Capellas: WorldCom Targeting SMB Customers

"We'll just play that out," Capellas said at the Gartner Symposium ITxpo here.

WorldCom will leverage its retail presence to penetrate more small businesses with its IT services, moving at the market from the bottom up, Capellas said. At the same time, the carrier will rely on VARs to move into the middle market from the top down.

"Every time you bundle a product, you take that bundle and offer it through VARs," he said. "We'll simply move from both sides to the middle."

Capellas made his comments in response to questions from Gartner analysts during an interview-style presentation before an audience of several hundred IT executives. Most companies that have been successful in the SMB space have infiltrated the market from the bottom up, he said, adding that WorldCom must develop bundles that self-install and can be sold through telemarketing-style operations.

"We really differentiate the M from the S and plan to emphasize both," he said, explaining that WorldCom will make a distinction between the midmarket and small-business space.

The next major wave of industry investment will be in the area of utility computing, and WorldCom plans to develop new partnerships to leverage its global backbone network and ability to install and optimize networks, Capellas said. "The trick to this is to understand what you don't know how to do," he said.

In particular, he said, WorldCom would partner with large integrators to offer more cost-effective outsourcing solutions through its global network. Though it's too late for WorldCom to move into the crowded wireless-services market, the company could partner with some providers, he added.

Capellas said WorldCom made some good progress in January and February as it struggles to recover from bankruptcy protection. He said the company has improved its ability to retain customers and was starting to win back some lost clients.

WorldCom's previously announced plans to reduce its SG&A costs by 3 percent would mostly be the result of back-office consolidation, Capellas said. The company has no plans to reduce its sales force or number of customer-facing employees, and it will continue to invest in marketing efforts, he said.

"We are sitting here with a great asset, and the world is moving our way," Capellas said.