CPQ/NETWORKING article #3 (note BOLD sections):
9/16/96 New Straits Times 36
1996 WL 12284903
The New Straits Times
Copyright 1996
Monday, September 16, 1996
Comment & Analysis
Industry watch
Everything's connected
Lim Chong
WHAT a busy time this has been for the networking industry. The
past weeks have seen Cisco and Bay Networks back on the acquisition
trail and Robert Frankenberg resigning as Novell's chairman and chief
executive officer.
The industry is going through a consolidation phase and according
to analysts, further takeovers and mergers can be expected. "The
market is moving too fast to miss an opportunity," Cisco's chief
executive officer John Chambers was quoted as saying.
Businesses are busy putting up networks and they are increasingly
seeking a full array of technology from a single vendor to avoid
confusion and hassle. The network equipment market is estimated to
be growing at around 30 to 35 per cent annually. Over the next five
years the market could offer up to US$100 billion (RM250 billion) of
growth opportunities, according to 3Com executive vice president Bob
Finocchio.
With the new preference for one-stop shopping, networking
companies have little choice but to build up their technology
products and support services in order to do well. Not surprisingly,
the drive towards multi- function products has led to market
consolidation. The networking companies either invest in or acquire
other companies for technologies they cannot develop on their own.
It's usually the bigger companies swallowing the smaller ones so long
as they are able to fit a part of the technology jigsaw. As the
giants grow bigger, it will be more difficult for new entrants to
make an impact in the marketplace. Only the strong will survive.
Is networking the industry of the future? Even personal computer
(PC) giant Compaq is going into the networking market. with server
products. To come up with its own network solutions, Compaq spent
more than US$400 million to acquire networking companies Thomas
Conrad and Networth.
Most mergers have been based on technology fit, and the largest
was that of router specialist Wellfleet and switching proponent
SynOptics to form Bay Networks. Bay, going through a painful period
of consolidation, was itself recently reported to be a target of
takeover. There have been speculations of IBM showing a little
interest. To flex its muscles and showing that it's still in the
game, Bay recently announced that it was buying LANCity in order to
provide virtual private networks (VPNs) as well as end-to-end
networking with "edge connectivity" to all access technologies.
When it comes to takeovers in the networking industry, it's hard
to ignore the achievements of Cisco, even when one wants to.
Recently in its fifth acquisition so far this year, the company made
its opening move in the Gigabit Ethernet market by acquiring Granite
Systems for US$220 million in stock. Cisco acquired the company's
multilayer Gigabit Ethernet switching technology, regarded as a new
and potentially powerful option for backbone network transport
switching.
Gigabit Ethernet, designed to move data at the rate of one billion
bits per second, has been gaining a lot of attention lately and may
be the centre of attraction at Networld-Interop in Atlanta this
month. Though there is still no interoperability standard a number
of companies have already announced their plans to roll out products.
According to Dataquest, the Gigabit Ethernet market is projected
to grow from US$73 milllion next year to become an almost US$3
billion market by the year 2000. Too big an opportunity for Cisco to
miss. In fact, Cisco and Granite are two of the founding members of
the Gigabit Ethernet Alliance which is made up of more than 60
networking and computer companies with the aim of providing an open
and cost-effective Gigabit Ethernet standard.
Designed to run over either fibre-optic or copper cabling, Gigabit
Ethernet may prove to be most widely supported ultrafast network, and
therefore the least expensive. Still, the game has just begun.
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REGION: Malaysia; Pacific Rim; Far East (MY PRM FE)
EDITION: COMPUTIMES; 2*
Word Count: 621
9/16/96 NEWST 36
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