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BT Launches iNet to Fish the IP Mid-market| July 12, 2006 | Business Telecom Services - Europe - UK/Ireland Analysts: Sandra O'Boyle
On July 12th BT integrated SkyNet and TNS (UK LAN solution providers acquired by BT in 2005) into a new business unit, BT iNet, with 190 employees. iNet will provide LAN and IP telephony, wireless networking and managed services to medium-sized businesses and government organizations in the UK (typically sites with between 50 and 150 employees). The integration was timed to allow both companies to complete their respective financial years and to align the new entity with BT’s financial year. Analytical Summary • Current Perspective: Slightly positive on BT’s new business unit, because BT iNet combines the LAN integration strengths of both TNS and SkyNet, allowing BT to address the mid-market for convergent solutions more efficiently. Keeping iNet at arms length as a wholly owned subsidiary adds another layer of complexity to BT’s channel, product and account management. • Vendor Importance: Moderate to high to BT, because the carrier acquired SkyNet and TNS in 2005 – both all-Cisco-kit LAN and IP telephony integration partners – to drive IP convergence sales in the mid-market enterprise and local public sector. With the creation of iNet, BT can go to this market with professional services, managed LAN, IP telephony and IP VPN services as well as the full BT portfolio of services. • Market Impact: Moderate to high on the UK IP services market, because iNet will be an important sales channel for BT to provision Cisco IP telephony, wireless LAN services and IP networking solutions to the mid-market. BT has defined the mid-market as sites with 50 to 150 employees, but customers can be as big as Abbey National or Merrill Lynch. iNet will be kept on its own, but the integration of TNS and SkyNet will not be easy, not to mention integration with the rest of BT. Recommended Competitor Actions • Competitors in the mid-market enterprise space can note that they have flatter organizational structures and are more flexible and easier to do business with than BT. Competitors can also argue that for mid-market customers they are not pushing an all-Cisco kit for IP telephony and they will give customers a choice of vendor solutions to suit budgets and individual needs. • Competitors targeting the mid-market in the UK with IP services know the indirect channel is hugely important to servicing this segment cost-effectively for IP VPN and VoIP services going forward. Competitors should ensure they have quality agents and resellers with proven sales ability and a sound organisational setup, and they should look for partners with strong tie-ins with certain vertical segments. • Competitors in the UK should take note of BT’s new capabilities in launching VPN services faster, at competitive prices and with a range of shrink-wrapped packages covering CPE, LAN, tail circuits and so forth, which it can easily pull together into a new service. This gives BT more flexibility to tailor VPN services to mid-market customers. Business Telecom Services - Europe
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