By Jessy Cavazos, Industry Manager

The world communications test and measurement industry is alive and well. Actually, it is the fastest growing segment of the test and measurement industry today. It also offers the greatest potential for revenues for the coming years. At the same time, this market is probably the most competitive of all the segments of the test and measurement industry. Reaching and maintaining growth and leadership in this space is no easy task. This article highlights some of the strategies companies have implemented to achieve success in this market.

Frost & Sullivan covers the world communications test and measurement market extensively including wireline and wireless test equipment and services, producing research on both mature and emerging markets. As part of this ongoing research, the Test & Measurement Group identifies the companies that outperform the competition. So far this year, such companies include:

• Anritsu Corporation for Product Innovation
• BreakingPoint Systems for Product Innovation
• Brilliant Telecommunications for Emerging Company
• Codenomicon for Product Innovation
• EXFO for Product Line Strategy and Technology Innovation
• Gigamon Systems for Emerging Company
• Ixia for Market Leadership
• VeEx for Emerging Company

Most Utilized Growth Process: Technology

Similar to many industries (as illustrated in Chart 1.1), the communications test industry heavily focuses on technology as a growth strategy. EXFO is one of the companies that have best implemented such strategy in the communications test space. Over the past few years, EXFO has reinvested a significant percent of its revenues into research and development (16 percent on average over the past three fiscal years). About one third of EXFO's sales were generated by new products (on the market 2 years or less) in fiscal year 2007. Over the same period, the company's revenues grew from $97.2 million in fiscal 2005 to $152.9 million in fiscal 2007.

Most Risky Growth Process: Mergers & Acquisitions

Another well-known growth process used in the communications test and measurement industry is mergers and acquisitions. In this industry, no one can better illustrate this growth process than JDSU. Ever since the acquisition of Acterna in 2005, the company has continued to grow its T&M division with the acquisition of Test-um in 2006, Casabyte and Innocor in 2007, and the Fiber division of Westover Scientific in 2008. The revenues of JDSU's Communications Test & Measurement division grew 25 percent in fiscal 2007. EXFO has also recently revived its acquisition strategy as a growth process by acquiring Navtel Communications and Brix Networks earlier this year. At the sam time, this growth process is probably one of the most difficult to implement though due to the convergence of organizational cultures, visions, etc. While in theory the acquisition/merger makes perfect sense, reaping the benefits of synergies especially among large organizations can be difficult and confusing to customers.

New/Under-utilized Strategies to Drive Growth

While growth success seems to revolve around new product development, other processes can lead to successful growth such as distribution channel optimization, competitive positioning and branding, geographic expansion, outsourcing/off shoring, sales team optimization, strategic partnering, technology licensing, application/vertical market expansion, etc.