Reminder to myself to read.
Ascend Gets Stable Footing, Adds Fiber To Growth Plan
Date: 7/16/98
Author: Michele Hostetler
Ascend Communications Inc. wants to climb back to its old heights and beyond - this time with
the help of fiber-optic lines.
The network equipment maker, which stumbled after a big acquisition, is getting serious about
fiber optics, the high-powered next generation in data- transmission lines. Ascend started
shipping
products for its fiber-optics strategy, called New Public Network, in June.
Ascend's competitors - most notably Cisco Systems Inc., Lucent Technologies Inc. and Northern
Telecom Ltd. - are expected to be close behind with their own battle plans. But analysts say that
by offering cheaper and faster products, Ascend is pushing into this burgeoning market at a
quicker pace than its competitors.
''Ascend has created a competitive environment,'' said Frank Dzubeck, industry analyst with
Washington, D.C.-based Communications Network Architectures Inc. ''They have a very
compelling argument. I think they're in a leading- edge position.''
Ascend began its rise in networking in the early '90s by locking on to the then-nascent Internet
market. Ascend made it by selling pricey and rugged gear to Internet service providers and
telephone carriers so they could run their networks over today's copper-based lines.
Last year, Ascend was slowed down by its purchase of Cascade Communications Corp.,
allowing competitors to grab market share. Ascend took several hits to its bottom line, but now
seems to be getting back on track, analysts say. They note that earnings have been improving
on
a quarter-to-quarter basis, though they continue to fall short of year-earlier operating net.
Webs of fiber-optic lines, collectively known as optical networks, could provide a new
opportunity for Ascend.
Fiber-optic lines transmit data over networks at thousands of times the speed of conventional
copper lines, but are expensive to install and maintain. Still, Internet service providers and
telephone carriers see a market for them. They plan to rent out space on them as sort of an
expensive toll road for companies to quickly transmit data.
Fiber-optic lines will handle the surge in online data traffic and are the next step for Internet
service providers, says Hassan Ahmed, general manager of Ascend's core switching division.
''What it helps us do is go deeper and deeper into the network's core. I see '98 as the real
buildout of this vision,'' Ahmed said.
The move toward fiber accompanies Ascend's move into asynchronous transfer mode (ATM)
technology, says Jay Nakahara, managing director of New York-based Invesco Services Inc.
ATM is the current standard for dividing bit-guzzling graphics so they can be moved more
efficiently.
But traditional copper lines tend to slow ATM down, while fiber optics fully utilize them, analysts
say.
''I think it's an opportunistic move for Ascend,'' Nakahara said of combining fiber optics and
ATM.
Internet service providers have had to maintain three separate networks to ship voice and data.
Each network needed its own equipment.
First is the data network that includes ATM. The second is the transmission network for voice.
The third is the fiber-optic network, which existed on some systems before but has been too
expensive to be widespread.
That setup should begin to change as companies use new tools that allow them to merge their
old
copper- based systems with fiber optics. Voice and data networking are converging, giving
fiber-optic networks another boost. That's the area Ascend has targeted.
Traffic from data and transmission systems flows into their optical counterpart for transport
across distances. Synchronous optical network technology (SONET) is used to adapt the
copper-based voice network to fiber optics.
There are other advances on the optical front to bolster Ascend's plans. Fiber-optic networks are
receiving a boost to make them more affordable and useful. Technology called ''dense
wavelength
division multiplexing'' acts like a prism to expand the number of data streams running on a
fiber-optic line.
To make the network even faster and cheaper, Ascend has cut out the SONET middle layer
between the dense wavelength system and the voice network with a switch known as GX 550
Smart Core.
The traditional method of merging copper with fiber optics costs about $8,200, according to
BancAmerica Robertson Stephens. Ascend's approach costs about $1,400.
Williams Networks, a division of Tulsa, Okla.-based Williams Communications, is the first major
customer of Ascend's New Public Network strategy. Williams is building a fiber- optic network
from the ground up. It's using ATM and fiber optics to run voice, data and Internet traffic.
(C) Copyright 1998 Investors Business Daily, Inc.
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Only The Strong Survive In Tougher Unix Climate
Date: 7/16/98
Author: Michael Tarsala
Technology advances and the ever looming threat from Microsoft Corp. are expected to blow
some versions of the Unix operating system out of the market over the next few years.
