Think you know CommScope? Chances are you don’t, really. While, the company’s history lies in the world of cable TV, in the last few years, it has made significant changes in focus and assets, including acquiring Arris for $7.4 billion. Arris, a communications equipment manufacturer, owned enterprise Wi-Fi specialist Ruckus.
CommScope also made sure to be in the vanguard of virtual radio access network (RAN) technology. Oh, and it reported $9.228 billion in revenue in 2022, so there’s that.
What’s most interesting to me about CommScope is that it’s been doing exactly what its communications service provider (CSP) and enterprise customers like AT&T, Anixter and Graybar Electric need to do to be successful: undertaking an aggressive transformation from digital to virtual to cloud and — ultimately — to business outcomes. To be sure, this transformation is what today’s network architectures are all about — not just carrying the data and information that businesses need to get the job done, but also delivering fiscal results.
In the latest episode of Silverlinings’ Cloud 9 video series, I spoke with Bart Giordano, president of networking, intelligent cellular and security at CommScope, about everything from business transformation to when to use 5G versus Wi-Fi in private wireless applications.
Giordano is on the front lines of helping CommScope navigate its path to the cloud while also helping its customers do the same thing.
Check out the interview above and read the transcript below.
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Steve Saunders: Hi, I'm Steve Saunders on Cloud 9, and my guest today is Bart Giordano, President of Networking, Intelligence Cellular and Security at CommScope. Now, CommScope has been around for about five decades, and like any business that's been around for that long, it's seen some changes, but none more so than in the last five years.
Like every company in the comms industry, it has had to reinvent itself to operate in a cloud environment where speed, intelligence and digital innovation are the prerequisites for success. Bart, can you tell us a little bit about CommScope's recent transformation and how it sets you up to deliver on your current strategic goals?
Bart Giordano: You bet, Steve, and thanks very much for the opportunity today. Say CommScope's transformation is driven by an initiative we call CommScope NEXT, and CommScope NEXT comprises of three primary elements. First and foremost, we're looking for ways to turbocharge our growth. What accounts and verticals do we want to focus on? How can we increase our manufacturing capacity to meet the growing demands in the market, and where do we want to expand? What are the new segments, new countries and new areas that we want to explore to drive that growth?
Secondly, it's about improving efficiency. We want to reduce complexity and cost in our own business by driving savings through things like analytics on where we're spending money, and streamlining duplicative systems and processes, et cetera. Then finally, how can we optimize our portfolio and reallocate capital where we think we have a winning value proposition in the market?
Finally, we've transitioned the entire company to a general management structure from a functional structure, and this really is enabling us to drive accountability and an ownership mindset through this business unit structure that's in helping us to accelerate that CommScope NEXT initiative.
Saunders: Fantastic. All of that has put you in competition against some extremely large companies now, including well-known companies like HPE and Cisco. You're not at exactly the same scale as some of those mega lists, how do you differentiate yourself? Is it technology? Is it culture? Is it innovation?
Giordano: I think it's a combination of all of the above. I think one of the things that we're really focused on is trying not to be all things to all customers. We really want to focus on markets where we're unique, where we think we have a value proposition that's going to resonate more so than maybe other players who serve those markets more broadly.
So we have a vertically-centric go-to-market strategy into the enterprise, and in RUCKUS we refer to this as purpose-driven networking. How can we understand the challenges that our customers face in those industries, organize around them, and then develop solutions and a go-to-market model with our partners to bring those solutions to market?
So, I can give you a couple examples. Take K-12 education where we've historically been very strong, rather than focusing on bringing the best Wi-Fi to the classroom, we think about things like what are the outcomes we're striving for in the student experience in a school, and how does the solutions that we bring to bear there impact those outcomes?
Similar for hospitality for example, we're really focused on the guest experience and maybe the operational efficiency of a property, or in manufacturing, they're trying to drive industrial automation and things like IoT through automatic guided vehicles and robotics to improve factory throughput. How do the connectivity solutions that we bring to market impact those in the most effective way?
I think one of the things we see is the buying criteria from all these markets has really evolved from kind of traditional speeds and feeds to now being business outcome-driven, and we feel really well-positioned to take advantage of that through this purpose-driven approach.
Saunders: I mean, what we're really talking about here is adaptation of horizontal technology to vertical industries, isn't it?
Giordano: Yeah, exactly. I think part of the reason that we ended up with that type of approach is what you called on earlier, right? We were a smaller player in the market and so had to really be focused on where we could have an outsized advantage against those much larger players.
