CEO of ECI Telecom Darryl Edwards talks in depth about the country’s enviable economic performance and knack for innovation in the ICT sector, as well as the solid performance of ECI Telecom through its capacity to adapt network solutions in a rapidly changing environment. He also provides an insight into the staggering rate of development in the industry, where ICT is headed, and what many people are missing out on about Israel.
Since you joined the company in 2012, what are the biggest changes you have seen?
I think the biggest change really is ECI. Some companies are very good at keeping their innovation up. ECI had to re-find its innovation. What we’ve done is put innovation back at the heart of the company. As a technology company, it has to be at the heart of the company. We’ve now got a very, very different mindset about our business. ECI was a manufacturing, very hardware-orientated company, and now we’re very software-orientated. But, we’re not just software-orientated; it’s open software. What we’re saying to customers, “You don’t need to buy ECI’s hardware. You can buy anyone’s hardware and use our software.” That’s what we’re saying, and it’s a radical change. It’s huge.
What are your expectations for the short term regarding this new strategy?
Well, the expectations are, as with any company really, is to delight our customers, to help solve their business problems. That’s what innovation’s about, solving people’s problems, helping humanity better connect to each other. Simpler, cheaper, faster, in more innovative ways. That’s what communications companies do, and that’s what innovation’s about for us. It’s making our customers be competitive.
In terms of customers, where do your customers come from?
ECI is engaged all over the world. 700 million people use our technology in India alone, making phone calls over ECI technology. Many countries in the world, many operators around the world are using ECI technologies today. We’re looked at very much as a thought leader in terms of the next generation technologies. It’s critical to do that. We’re engaged with so many customers right now in terms of the paradigm shift because we think differently in terms of the way the future should unfold in the telecommunications industry. That’s very, very attractive for many operators.
What would you say to our audience that don’t know about Israel, don’t know what is going on here in terms of business?
Come and visit, see for yourself. The thing that staggers me today, even in Europe, believe it or not, people say to me, “When you’re coming into Tel Aviv, the skyline is like New York.” The majority of people think, “I thought it was all desert.”
Believe it or not, it’s a well-kept secret because people still think it’s famous for the politics and those things… From my perspective, people are missing the real picture of Israel and what it’s all about, and the people. I’m not Israeli. I’m not even Jewish. From my perspective, I consider myself an honorary Israeli. It’s an amazing country, amazing people. That can-do spirit is something I admire. It never ceases to amaze me on a daily basis, their ability to get things done.
Over the last decade, Israel has introduced a wealth of groundbreaking and valuable innovations within the ICT sector with a lot of research centers and facilities in academic excellence. What are the reasons behind Israel’s immense innovative capacity and its thriving entrepreneurial spirit?
I think Israel has always been a very innovative and entrepreneurial country. The universities here are amazing and the skill capital is incredible. It’s a melting pot of different nationalities. I think you can’t really encapsulate that in one word, but they’ve come up with one thing, which is an amazing ‘can-do’ spirit within the country. When you look at that, how do you evidence that?
Israel has more successful start-ups than any other country in the world. They have the second most-listed technology companies after the US on the NASDAQ, for instance. There are 1,000 new start-ups a year. The statistics are awesome. I’ll try and relate that back to ECI as well. ECI, is a mature start-up. That’s the way I look at ECI. We’re a 54-year-old mature start-up company.
You don’t stay in business unless you’re innovating. Innovation goes back at least 54 years in this company, bearing in mind that it’s a young country. From my perspective, I look at ECI and I look at some of the firsts it’s had through its history and continues to have today in terms of new technologies and evolution, if you like, of its innovation environment. From my perspective, we’re very lucky in ECI to benefit from being in Israel and to be able to take the skills from other entrepreneurs and attract people to ECI and to be able to innovate within the company.
It’s not really a technical discussion, but I think there’s a context to what’s happening in Israel today, in the ICT space, that you need to understand. I think you need to frame what’s happening in the industry in a language that’s probably not technical and very simple for everyone to understand. Twenty-five or 30 years ago, an operator would tell you, “Here’s what you get as a service. You get a telephone line, you get voicemail maybe.” Even in those days, you might be able to do conference calls.