As Microsoft's rival NT operating system gobbles up market share at the low end of the server
and workstation market, competition is building at the high end as stronger Unix companies
move
up to more powerful 64-bit operating systems.
Some weaker Unix operating software competitors plan to hang in against NT for a while with
32-bit systems. But at some point, watchers say, they'll likely consolidate and use the more
powerful 64-bit systems made by their stronger counterparts.
Ultimately, some of the hardware makers that developed their own Unix software to run on their
servers and workstations could fade out of the Unix operating system market. Analysts say as
few as four could matter by '01.
''Unix is going to be a handful of guys left,'' said David Wu, analyst with ABN AMRO Inc. in San
Francisco. ''We have too many versions already. How many versions of chocolate ice cream do
you really want?''
The surviving versions of Unix are likely to come from Sun Microsystems Inc., IBM Corp.,
Hewlett-Packard Co. and Santa Cruz Operation Inc. Analysts are split over whether Compaq
Computer Corp.'s Digital Unix operating software will remain.
Already the consolidation has begun. Sun and HP stand out as those most aggressively
substituting their operating software for those of the smaller Unix players.
Sun has announced that NCR Corp., Fujitsu Ltd. , Siemens AG , Amdahl Corp. and Toshiba
Corp. will use a future 64-bit version of Solaris, its version of Unix. HP has signed up Hitachi
Ltd., NEC Corp. and Stratus Computer Inc. for its 64-bit HP Unix system.
Despite the dire predictions, Unix is not on its last legs. Just because there are fewer variations
doesn't mean there will be less demand, say industry executives and analysts. Unix can run
more
powerful computers than NT can, and it is less prone to failure, analysts say.
''It's a strong force now,'' said Chris LeTocq, analyst for Dataquest Inc. in San Jose, Calif. ''The
server marketplace is growing like crazy. Unix certainly cannot be regarded as weak.''
Weeding out the less popular types of Unix software could be a boon for market leaders.
Software developers might be more willing to develop Unix programs if there are fewer operating
systems for which to write. That could help drive Unix sales in the face of stiff competition from
NT.
''Most of our customers want less choice,'' said John McFarlane, president of Sun's software
division. ''They want key partners they can work with, but less choice. There is value in having a
few great operating systems. In software, volume is everything.''
Unix was the brainchild of AT&T Corp.'s Bell Labs in the late '60s, and became popular in
mainframes at universities and research labs in the '70s. In the '80s, many companies began to
use
their own brand of Unix to run their computer workstations and servers.
Now the smaller hardware players will be forced to choose one of these, and pay their larger
Unix competitors licensing fees.
Many Unix companies should survive whether or not they abandon their own operating systems.
Silicon Graphics Inc. likely will offer its own Unix system designed for scientific and technical
computers, as well as movie special effects. Sequent Computer Corp. is expected to use
Compaq's Digital Unix in its high-end servers.
Unix on the whole is growing, but NT is closing the gap fast. NT software sales should increase
31% a year to $27.5 billion in '02 from $7.2 billion in '97, reports Framingham, Mass.-based
International Data Corp. Unix is expected to grow 9% annually during that same time, from
$24.7 billion to $37.9 billion.
More customers are using NT for jobs usually relegated to powerful Unix machines because they
also can use them to run Microsoft's Word, Excel and other productivity software. The NT
machines also can be less expensive than their Unix cousins.
There's a reason for that, says John Jones, an analyst with Salomon Smith Barney. NT is less
powerful than Unix.
''All you have to do is use NT to know how bad it is,'' Jones said. ''It's good as a file server, print
server and for stand- alone applications. And NT's cheap and PC servers are cheap. But if that's
all I can do with it, it's an expensive piece of hardware.''
Another important factor in all this is competition among the Unix players themselves. It's
become
expensive for hardware companies to graduate to 64-bit systems, which can handle more
complex instructions than conventional 32-bit systems. Stepping up to 64 bits will be necessary
for Unix companies to set themselves apart from NT.
''It's a substantial investment - maybe $200 million a year for people like Sun, HP, IBM and
ourselves,'' said John Rose, general manager of Compaq's enterprise computing business.
Some already are throwing in the towel on Unix development. They plan to use other companies'
64-bit systems for their hardware. Rose says development cost is the reason Sequent will adopt
Compaq's Digital Unix for its high-end machines near '00 instead of sticking with its own.
