that there is a lot more to this than there was before, that they can make their company more efficient, more productive. That will help t he IT manager who has been banging his head trying to get this adopted.

A couple of final questions. Do you have any new products planned for Japanese market within the next few months.

Gardner: Absolutely. The GeoSwitch is probably the biggest one; it's an ATM-based product. I mentioned how this market bifurcates into the high end and low end. GeoSwitch, which is an ATM-based, local campus hub workgroup platform, is going to fit very nicely into this market. It has broken the price barrier in terms of ATM connectivity. ATM is the perfect way to tie high-end systems together, so I think we'll have an excellent product positioned well for the high-performance computing market.

Lamping: There will be other products that are exciting: some lower port density products. We'll be able to offer 8-, 16-, and 24-port configurations, boxes that you can mix and match; they're much easier to put together and they need less knowledge to get a network up and running. We'll also be offering some network management to run with that. All of these will be shown at the Interop.

Finally, I've heard that Ungermann-Bass plans a name change in the near future, Can you reveal to Computing Japan your new name and logo?

Gardner: We can't now unfortunately. That will be announced officially as part of the ii-pear relaunch of the company -- we haven't even revealed it to some of our own people yet. The official relaunch will be in June in Berlin, and July 20 will be a p arty and press conference here in Japan. I'm sure Computing Japan will be represented there. This will be a big year for the company, and we have a lot planned this summer focused around our 15th anniversary.