It’s a radically different world to what we live in today because operators don’t do that anymore. You as an individual, if you’ve got your iPhone or your Samsung S6 or whatever device you carry, you now decide which services you want as an individual. It’s no longer the operator telling you. You want to have Facebook, you want to go onto WhatsApp, you want to do Snapchat, all these innovations in social media capabilities have completely changed the communications world.
What does it mean? It means that we have to innovate. We have to innovate at a faster pace than the way humans interact with each other. I’ll give you some statistics on that. If you take all the data that was produced in the world to 2003, everything, hieroglyphics, books that have been written, emails, letters, everything the human race has ever produced, we now produce the same amount of data every two days. Every two days!
Every two days?
That’s a fact, stated by Google’s Eric Schmidt. Every two days! Now, that data, if you add it all up, is less than 1% of the data we will create in the communications world over the next 20 years. Now, think about that for a minute. Think about your devices. Ten years ago you didn’t have what you have today on your device. You had a simple phone 10 to 15 years ago. If you go forward 10 to 15 years, there’s going to be things called “internet of things”. You must have heard this. Israel is getting very, very into the internet of things now, leading it and innovating in it whereby everything that can be connected to the internet will be connected to the internet.
There’s innovation going on within the human race that you the customer/consumer are driving, ‘you’ are demanding. Companies like ECI and other hi-tech companies, we have to adapt the network because the networks of yesterday, when your mother had a telephone line with the old dial, are now moving to a completely different evolutionary path. That’s driving a huge amount of innovation. When I speak about that innovation, I want you to think about it from a point of view of you personally. When you go on your device and you’re social networking or you’re buying stuff, security’s paramount. You’ve got to have that security. That’s for you as an individual.
Think of it as a bank. Think of it as a major corporation. Think of it on the network. This is something that ECI – and Israel particularly – are focusing on. What we benefit from in Israel is the cyber security, for instance, as a key ingredient to how this whole world of technology is evolving. The other thing I’d say is very much on the software side. The days of fixed infrastructure and networks have changed. It now becomes very much software-defined. Again, this is where Israel is playing a huge part in the software skills, and you see that. Look who’s here – Google, Intel, Microsoft and Apple – they all take advantage of the skilled ICT capital in Israel.
When I talk about “ELASTIC Networks”, for instance, relative to ECI, it’s very much about having a network with the ability to adapt for today – and for what’s going to happen in the next 20 years. We’re innovating today to serve those needs through our ELASTIC Networks. If you extend that further hundreds of companies are doing it in Israel. It’s a real hotspot for innovation in this paradigm shift of technology that’s happening in the ICT space. It’s a very exciting time of the industry. It’s a very exciting time for ECI here.
I read not long ago a sentence that was saying that “change is the only constant” in your sector, in the ICT sector, and the company had to change and to switch to become competitive right now with a high competition from Asia. How did you manage to fight against this competition and the constant changes in the industry?
There’s always going to be competition and we embrace it because it makes us better, it makes us faster, it makes us sharper. We’re not afraid of competition, and I think that’s a key thing that helps drive innovation. How do you look slightly different versus somebody else? How do you add more value to your customers’ business? At the end of the day, that again comes through in the innovation we’re doing. From my perspective, the ICT industry and the telecommunications industry particularly, is undergoing such a radical change right now.
I’m a veteran of the industry, and even I can’t get to grips of how big a change there’s going to be over the next five years in this industry. For me, it’s a cross point for many, many companies and innovators to take advantage of. From an ECI perspective, it’s not something you have a choice in. You’ve actually got to do this. If we’re going to survive for another 54 years, then we’ve got to embrace these dynamic changes that are happening and move with them. At ECI, we are doing this with our ELASTIC Networks. What we’re doing and investing in centers around cyber and software-defined networking, etc.
To you these are product words, but actually what we’re symbolizing is the change that’s happening in the industry. That’s the reality. It’s a huge change. There are 1,000 startups in Israel today, of innovative companies and entrepreneurs and this is accelerating. It wouldn’t surprise me that in five years there’ll be 3,000 a year because there’s so much change and so much opportunity for innovation right now, particularly in the ICT space, and that’s really exciting.
When we talk about innovation here in Israel, it’s human capital and R&D. Israel is ranked second in the world for the amount of the GDP spent on R&D. At ECI do you think that these two are the most relevant factors?