There's another factor said to be contributing to Unix consolidation: Intel's upcoming Merced
chip, due for release in '00. Merced is designed to work best with 64-bit operating systems - the
ones being made by large companies. It's another deterrent for lesser-known operating system
makers to advance their own Unix operating software brands.
All of the major Unix operating system makers except IBM have announced plans to support
Merced. Even Sun, which refuses to support NT, will make servers with the Intel chips, as well
as with its own Sparc brand. Some Unix companies - including Compaq and SCO - plan to use
Intel's recently introduced Xeon chips in servers until Merced is ready.
''Intel is just consolidating all these runaway Unix-based servers,'' said Brad Day, an analyst with
Giga Information Group. ''The consolidation is from the lower cost of ownership of the Intel
technology.''
(C) Copyright 1998 Investors Business Daily, Inc.
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Modem Pioneer Sees Transition On The Horizon
Date: 7/16/98
Author: Michael Lyster
Two decades ago, Dennis Hayes gave life to the PC modem with a set of software instructions
that became an industry standard. Hayes' AT Command Set lets computers communicate via
modems, and it's played a big role in the Internet's growth.
In '78, his company, now called Hayes Corp., shipped its first modem - a 300-baud model that
would choke on today's simplest Web page. The company is eyeing a new generation of
modems
for high-speed cable lines and digital subscriber lines, which work over standard phone lines.
Hayes Corp. once dominated the modem market but has seen its share of trouble recently. In
'94, the company underwent a bankruptcy reorganization, and re-emerged a year later.
Like other modem makers, it was hit by last year's war over differing standards for modems that
access the Internet at 56 kilobits per second. As 3Com Corp. and Rockwell International Corp.
each pursued differing 56K standards, modem sales slumped. A universal 56K standard was
adopted in February, but sales have remained sluggish.
In May, Bay Networks Inc., which is being bought by Canada's Northern Telecom Ltd., tapped
Hayes' company to supply it with cable modems. In January, the company signed a two-year
pact to provide DSL network cards to France's Alcatel Alsthom SA.
Hayes, founder and chairman of Hayes Corp., recently talked with IBD about the modem
industry.
IBD:
How would you describe the modem industry's evolution in the past 20 years?
Hayes:
It's always been a race to get the highest speed you could over a telephone line. The conditions
today are creating even more need for speed than they did in the past.
IBD:
How do you see the industry evolving in the next few years?
Hayes:
The conditions are right for a major transition. What's happening now is the beginning of that
transition. One of the major factors driving demand is the frustration that everyone has with the
speed of access to the Internet. It looks like broadband is going to be the answer, with two
flavors: One being the cable modem and the other being the DSL type. The prospects for the
industry are good.
IBD:
How do you see the rivalry between DSL and cable modems playing out?
Hayes:
Thank goodness for competition. Competition between cable and phone companies is healthy
and is causing things to move along more quickly than they might otherwise. No technology is
perfect. But the speed capabilities of cable and DSL offer opportunity for the whole industry to
make the Internet fly. When the Internet flies, the content can become more entertaining and
more
useful.
IBD:
What are the prospects for Internet access via satellite?
Hayes:
Because the satellite is inherently a one-way device, the Internet is provided downstream
through
the satellite. But you'd still have to use a dial-up modem to go upstream end files or e-mail). I
don't see why it couldn't be viable. It's certainly in the realm of technology.
IBD:
Did you envision any of this back in '78?
Hayes:
We thought that a lot would be happening as computers got to where they were affordable and
used on a wide basis. But in '78, it would have been hard to predict how successful the Internet
has become and how it's a driving force in the market today.
IBD:
Do you see more consolidation in the industry?
Hayes:
I see convergence happening among cable, telecommunications, computers and consumer
electronics very quickly. As the Internet grows and becomes more entertaining, there will be a lot
of ways to tap into it. That will help the industry grow more.
IBD:
How much of an impact did the 56K war have on the industry?
Hayes:
There was a lot of impact. You had two different methods competing. When that happens, the
total market is smaller than it would be than if a well-established standard is accepted and
implemented.
IBD:
What is the biggest challenge facing Hayes Corp.?
Hayes:
We need to carry through with execution. The market is developing well and we are ready to be
a major player in it.
(C) Copyright 1998 Investors Business Daily, Inc.
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