Narus helps tech find network gaps that make cash

"It all starts and ends with one thing: how you make money," says Mr Ori Cohen, the founder and chairman of telecommunications network analysis software company Narus.

As a corporate philosophy, it seems a bit blunt. But actually, Mr Cohen isn't reflecting a Gordon Gecko-ish creed of greed is good. Instead, his observation is meant to point out the uselessness of much of the understood wisdom that drove the feverish technology bombast of the past few years.

Good products and services, priced effectively, will answer needs, find a market and make money, he believes. Companies need to discover product and service gaps and niches, satisfy desires, and ease pain. It sounds simple but, of course, it's not, especially when you have a technology company that needs to anticipate those gaps and then engineer sophisticated software to address them.

However, Mr Cohen, who was in Dublin last week to address a Cisco conference, relishes a technology problem. One gets the distinct impression that, for Mr Cohen, tackling complexity is a pleasure, and competing in a vigorous and uncertain market is an enjoyable challenge.

Mr Cohen's four-year-old Silicon Valley-based company makes high-end - and expensive - software that is bought by large telecommunications companies and service providers using IP (Internet protocol) networks. These fall into four broad categories: broadband service providers such as cable and DSL (digital subscriber line) companies; managed service providers such as the big Web hosting companies; the large carriers such as the former state-run telephone companies in Europe and the US giants; and mobile Internet operators.

Among the existing customers of the 160-employee company are BT Ignite, Cable & Wireless France, AT&T Broadband and Williams Communications. Investors include KPMG, the Mayfield Fund, Chase Capital and Intel.

Mr Cohen describes Narus as providing the "missing link between networks and all the intelligence that's needed in order to focus on the customer". He believes that understanding the customer is essential to understanding what the customer wants.

His perspective comes from his previous job as vice-president of business and technology development for VDOnet, an Internet video conferencing and video-on-demand software company. Test users loved the video services it provided to network operators. But, he says with a laugh, "because users loved it, they would abuse it. They would leave the video camera running 24 hours a day - they had no incentive to shut it off. When the operators began to try to scale [expand] these trials, the network began to crash. It was a real eye-opener. I realised it was all about economic incentives - how much can you make as an operator, how do you create services that customers will want, how much will a customer be willing to pay for a service."

With the downturn in the economic climate, he feels Narus's time has come.

For the past 18 months, "everyone was just building, building, building networks. It was really easy because, up to a few months ago, money was free" - venture funders couldn't dish it out fast enough. A "mind-boggling" amount was spent on networks, Mr Cohen says, "but no one really asked how do you make money."

The value is no longer in the networks but in offering services over them, he says. Only 2 per cent of the fibre networks in the US are being actively used and access to networks is becoming commoditised (he points out that a consumer can get a DSL connection today in the US for $40 (€47) that supplies more bandwidth than a corporate broadband connection costing $4,000 in 1996). So, operators are looking for ways to create value, which means understanding how your customer uses the network.

And that's what Narus's software does, he says - it sits alongside the network and analyses usage so that operators can tell who is using huge amounts of bandwidth to download videos, for example. Mr Cohen says such knowledge allows operators to both charge for usage and "upsell" - if you know a customer likes video downloads, then offer a service tailored around downloading videos.

The software can also be used for fraud detection and billing services, but Mr Cohen finds mobile Internet applications most interesting because that's the area where service providers can use network information to create innovative services for an understood audience.

High-end content offered to consumers or corporate users over mobile Internet involves a long "food chain", he says - handset sellers, copyright holders, distributors and content creators, among others. "Operators have to hand off different pieces of information to different players: billing, auditing, third-party billers, content senders," he says. Narus can do that for carriers, Mr Cohen adds. "I think carriers are going to fight very aggressively to retain ownership of the customer."

And are carriers moving fast enough? "I think some will move fast and others will die. It's a new world. Either you get used to that world, or you get sold, or you die," he says.