I think there’s a number of relevant factors, to be honest with you. I can give you a perspective as a non-Israeli. Israel has a lot of key strengths. Yes, they’ve got fantastic universities. They have the can-do spirit, very much so. The other thing I think that you’ve got to take into account is the impressive problem-solving ability of Israelis. I’ve lived in many, many countries and I can tell you Israelis, if there’s a problem, they’ll find a way round it. That comes through in the innovation and the problem solving.
You couple those things together, and then you add on the governmental support through the OCS, the Office of the Chief Scientists, and it’s unbelievable. It’s very, very powerful what they have here. I used to be an advisor to a couple of other countries. One’s my home country, but if I was sitting in front of the British government today, I’d be saying, “Look at Israel and what they do. It’s trapped in with investment. Look at what they do to support innovation in the country here.” Its orders of magnitude are different. The good thing is that because it’s a small country, people want to go and do something and create stuff on their own.
We actively support that from an ECI perspective. In the past, ECI has seeded these companies. We benefit from them today. We partner with them today. We can’t create everything ourselves, so we work with some of these entrepreneurial companies. They have the benefit of getting global experience; we have the benefit of learning and picking capability from them that we can enhance our technologies as well. I think it’s too simplistic to say it’s the universities. To be honest with you, it’s a lot more than that. It’s the cultural DNA of this country to win and succeed.
What would be the challenges that you encounter as a company in your field, in the ICT field right now?
The challenges we face, really, are how quickly you can move. Speed is of the essence. The opportunities are moving very quickly, particularly in this new paradigm shift that we’re working. Just on security, you read everyday there’s cyber techs around the world. There’s a huge opportunity there right now. There are many companies in Israel that are looking at how they enhance that. You mentioned competition earlier. For me, the biggest competition is time. How quickly can we move and adapt and to take a position. So far, ECI’s been very successful at doing that with the solutions. As an example, ECI is moving into software-defined networks.
This is part of our ELASTIC Network strategy, our vision if you like, which is all about making it real for our customer. We’re actually delivering that capability. Between innovation and reality is a very short period of time in our industry today. No sooner have you innovated, you have to innovate again very quickly. I’ve got a 21-year-old son. He changes his device every three or four months because a new one comes out. My daughter’s the same.
If you look at the speed of the device market in particular, you’ve got to be on your game to innovate there. That speed is now coming through very much to the wider ICT. Our industry used to innovate at a much longer cycle. Because you as individuals and the way you behave with each other now, it’s a paradigm shift that’s making us have to move much faster in development cycles. If you’re going to move faster in development cycles, you want to be in a country where you have the right support infrastructure to do it. That’s what Israel does.
How do you evolve so quickly?
You have to have the skills available to you to adapt to the skill requirements because the skills you had last year may not be the ones that you really need to adapt to this year. It’s a very fast-moving skill set requirement. That’s where you need the pool of skills that you’ve got here. Israel’s very much like a big Silicon Valley. It’s a pool of skills that you can move very quickly to adapt the skill set you need.
Literally ECI is moving to this new stuff in the last 12 months and we’re already producing the latest software-defined networks, cyber security solutions. It’s really exciting stuff that 18 months ago we didn’t have. It’s that quick. When you go back 30 years ago, the development cycle was four or five years for technologies. That’s the pace. The reason it’s necessary is very simple. Operators, whether it’s a mobile operator, whoever services your network for you, or a fixed operator today, they’re under intense pressure. This is my business. They’re my customers.
They’re under intense pressure, competitive pricing pressure, through tariffs. Your mobile phones, for instance, your internet connection – the network needs to become simpler and more adaptive and elastic. Sorry to keep bringing it up, but that’s what we do and it encapsulates the whole thing that we’re trying to do as a company to service you as individuals. See, it comes down to you guys driving it.
Could you expand a little bit on where the concept of elasticity came from and what is the strategy now for your elastic networks and elastic cloud?
