Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Steven Salberta - Boenning & Scattergood
Steven Salberta - Boenning & Scattergood
Can you give us some statistics around the deal sizes you’re seeing in both the North American market and in China and overall volume of deals that you’re seeing?
Bob Mao
We’ll have Ron Sege answer you on the North American side.
Ron Sege
I can’t give you the specific stats but I can tell you that in North America deals size and deal activity are definitely increasing both quarter on quarter and year on year. This is consistent with our strategy of refocusing from SMB to large enterprise. We’re definitely moving to more of an annuity business in North America and the rest of our rest of world regions.
Bob Mao
Our China side is a large market we are doing large volume. Our average size of deals is in the $200,000 to $300,000 US dollar range with large projects going upwards to $5 or $6 million. Of course the small end goes into the tens of thousands.
Steven Salberta - Boenning & Scattergood
Can you discuss the China carrier business? You mentioned a couple deals there and I assume that you’re competing pretty aggressively against Huawei for that business. What does pricing look like and what sort of gross margins can you generate from those deals?
Bob Mao
As we said, the China carrier side with China Telecom and China Mobile we are winning in the Wi-Fi networks. In this one we are competing with many providers and Huawei is one of the providers.
Jay Zager
Traditionally our sales to Huawei cover primarily our switching and routing products. We have never had an OEM agreement with Huawei on Wi-Fi networks. This is a business that we’ve been able to compete with traditionally.
Bob Mao
Its not just a couple of deals it is deals through many provincial city networks which China Telecom and China Mobile offers.
Steven Salberta - Boenning & Scattergood
The deal that you talked about on the call they were through Huawei OEM.
Bob Mao
The Wi-Fi are direct. The Wi-Fi networks we deal directly with China Telecom and China Mobile.
Jay Zager
Those deals are showing up in our China Direct Touch sales, which is one of the reasons why we’re able to have significant year over year growth in that business, I think it was up 16% year over year.
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