I think now in my role as leader for the NICS Segment at CommScope, which includes not just RUCKUS, but also our cellular business, our ERA DAS platform in ONECELL, as well as our PKI security business, how can we leverage that experience in order to offer a broader portfolio of solutions to those same industries?
Saunders: One of the other areas which I find is really interesting about CommScope is managed services. You've been helping carriers with managed services for years, but now you're really doing that for enterprises. The goal there is to not just to deliver an outcome, but actually to take the whole operation out of their hands. Is that something which is going well for you? How does managed services for enterprises differ from managed services for carriers?
Giordano: Yeah, sure. So I think enabling managed services has always been really fundamental, particularly in RUCKUS to the way we've gone to market. You end up with large complex networks that are serving multiple end customers, so the implication is you need to deliver a fully multi-tenant environment through a single point of control. With carriers, there's an expectations of [inaudible 00:05:34] reliability.
So we've deployed these solutions very broadly through MSPs and operators, and also turnkey through our managed networks business into hospitality, high density residential or what we call MDU into large venues and other industries. But as you highlighted, we're now seeing an opportunity in more traditional enterprise verticals, places like manufacturing, warehousing, logistics, but the difference in the enterprise is they prefer simplicity.
Operators are oftentimes structured to deal with a lot of complexity, and in the enterprise there's also a big focus now on business transformation. So, the implication of that is that while networks are generally becoming more complex through convergence, convergence of multiple technologies like Wi-Fi, IoT, and cellular in the enterprise, convergence of IoT, operational technology and traditional IT technologies, the administration of those has to remain very simple.
So we want to bring solutions that will leverage a common infrastructure, help you unify the management across all of these domains, and then selectively apply technologies like artificial intelligence and machine learning to automate that environment and give the business very rich insight.
Saunders: You mentioned AI and machine learning. That's an interesting area right now, particularly, well, in both carriers and the enterprise market. Who is further ahead in terms of aggressively adopting AI and its full potential? Do you think it's the carriers or is it the enterprises?
Giordano: I think it's happening so fast that the answer to that question is pretty difficult to answer at this stage. I mean, if you look at the admin of what's going on with large language models, and I monitor this very closely, because we're really keen in our own business to take advantage of the productivity benefits and other benefits that these can bring, it feels like every day I read about some new incredible innovation that's happening, the pace of which I don't think we've ever seen.
I talk to my own children about this and the impact it's going to have on their lives and their livelihoods, and I kind of hearken it to our own experience in our generation of the advent of the internet or the iPhone, right? I think it's that fundamental of a change, and I think if businesses aren't paying attention and aren't looking for ways to start taking advantage of this, they're going to get left behind.
Saunders: Well, but there's also some risks there, aren't there? Because closed loop automation, which is where you let the computer make the decisions and they're autonomously in charge, that is, I think for understandable reasons, quite terrifying to some carriers, so they're still inserting a human decision-maker in there. But it seems to me that when the network is fiber optic and the data is carried at the speed of light, there's just no way in the long-term that human beings can be part of that decision-making process. Do you agree?
Giordano: Yeah, I think like with any system or process, the outcome is only as good as the inputs, right? So the role for humans is to really understand the system to the best of our ability and provide it the right inputs, and then be cautious and suspect with the outputs. But I think the productivity benefits and the pace at which businesses will operate and the gains which we will realize economically are going to be just simply fantastic, beyond what we can imagine.
Saunders: Well, I think you also have future-proofed CommScope's strategy by focusing on outcomes, because that's really what the humans need to do, isn't it? They need to decide what's the outcome of this machine which we're creating here to do something in a vertical industry, and how does it actually make the customer happier or save money or make money for the business? By getting ahead of that curve, I think you're also providing an answer to people who perhaps are worried within carriers and enterprises about, well, what's my job going to be? Well, guess what? Your job isn't going to be doing CLI interfaces anymore.
Giordano: There's a new job that's emerging called a prompt engineer. So, how do you prompt AI to the most effective way to take advantage of those capabilities that will help you accelerate the delivery of that business outcome to your customers?
Saunders: You mentioned a couple of technologies right now that can be deployed for private wireless, 4G, 5G, Wi-Fi and so on, that's pretty complicated as well. I mean, is that something that you're providing your enterprise customers with a lot of advice on right now? Do they have a lot of questions, or is that not the most challenging thing which they have to make up their minds about?
