Approximately 380 staff are employed by Enavis - this total is down from approximately 550, following headcount reductions instigated in October 2001. The company is presently implementing a phase of consolidation, which will see the closure of one of its three U.S. sites. Mr Markus emphasised that this process would not affect the capabilities of the company in the U.S.

Enavis operates in a highly specialised sector of the optical equipment market, in developing and marketing a portfolio of digital and optical cross-connect products, which include a network management system, plus a multiplexer product. These cross-connect systems offer bandwidth management over optical networks, covering a wide range of bandwidths and services.

Ruben Markus, President and CEO of Enavis, has held senior positions with the group since 1996, at which time the division was a unit of Tadiran Telecommunications, before ECI Telecom merged with the company in 1999. Prior to this, from 1979, Mr Markus worked as an engineer with Tadiran's research and development team.

The company also produces a SONET and SDH multiplexer, the T::MUX, which provides additional flexibility to the product portfolio. Enavis' network management solution, T::NMS, serves to manage traffic transmitted across the Enavis product line.

T::DAX

The T::DAX system brings a number of unique features to the market. The system seamlessly manages SONET and SDH traffic, and is capable of translating between protocols. Bandwidth management is flexible, handling from narrow-band, 64 Kbit/s, to super-broadband, for example OC-48c services. The system is able to administer multiple service types - both TDM services including T1, E3 and DS3, and data protocols IP, Frame Relay and ATM. All of these features are supported on the same platform simultaneously.

T::DAX offers end-to-end service provisioning capabilities - the network management software enables a carrier to configure a node or port, provision a network path, and test and monitor system performance. The product design is thus flexible, but also modular, allowing easy configuration to specific locations within a customer network. The product is extremely robust and provides proven high levels of reliability and availability. Mr Markus noted, "Overall, our system simplifies management, configuration and monitoring of the network for an operator."

T::CORE

Enavis' forthcoming T::CORE optical cross-connect system shares many of the features of the T::DAX digital cross-connect product. The core difference lies in the applications - whereas T::DAX is optimised for narrow-band and wideband bandwidth management situations, the T::CORE system is optimised for broadband and super-broadband situations. The two products are seen as being complementary, although both provide fundamentally the same underlying functionality. The product's cutting edge design and intelligence will eventually make it a cost effective solution for sub-Lambda grooming applications.

Ruben Markus commented, "The T::DAX and T::CORE products are similar in that they perform broadly the same functions - in certain circumstances there could be overlap between the two. A carrier would choose our T::CORE system if they have a requirement for management of primarily super-broadband services, where they would be able to justify the additional cost over the T::DAX product. A number of companies have indicated an interest in trialling the T::CORE system. We anticipate that this product will drive future growth for Enavis."

The T::CORE system is expected to be available in quarter two or three of 2002.

Testing

Mr Markus said that testing times vary markedly, mainly dependent upon the size of the carrier and its network. The norm for this process is from six to twelve months, although some of the large carriers have been known to test for eighteen months and small carriers may make a decision on the spot. Mr Markus added, "Recently a major carrier completed the entire qualification process in less than two months."

The focus for testing is the software driving the product, as this forms the major part of the system in terms of research and development work. Mr Markus commented that, despite the fact that some of the product software is reused from the T::DAX, and is thus tried and tested, the current system bears little relationship to the original design developed by Tadiran.

Intellectual property

The intellectual property rights associated with Enavis products generally belong to the company. However, collaboration with other technology manufacturers is carried out. Enavis has in the past, and will seek in the future, to team with other equipment manufacturers where appropriate.

Sales and marketing functions are handled directly by Enavis, though Mr Markus noted that the introduction of the T::CORE product might result in a change to this policy, due to the high expectations that Enavis holds for this solution in the market. The group, when a division of Tadiran Telecommunications, has engaged in partnerships for these functions in the past - in the U.S. both DSC and Newbridge acted as distributors.

Following the split from ECI Telecom, company image and recognition has not been an issue according to Mr Markus, and no resistance has been experienced when approaching customers, despite being a 'new' company. Ruben Markus remarked, however, that in the current market environment it is difficult to judge accurately any effect that the name change may have had.

Although a relatively small company, Enavis claims a very strong position in the sector it addresses. The company has developed a large customer base for its T::DAX product, counting a significant number of major carriers amongst its customers, and will leverage this position when launching the T::CORE system.

The key geographical market for Enavis is North America, with other significant markets being the UK and the Asia-Pacific region, in particular South Korea. Asked about Germany, Mr Markus said that this is an important market for other ECI groups although less for Enavis for its existing product line. The importance to Enavis of the North American market has meant more exposure than other ECI companies to the market downturn.

Enavis counts a large number of equipment suppliers as competitors, including many of the major systems vendors. Ruben Markus commented, "It should be remembered that with the major vendors we are competing against one small unit of the company, rather than the company as a whole. Therefore, the fact that we are a relatively small company is unimportant."

Enavis views Ciena as leading the optical cross-connect market presently, followed by Tellabs at least in the North American market. Other competitors here include Alcatel and Lucent while in the European market, Marconi, Siemens and Alcatel are viewed as the primary competition. There are also some start-up companies active in this product sector, notably BrightLink Networks and Ocular Networks, the latter having recently been acquired by Tellabs.

Mr Markus considers the cross-connect sector as presently in a state of flux; following the introduction of next-generation cross-connect systems, development and direction is not yet clear.

"This is a complex market, for the reasons mentioned. The barriers to entry into this market sector are very high, due largely to carrier's high expectations regarding design, manufacture, reliability, customer support and documentation. Ultimately, very few vendors are able to meet these demands. These factors tend to exclude small start-up companies."

Differentiators

Enavis believes that its products offer functionality and features not available elsewhere, from vendors such as Tellabs. According to Ruben Markus, "We do offer unique capabilities with our systems. Where equivalent offerings are available, I would say that they are technically inferior to ours."

The claimed superior capabilities of Enavis' products will translate into a better return on investment for the carrier. An additional benefit with Enavis' offering is low initial cost for the system. Discussing this Mr Markus added the proviso, "If a carrier judges that it requires all of the features and functionality available with our system, then it will be cheaper than our competitors offerings. However, if the full capabilities are not needed, a lower specification system from a supplier such as Tellabs may be more cost effective."

Relating the current market situation to the formation of Enavis, and, more broadly, ECI Telecom's strategy of divesting its business divisions into separate companies, Mr Markus commented, "ECI is taking a pragmatic approach to achieving cost savings. In the present circumstances it makes sense financially to split up the company into smaller entities. This is expected to make running the individual businesses simpler and more effective."

Regarding the future for ECI and its subsidiary companies, including Enavis, Mr Markus noted that with the market turnaround it was conceivable that a further reorganisation, or even re-consolidation, of the group might be a possibility.

"In this market sector, carriers require solutions that offer high quality of service, currently this translates to the processing of electronic signals at the core of the switch. All-optical switches are not yet able to deliver this reliability. The situation will not change for some time to come, and this fact is beginning to be accepted by the carriers. The wider the recognition of this trend the more appealing Enavis offerings become."