Spotlight

Convergence@Sasken

It's undergone a fair bit of mergers and acquisitions, and today Sasken is looking at complete convergence, says Aishwarya Ramani.

What started as a small undertaking by a group of typical Indian technology professionals has now matured into Sasken Communication Technologies. Initially called Silicon Automation Systems, Sasken found the going tough due to shortcomings of the physical infrastructure in India and the perception in the minds of Indian professionals that undertaking such an initiative was an uphill task.

"We plan to get into the service provider vertical in the future" - Rajeev Mody CMD, Sasken

“Indians, at the time, felt comfortable working for a large company. A small company or a start-up was looked down upon,” reminisces Rajeev C Mody, Chairman and Managing Director, Sasken. According to him this was one of the major challenges faced by the company.

Today its client list includes technology majors such as Nippon Telegram and Telephone, Nokia, Ericsson, Alcatel and Nortel among others. Moreover, the company has continued its association with early customers such as Nortel. The first deal bagged by it as Silicon Automation Systems was a contract with Bell Nortel Research Labs.

Sasken’s success story is a must read for any Indian start-up dreaming of planting its flag abroad. The company started in 1991 with a four-member team and a presence in Silicon Valley. Things fell into place and Sasken entered the telecommunications vertical. Mody saw great potential in the wireless market, multimedia and modems and getting into telecom was an accident.

Software products

Mody’s predictions for the telecommunications market and its growth have come to pass. Telecom is one of the fastest growing industries in India. A recent research showed that, as of 31 January 2006, the number of mobile phones being used in India was 81 million which is 63 percent of the total installed base of phones.

The company started off as a product company. It is now looking to grow into the services segment too. Its focus is on the mobile handset space. It provides products, services and technology IPs that cover the entire telecom value chain. Their association spans not just equipment managers, but also semi-conductor vendors. “Since our focus is the mobile handset, we are required to network with the silicon suppliers,” says Mody.

Sasken has built its semiconductor offerings and works closely with the industry. This unit possesses sophisticated infrastructure—simulation and development tools, a well-equipped hardware development and test lab, system testing facilities and IC design tools.

This is not to say that the wireless embedded software space has been neglected. On the contrary, Sasken has made strides here during the last 16 years. A recent feather in its cap was the launch of a Test Lab in Q1 FY07, aimed at 2G / 2.5G pre-conformance testing for silicon vendors and terminal device manufacturers, which it claims is the first-of-its-kind in India.

Sasken’s products division has a strength of 2,600 workers and is headquartered at Bangalore, with development centres in India and Israel. The products division provides solutions for wireless mobile devices covering communication and application sub-systems for GSM products. Their product portfolio consists of integrated phone software solutions, applications frameworks and multimedia and messaging solutions.

To date Sasken’s Wireless IP unit has shipped over 31 models of which 8 million handsets have been manufactured and shipped by its partners in Australia, China, Europe, Hong Kong, Japan and Taiwan.

Being a product focussed company brings its own set of advantages and challenges one of which is innovation. The company has been looking at building a repository of intellectual property rights (IPR) and has filed a total of 39 patent applications with five new patents filed in 2006. Of these nine patents have been granted and two have been allowed by the US Patent and Trademark Office (for details see Box: Patents). The company has developed protocol stacks in areas such as 3G, GPRS, EGPS and GSM.

The company owns IPRs in the areas of broadband, DSL, multimedia and 3G. Its IPRs are divided into three categories. Explains Mody, “M-Category deals with wireless modems, S-Category with smartphones and E-Category with Integrated Solutions.” Their IP is the software for these handsets and other equipment. The company gets its revenues from IP in the form of royalty payments that it charges OEMs or ODMs.

The wireless modem solutions deal with protocol stacks for GSM / EDGE and WCDMA based phones. The S-Category deals with phones that have multimedia capabilities and support video telephony.

Adding services

From the start, the company had plans to move into services but at the same time it did not want to depend on these. Today it provides services, solutions and technologies to customers worldwide including network equipment manufacturers, wireless manufacturers, terminal device vendors and operators.

The revenue mix of the company’s services business can be broken into 50 to 55 percent from network OEMs, 30 percent from semi-conductor manufacturers, and about 10 to 12 percent from handset vendors. They provide services such as IC Design, Silicon Platform Software, and Handset development. It also offers R&D as part of services.

Software services revenues grew by 26.9 percent in the year ending March 31, 2006 to Rs 258 crore up from Rs 203 crore in the previous year. Sasken’s services unit provides embedded R&D outsourcing services and its strategy is to focus on Tier 1 customers. It cites consolidation among telecom companies to support its plans and believes that consolidation of R&D activities is likely.

Sasken took the M&A route, especially in the services segment. “We plan to get into the service provider vertical in the future,” says Mody. With this goal in mind, Sasken carried out a series of acquisitions that helped consolidate its position as a complete service provider. “Acquiring Blue Broadband helped us provide solutions to OEMs such as Nokia, Nortel and Motorola,” says Mody.

Sasken also acquired Chennai based iSoftTech. “This helped us gain competencies in data networking and wireless LAN,” says Mody.

Sasken’s latest acquisition has been Botania Hitech (a Euro 35.5 million cash deal). The latter happened to be a Finland-based provider of wireless R&D and testing services. This deal gave know-how and helped by adding mobile testing to Sasken’s service portfolio. Further, it allows Sasken to provide end-to-end telecom solutions right from conceptualisation to final design.

These acquisitions also added to Sasken’s human resources and geographical reach. As on April 2006, the iSoftTech acquisition had added over 100 people to Sasken’s workforce, whereas the Botania acquisition added over 230 people.

Sasken has subsidiaries in China and Mexico. It has made investments to establish infrastructure in Mexico with the aim of commencing software development work in that country.

The company wants to be a complete service provider in the future. “Our plans deal with convergence,” says Mody. The company’s focus is upon the mobile handset space and looking to provide a complete solution that converges voice, video and e-mail applications. The strategy deals with connecting all the dots in the telecom value chain.