Statistics, VoIP and Damn Statistics

When Infonetics Research talks, people in the VoIP and IP communications industry listen. The Campbell, CA-based market research company was one of the first to cover VoIP and has gained a reputation in less than a decade for being forward-looking and independent in its research.

In nine years, Infonetics went from a garage start-up to an international market research firm, competing with players like Yankee Group and IDC. The privately held company, which employees 20 people, today covers 10 targeted areas of networking and telecommunications.

Infonetics Research got its start when the market research company that employed Infonetics co-founder and CEO J’Amy Napolitan and her father, Michael Howard went out of business in 1990. The lessons of that failure were not lost on Napolitan.

J'Amy Napolitan

“They were doing demand-side research, network testing, and trade shows,” she explains. “They were spread out too much. They had no focus.”

Howard and Napolitan bought the rights to the defunct company’s demand-side research practice — as well as its name, Infonetics, which was subsequently changed to Infonetics Research — and set to work establishing the new venture’s credentials. Napolitan’s brother, Larry Howard, also joined the business a year later to handle sales.

The start-up operated out of Michael Howard’s garage. “We were all in a big room with only a few bookcases providing minimal separation,” Napolitan recalls, “having to explain that, yes, that is a dog barking in the background, and being known on a first name basis at The Fountain Restaurant at the Fairmont — our conference room.”

Those years were so lean that Napolitan taught aerobics classes on the side to make ends meet. “I still run into a lot of people who were in my classes,” she says.

The fledgling company quickly developed a niche, covering emerging technologies and providing in-depth insight for clients. Within a year the company opened its first office in San Jose as well as offices in Boston and the UK.

The company made its mark with both the depth and timeliness of its research.

“We were typically hitting topics earlier and more in depth,” explains Napolitan. “We find out what users are buying, what features and functions are important, how they choose a vendor. Our depth was a big differentiator and continues to be.”

Among the leading edge topics that Infonetics covered in the early 1990s were ATM (Asynchronous Transfer Mode) networks, frame relay data transmission protocol, LAN switching, high speed LANs, and FDDI (Fiber Distributed Data Interface) protocol. Later on, in the mid-1990s, the company took the lead in covering IP telephony.

Infonetics also offers clients both demand- and supply-side research, which Napolitan says gives clients a balanced, no-spin market picture. The company’s reports include quarterly market share and forecast, end-user survey research, service provider survey research, and service provider capital expenditure analysis.

Staying focused is the key to Infonetics’ success. “Our goal is to be the best at what we do,” Napolitan says. “We set up our practice and methodology to be the best. We don’t do something unless we’re going to do it well.”

That focus helped the company keep an even keel during the tech boom of the late 1990s and the subsequent bust.

“The challenge is, how can you keep your integrity during a bubble,” says Napolitan. “A lot of companies made unrealistic forecasts. As a result, customers lose confidence in the forecast.” And lost confidence translates to lost customers.

Instead, Infonetics stayed “slow and steady,” Napolitan explains. “We wanted to make sure our research practice wasn’t compromised. So we kept on course during the bubble as well as the downturn. We stuck to our guns, stayed focused, and continued to do what we do well. We kept all our analysts,” she adds, “ when there was a lot of change at other companies. Customers liked our stability.”

That stability has kept many early customers with the company.

“We have worked with many companies from stealth through IPO or acquisition,” Napolitan reports. Among Infonetics’ long time customers are LAN switching company Kalpana, acquired by Cisco in 1994, and firewall solution provider NetScreen Technologies, which was acquired by Juniper Networks in 2004.

Networking giant Cisco continues to be an Infonetics client and has worked with the company for about 12 years.

“The big reason is the individuals that do the research,” says Cisco Director of Industry Relations Skip MacAskill. “Infonetics has shown great consistency and has a well-established research process. They spend a lot of time with manufacturers of technology and buyers of technology.

“When we look at overall applications in the service provider segment,” he continues, “Infonetics has been very important in seeing the trends for carriers and how they’re moving to IP. They focus on the right trends and the right topics.”

In addition to the emerging arena of video on the Internet, Infonetics is expanding its coverage in several other emerging technologies. One area is mobile wireless IP and fixed-mobile convergence, as well as the IMS (Interactive Multimedia Subsystem) architecture that Napolitan says, “will make everything work together.”

Another area that’s growing in importance is WiMax, the wireless metropolitan-area networking standard. “We started our WiMax coverage in 2005,” says Napolitan. “It’s not as sexy as IPTV, but it’s an important technology to watch — it has a lot of possibilities.”

But as the company grows, Napolitan continues to keep her eye squarely on the ball.

“We’ve been thriving at this for 16 years,” says Ms. Napolitan. “We like what we do. We’re focused. Emerging technologies are exciting, so there’s always something new on the horizon. But we never lose sight of why we’re here and what got us this far: integrity in everything we do. That’s the real secret to our success.”