Globe 100 | No. 4 - Starent Networks Corp.

Surreptitious success

While big competitors weren't looking, Starent found its niche in cellphone data

Ashraf M. Dahod bet cell companies would need greater data capacity. Ashraf M. Dahod bet cell companies would need greater data capacity.
By Hiawatha Bray
Globe Staff / May 19, 2009
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It's amazing what can happen when you're not looking. The world's top makers of cellphone network gear were so busy selling equipment to handle voice calls that they lost track of the market for data services.

Which is how Starent Networks Corp. of Tewksbury managed to become one of the top suppliers of this vital equipment, at exactly the moment when global demand for cellular data service is surging. Last year saw Starent's revenue jump 74 percent to $254 million, while net income skyrocketed 428 percent to $60.5 million. Those remarkable numbers are good enough to earn Starent a fourth-place ranking among this year's Globe 100.

Chief executive Ashraf M. Dahod had four previous start-ups under his belt when he founded Starent in 2000. Dahod foresaw that cell companies would want to offer their customers more than phone calls.

"Voice was becoming a commodity, and the carriers were having a hard time making a profit," he said. Selling high-speed "3G" data services, like Internet access and media downloads could bring in new revenue.

According to Chetan Sharma Consulting in Issaquah, Wash., which tracks the cellular data business, the US market grew to $34 billion last year, and could reach between $39 billion and $45 billion this year, depending on the severity of the recession. Sharma estimates that 30 percent of America's 270 million cellular users have signed up for a data plan. As smartphones like Apple's iPhone continue to proliferate, that could grow to 80 percent by 2013.

But sending data through a mobile device is dreadfully complex. Each data stream is made of thousands of packets. The stream must hop from one cell tower to the next as you move around, but it can't lose the customer's data packets along the way. That means routing computers that can instantly and accurately track hundreds of data streams carrying millions of bits.

Huge telecom equipment makers like Cisco Systems, Huawei Technologies, and Nokia Siemens Networks can manage this sort of thing, but they had other fish to fry. "Equipment providers really didn't pay much attention," said Phil Marshall, a research fellow at Boston's Yankee Group. "They were making most of their money selling base station equipment" for voice calls. "The result was, Starent got itself a pretty good footprint in that business."

Starent is a primary provider of data-routing gear to Verizon Wireless, one of the nation's biggest cellular companies. Indeed, this one customer provides so much of Starent's revenue that skeptics warn that the company is overexposed to any downturn in Verizon's business. Besides, Cisco and other cellular equipment giants are gearing up to offer their own mobile data solutions.

"There's obviously a lot of pressure on Starent," said Marshall.

Because companies are slow to break up relationships with established vendors, Starent should be able to keep its current customers over the short term. But "in the medium to long term, Starent has to be very wary," Marshall warned.

Dahod said Starent is diversifying by signing up new customers in the United States and overseas, including cellular carriers in Europe, China, and India. And he's confident that his company's engineering skill will keep its products well in front of any rivals. "The reason we win is because of our technology," Dahod said. That, and paying attention to what the big guys missed.

Hiawatha Bray can be reached at

REVENUE IN 2008: $254 million
NET INCOME IN 2008: $60.5 million
MARKET VALUE ON MARCH 31: $1.1 billion