The More Things Change....

interviewed by Wm. Auckerman

What is the extent of WRQ's presence in Japan?

Doug Walker: We don't actually have any employees here in Japan. Outside of North America, we distribute our products through distributors.
       Our distributor in Japan is Cybernet Systems; in fact, they helped us a great deal to localize our first product for the Japanese market. When we started in Japan, we were selling English-language products, primarily to the multinationals. Cybernet has worked very closely with us to localize our products.
       We plan to open an office in Japan in 1998, but the purpose of that office will be to support Cybernet's activities, not to sell directly. The staff that works on Japan now is based in Seattle.

Why did you decide to partner with a local distributor in Japan instead of opening your own office?

Walker: For one thing, we haven't done that [open our own office] anywhere overseas. We originally got started internationally using indirect distribution as a model, and it has worked pretty well for us in most areas and regions.
       A distribution partnership is a good model in terms of cost and investment. The alternative is a very expensive direct sales model, and that's not as appealing. You have to understand that when you're selling to high-end IT, relationship is very important. It's not like the consumer market.

Dave Hebert: There's also the sense that the customer is served better, with localized support in their own language and in their own time zone.

In general, is the Japanese market more or less profitable than the US market?

Walker: All of our international markets have been pretty profitable because we don't employ a direct sales force. That means the sales model, in general, is less expensive. It does make our revenue numbers look smaller though. If we owned the distribution in Japan, for example, while we would be paying a lot higher cost, we would be reporting the gross number and not the number that we currently have.
       The Japanese market is the kind of market we like: a developed, sophisticated IT infrastructure. Historically, our only slowness in attacking Japan was to tackle the localization effort and the double-byte effort - but now, we've made a commitment that every product we do has double-byte support from day one.
       Compared to the rest of Asia, Japan has a tendency to pay more money for quality. And that's the product line and level we're always looking at. We think Japan is a great market, and we intend to make it the second-largest market for us, outside the United States.

Who are the major users of your products in Japan?

Walker: One of the most recent customers is Nissan. Other corporate sites include Casio, Nishimen, Tohoku Electric, and Toyota, and we have several university and government sites.

Who are the major users of your products in Japan?

Walker: One of the most recent customers is Nissan. Other corporate sites include Casio, Nishimen, Tohoku Electric, and Toyota, and we have several university and government sites.

Who are WRQ's main competitors?

Walker: What's funny about the market we're in is that there's not a good Avis-Hertz type of competition, one where we have a competitor that offers the same product line, depthwise, who we go head-to-head with. We have competitors for some products, but they're not in a good, solid cross-competition position.
       One of our biggest problems, competition-wise in this enterprise space, is simply to be able to make the customer contacts. We find that if we can come to the party, we can do well. The trick, frequently, is to get invited to the party.

So, how do you get WRQ invited to the party?

Walker: What we do in Japan depends a lot on the Cybernet staff, and on our own efforts to work through other parties. For example, we have a relationship with Digital; they obviously have some good channels. We also work with Microsoft in the US, and we hope we might do that with Microsoft Japan as well, in things like joint road shows with their products.
       We have to work with a lot of different resellers, tool providers, whatever, to get into the channels.

How has the Japanese networking market changed in the past few years?

Walker: The Japanese IT infrastructure is in a period of pretty rapid change right now. Japan has always been a high-tech market, but there has been some degree of conservatism with a lot of existing vendors, like NEC and Hitachi. It feels like now, though, there is a sort of opening of the architecture in a lot of the IT organizations.

Hebert: Another thing that's interesting is the Windows NT platform migration. We see very aggressive movement there, more so than in other parts of the world.

And what additional changes do you foresee?

Walker: The thing that's so interesting, I think, is that a few years ago most people didn't have an e-mail address. TCP/IP and all this thing has exploded, and changed some of the landscape. That's a change every place in the world is experiencing.
       In the corporation, which is our market, we're seeing a lot of emphasis on intranets and stuff like that. No one knows what sort of impact all this structural change on computing is going to have.

Hebert: Also, NT and Unix integration will be important for the next few years.

How is this affecting the role of corporate IT managers?

Walker: All these changes are great, and they provide productivity to the workers in large organizations. But the challenges for IT managers seem to be approaching infinity. That's the sort of thing that keeps us in business; there are a lot of problems to solve. One of the things we've always been able to do is help glue together the disparate elements of IT structure.
       Things in IT organizations everywhere are changing rapidly in one sense, yet not changing in another sense. For example, is the mainframe going to go away? A lot of people predicted their demise a few years ago, and yet now we think maybe not. In the mid-'80s, TCP/IP was supposed to go away because ISO/OSI [open systems interconnection] was going to take over. That has not happened. And SNA [System Network Architecture] will be a problem for IT organizations well into the next century.

How are the Internet and intranets changing the corporate IT infrastructure?

Hebert: There's two sides to this. One is that some of this has not changed for years; intranets have been around for 20 years. A lot of the basic TCP/IP protocols, and a lot of the things that are associated with a company's internal network, have not changed.
       Instead, there's new technology that has been added to this, which is the Web-based technology. That has had a profound impact, but it hasn't eliminated the need for the older technologies as a whole. If anything, it has encouraged some of those other intranet kinds of solutions to be used by a wider audience than they were used by before.
       So, that side of it is the same. But it is causing people to take a different look at how they are accessing their data on the corporate network, and they are looking to us to provide some better solutions as time goes on.

Walker: The two things that I've seen that you can say for sure are that the Internet and intranet and webpages have given us a wonderful way to broadcast information. And their growth has finally meant that you have your e-mail address on your business card. That level of communication has occurred with the growth of the Internet.

So, are Internet and Web technologies the wave of the future?

Walker: I don't know if the browser is really the best paradigm for transaction processing; there are a lot of questions about that. It's also hard to predict the spread in terms of available bandwidth: how quickly bandwidth will be able to allow us to use some of these technologies, especially like video over the Internet.
       For example, it's amazing to me when I look at things like ISDN [integrated services digital network]. We used to talk about ISDN so much in the early '80s, as if it was going to happen next month or next year. But in the United States, ISDN still hasn't happened. It's almost inconceivable. By the time ISDN will have happened, it will be an outdated technology. It's so small you can't use it for anything; ISDN doesn't provide enough bandwidth to be very useful.
       So, it's very hard sometimes looking at what things will progress rapidly, versus what things don't. I don't feel I can predict how all this Internet stuff will play out, because I don't know what roadblocks there are when you look at bandwidth infrastructure, or even if the browser paradigm is useful for everything in computing. A lot of enterprise networking doesn't work so well from this browser point of view.

And where do extranets fit into the picture?

Hebert: It's the same thing. Extranets have been around for years, too; now we've just added another clump of technologies on top of it. There is a keen awareness, especially in multinational companies, as to how the extranet is going to affect the way they do business, the way that they communicate globally. In a lot of cases, they see potential, but there's no clearly defined solutions out there that are going to solve their problems.

Walker: For extranets, solving some of the security issues is the key. Security is still a very fractured area, depressingly slow to submit to standards or even clear-cut solutions. It seems like everybody is trying their own security hack. Most of the solutions are proprietary. It's not just a technology issue; there's no standard.

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