Giordano: There is definitely an opportunity to deploy different classes of services in the enterprise. I think traditionally, user and device connectivity we think of as being built around Wi-Fi, which has become ubiquitous and is probably one of the most successful connectivity solutions that the industry has had over the last 20 years. But if you look at some of the new use cases in the enterprise environment, I think there's a role for cellular to play, and I think there's a role for low power radios like BLE and Zigbee to play when it comes to IoT. So, our advice really is deploy the appropriate technology to most efficiently address the use case and outcome you're solving for.
So I've got a lot of questions about when is 5G going to kill Wi-Fi? I'll be the first to say the demise of Wi-Fi has been greatly exaggerated. I think the right question is, is where can private cellular services benefit in existing network or their operations, and how can it fit in seamlessly with the existing infrastructure, and how can you make it simple for the IT staff to deploy and operate?
I think there's three kind of primary areas where cellular offers a benefit over Wi-Fi. One would be coverage, right? If you think about covering a large area, maybe an agricultural environment or a farm, I don't think Wi-Fi would be our first choice to cover acreage.
The second is mobility. I think we all appreciate when you're walking around a building or a venue, that Wi-Fi allows you to roam freely and maintain connectivity fairly consistently. However, I think we also appreciate that if you're driving down the road in a car at highway speeds, that Wi-Fi is probably not the best fit if you need to maintain a constant connection, and that's where we depend on cellular today. So, you might imagine a factory environment deploying automated guided vehicles or AGVs moving at a particular speed and they require real-time connectivity, private cellular is probably an effective tool for that type of use case.
Then finally, where you need to guarantee latency. The nature of unlicensed spectrum which Wi-Fi operates in is such that in the presence of interference, you have to back off. So Wi-Fi can serve very low latency applications, but you can't always guarantee that latency. So for real-time sensitive applications where you must guarantee a particular latency with let's say millisecond level resolution, you may benefit from private cellular services in your environment.
Saunders: That's another area where you're on the forefront of this with your enterprise customers, you're probably seeing some really interesting applications around that. Can you think of any top of mind?
Giordano: Back to this topic of convergence, so we've been putting low power radios into our Wi-Fi access points for many years, and we're really not deploying those at traditional connectivity use cases, but it's more in the realm of operational technology. So take a hotel, for example, every hotel is going to have a Wi-Fi connection for its guests, and if it doesn't, you won't go back to that hotel, or if your experience is poor, you'll get online and complain about it.
So if you take that for granted that you're going to have to invest in a robust and resilient Wi-Fi infrastructure for guest connectivity, then there's a real advantage to being able to leverage that same infrastructure for your operational technology. Take for example what we call connected entry. I think we all have the experience now of checking into a hotel and using our mobile phone to unlock the door to our room. Those same door locks can also be connected up through the infrastructure to give the property manageability and insight into that connectivity solution.
But traditionally, you would have to go and deploy a new overlay network, BLE or Zigbee. So more cabling, more switchbaords, more bridges, but by converging those onto the Wi-Fi infrastructure, now you can at very low cost add these new types of use cases. It's very similar for energy management to connect your thermostats, or for staff safety and security applications to connect panic button, for example.
Saunders: If you had to identify one or two really major challenges perhaps for the industry, but also by inference also for CommScope itself moving forward over the next five or 10 years, what do you think the biggest challenges that you face will be?
Giordano: Certainly enabling business transformation for our customers and our partners. They're all solving new challenges, looking at new consumption models, investing and evaluating new technologies and solutions and services. I think the implication for that is if you're going to enable business transformation, you need to transform yourself.
That implies optimizing both our front and backend systems to enable this kind of everything as a service approach to going to market, and rethinking our go-to market and how demand is generated, what the sales process looks like. Reevaluating our entire CPQ process which was built for one-time revenue and a perpetual license model in a time when we're making this big shift to SaaS and networking as a service and enabling new rev rec models, et cetera.
So I think for us, business transformation, both enabling that in our channel and with our customers and understanding what it takes to transform our own operations to support that is an incredible challenge, but I think we're prepared very well for it.
Saunders: I'd agree. I think you've grasped the essential need of businesses today, which is to look at what they're trying to achieve, not how they're trying to achieve it. We've moved beyond the level of networking and communications as just a function of the business to the actual fundamental enabler of business outcomes. It's really interesting and congratulations on your success at CommScope.
Giordano: Well, you as well, Steve. Again, I really appreciate the opportunity and your own insights as well, so we'll look forward to doing it again soon.
Steve: Appreciate you. Thanks so much.
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