We’ve encapsulated what we’re doing with elastic networks. Elastic networks is very much if you look at networks historically, go from analog to digital to IP to social media. In the future you’re going to have this huge growth in data. Operators need to have networks that are very flexible and adaptive and scalable very quickly. If the amount of data in the world today is less than 1%, and it’s going to grow significantly more over the next 20 years, then the type of network – let alone you the type of devices you will use at home or your kids will use in 20 years’ time – will be completely different to what we’re using today.
When an operator builds a 2G network, it’s a huge, multibillion-dollar investment. What they used to do is build a 3G network, where you would have two networks. You might see on your phone you have 2G or 3G. Anywhere you are you’ll get a 2G signal up because they’ve got two networks running. When they build a 4G, guess what? There’s another network .The operating cost of that is huge.
What customers have said is, “Look, we don’t want to do this anymore. We want to buy one type of antenna. So when you make a phone call there’s an antenna on the roof somewhere and there’s one over there. We want an antenna that, in the future, we can send some software to and it becomes a 6G. Send some more software and it becomes a 7G.”
The whole network, all the way through the plumbing in the network, is behind that antenna. There are pipes carrying loads of data back to central points. That has to be adaptable as well, scalable, secure, and all that type of thing. That’s what elastic networks is about.
It’s about building the networks of the future so that when a customer spends a billion dollars, you can say to him, “Hmm. That billion dollars, you don’t need to rebuild it again. We can deliver all these new services for all these customers on the same billion dollars in a different way for you.” That’s the whole concept of the elastic network. It’s not unique to ECI. This is what the industry is doing. They’re doing it in different sizes and scales. The big operators are doing it for the operator’s network. If you go to a huge corporate bank, they’ll be doing it for a corporate bank environment or a campus environment.
It depends where you are in the chain, if you like, and that’s the revolution that’s going on right now. It’s real. It’s happening today because it comes back to you as individuals, what you’re doing with your devices, what you’re prepared to pay for your service on those devices. It tends to be going down one way, which puts pressure on all this OPEX cost multiple layers. A lot of the things that operators do is what’s called over-the-top services. If you look at a network today, most people are using Google, or Netflix, or YouTube uploads, downloads. None of that makes money for an operator. None of it. They just provide a dumb pipe, effectively. They can’t operate like that where they’re not making money. The costs are going up. You’re paying less, so they have to radically change the network environment. That’s what the revolution is about.
To fully understand your line of business, you mean that we have a network established right now and built. Your company is providing solutions from the software point of view to keep this network and improve it with the same infrastructure.
That is correct. That’s exactly it, very simply, but also offer new services as well.
We’re working a number of areas and we’re innovating as we speak. I don’t have all the answers. I don’t think anyone does. We’re innovating right now. It’s almost like a start-up environment, where we provide the environment for them where they’re not polluted in any way and can free think and innovate. We’ve had a number of things come out this year which we’ve said, “This is great. Customers like it. We’re going to develop it.” Tomorrow we’ll have something else. Those things can be obviously related to my core business. You can’t suddenly become somebody who makes washing machines, for instance. It’s got to be technology. It’s got to be telecommunications orientated, and that innovation is creating those services today for us.
Well, I would like to ask you a more personal question. You’ve been here since 2012. You have experience in other markets such as the United Kingdom.
It’s my second time in Israel. I was here in 2000 as well as a CEO of a company.
Then you moved to Turkey, if I’m not mistaken?
Yes. I didn’t live in Turkey, but I was the Chairman of the Board for Netas, which is a technology company. I was one of the advisors to President Erdogan, or Prime Minister Erdogan at the time, to advise them on the inward investments of Turkey.
A famous writer, Peter Drucker, used to say that the best way of predicting the future is by creating it. How would you like to see this company by the end of your tenure in the next five years? What would you like to achieve?
ECI is one of Israel’s most mature start-ups. I’m not 100% on my facts, but I think it is the oldest technology company in Israel. For me, I take it very, very personally that ECI is successful going forward. I’m passing through time at ECI, so when I leave I want to be able to say I added to the history of this company and set it up for the next 50 years. That’s what I want to leave. That’s my legacy. I’ve known ECI since I was six years old. My father came here working for Telrad, which is another hi-tech company here. They were doing a transfer of technology for a British company. I’ve known ECI since I was six by name, and for the last 35 years in telecoms I’ve known it is a competitor and now I am running it. I know what a great company it is and what it’s going to be going forward.