Ascend: Facing New Challenges Industry Update
telecoms-mag.com
Susan O'Keefe
It's a prevalent view in the industry that
last year's acquisition of Cascade is
probably the best thing that ever
happened to Ascend Communications.
Despite complaints that Ascend put
Cascade's core switching products on the
back burner for too long after the
acquisition, the division has blossomed,
accounting for more than 47 percent of
the company's $327.4 million Q2 98
revenues. Its next-generation switching
products have propelled Ascend to
leadership positions in terms of ATM WAN
equipment revenue from sales to service
providers (25.6-percent market share) as
well as total frame relay switch revenue,
according to research firm Cahners
In-Stat. On the access side, Ascend
continues to also be a big player and for
H1 98, ranked first in WAN remote access
ports shipped with 31.4 percent,
according to the Dell'Oro Group.
But just when Ascend seems to be getting
back on an even keel, the company's $822
million acquisition of Westboro,
Mass.-based Stratus Computer could
portend more rough waters ahead.
“Stratus is a non-stop computing
company, which is very different from a
networking company,” TeleChoice
director Deb Mielke said. “So they have all
the usual problems of merging two
companies plus the added cultural
problems of meshing a computer company
with a networking company.” Ascend will
fold Stratus into a newly created carrier
signaling and management business unit
with Stratus CEO Bruce Sachs in charge.
Several of Stratus' non-telecom
businesses will be divested before the end
of the year.
Analysts admit to being puzzled by the
price Ascend was willing to pay for
Stratus' advanced Signaling System 7
(SS7) technology. “Clearly they are
banking a lot on the assumption that SS7
gateways and integrated telephony
networks make a lot of sense,” said John
Morency of Renaissance Worldwide. “A
positive point is Stratus did have an SS7
gateway out there and deployed with a
few service providers, so it was definitely
a crown jewel that was worth somebody's
while to go after. But given the fact it will
take a few years for integrated voice and
data networks to really ramp up on a
serious scale such that you'd be able to
make a credible large-scale business case
of SS7 gateways, you have to wonder if it
will pan out in terms of delivering the
benefits Ascend had planned for when
they purchased the business.” Mielke
argued, however, that although the
purchase price may have been high, the
acquisition itself indicates that Ascend
really understands the future of the
convergence of voice and data
networking. “Ascend needed to find a way
to talk with legacy networks and deliver
most or all of the functionality that has
been in the voice networks,” she said.
“That's a big play with Stratus.”
CIMI analyst Tom Nolle agreed that
Ascend has a smart play with Stratus, but
said he's not sure if Ascend bought the
company for the right reasons,
considering Ascend was already
marketing a similar product in the Ascend
Signaling Gateway. “If Ascend believes
that the SS7 integration into a MAX TNT is
a large enough market to justify an
acquisition like Stratus, they're crazy
because at best that's a transitional
market. But if they build an advanced
intelligent networking (AIN) distributed
switch with the complexity in the service
control point, the intelligent peripheral,
and the signal transfer point, the Stratus
acquisition would be incredibly smart
because Stratus is very big in that space.
If I were them, I'd be touting my AIN
mission up to the skies because it would
bring a lot of excitement in the press. But
the bottom line is it's the only thing that
justifies the acquisition. There's no IP
mission large enough to justify buying
Stratus.”
True to the company's heritage, Ascend is
keeping quiet the key details of plans for
the current Stratus products and for
future product development using the
technology. But given the initial
two-phase strategy for incorporating the
Stratus technology into the product line,
there is an indication that on a basic level
Ascend understands the potential for the
Stratus solutions. “The problem we were
trying to solve with the Ascend Signaling
Gateway is an Internet call diversion
problem,” said Hassan Ahmed, who
recently took on the role of vice president
and general manager of the core
switching division. “But no technology
ever stands still, so you need to enhance
capabilities and features to make the call
diversion application richer. With Stratus,
we get a leg up on being able to do that
more quickly and we can really get a
much larger lead in the marketplace.”
According to Ahmed, the long-term goal is
to enable the convergence of voice and
data. “The only way convergence can be
successful is if all of the capabilities have
been built into the traditional voice
network for providing intelligent
networking (IN) services,” he said. “All of
that has to be available on day one. One
of the things Stratus allows in the longer
term is to enable that convergence of
telephony and data onto a single network.
We'll be able to integrate SS7 interaction
and IN functions with our core access and
switching products.” Curtis Sanford,
general manager of the access switching
business unit, agreed: “A major
percentage of access ports next year will
be signaled by SS7, so it's a big
opportunity for us,” he said.
A few products that in the past appeared
to have been shortchanged are also
making comebacks for Ascend. IP
Navigator, software that adds Layer 3
routing to Ascend's multiservice ATM and
frame relay WAN switches, has scored
wins with service providers, including I3S
and Frontier. “People are also beginning
to understand the scaleability and
flexibility that Navis offers,” Ahmed said.
The broadband access products from
Cascade's acquisition of Sahara are also
being brought to the forefront, indicating
Ascend is truly starting to get serious
about making the most of its
opportunities.
Susan O'keefe is senior editor at
Telecommunications. |
