Cabletron pins hopes on software, services efforts
By Paula Musich and John S. McCright, PC Week Online
August 27, 1999 4:39 PM ET
ROCHESTER, N.H. -- Working to shore up its tenuous financial position, Cabletron Systems Inc. is broadening its network offerings with new software and services.
As he closes the books on the company's second fiscal quarter next week, new Chairman and CEO Piyush Patel is looking to move Cabletron beyond offering hardware and management for corporate networks.
Patel's plan: Remake the company into a supplier of products and services for carriers, ISPs (Internet Service Providers) and enterprise sites. To get there, Cabletron plans to acquire new software for its Spectrum network management framework, release new networking hardware for ISPs and offer a series of new services.
"We are looking to acquire billing and accounting applications and monitoring applications for Spectrum," Patel said in an interview this week at the company's headquarters here. "In the future we will also add policy management and directory enablement."
(See PC Week Webcast for the interview with Patel.)
Edge router in the works
On the hardware side, Cabletron plans to roll out at next month's Networld+Interop show in Atlanta a high-performance edge router for ISPs.
The Edge Aggregation router will incorporate Layer 3 and Layer 4 switching capabilities into a device that handles not only Gigabit Ethernet traffic but also ATM (Asynchronous Transfer Mode), packet-over-SONET (Synchronous Optical Netowrk), T1 and T3 traffic. This will give administrators the ability, for example, to prioritize packets across wide area links, Patel said. The router will be able to forward more than 70 million packets per second.
Cabletron also will show at N+I a product capable of carrying voice traffic over an XDSL link from the home into a central office. The new Cabletron customer premises equipment is being tested with DSL Access Multiplexer equipment from Copper Mountain Networks, Diamond Lane Communications and Lucent Technologies Inc.'s Ascend Communications business unit. It will also support a JetStream Communications gateway that can take the DSL-originated voice call and put it into the public switched telephone network.
In addition, Cabletron is getting ready to announce a service called Smart Sourcing, in which it will run the internal networks of large organizations in exchange for a monthly per-user fee. The idea is to help clients avoid the technical and financial risk of owning their own in-building infrastructure.
As proof of the Smart Sourcing concept, Cabletron bought the in-house networking infrastructure of AT&T and has been running its network, which has about 150,000 users, for about a year, said officials.
A critical time
Cabletron is at a turning point after posting a net loss of $22.5 million in the quarter ended May 31, followed this summer by the retirement of founder and CEO Craig Benson. Patel, hand-picked by Benson to lead Cabletron out of its morass, inherited a company with a reputation for good products and support but a host of serious problems, including the perception that it's lost touch with the market.
Its financial performance over the last several quarters has been checkered at best, and the company's recent history has spooked some big customers who are not waiting for a turnaround.
"We got rid of their stuff over the past year because we had concerns about the long-term viability of the company," said Bob Currier, director of data communications at Duke University in Durham, N.C. "There was and still is a lot of concern about what their direction is, whether they'll be bought, whether Cabletron will be here three years from now."
Although the reliability of Cabletron equipment is not an issue, changing market forces don't allow users to justify the high cost of the company's equipment. "Before, you were willing to pay more money for something that lasts forever, but now it changes so quickly, I don't need it to last 10 years," said Currier.
Patel knows he has to act quickly to maintain Cabletron's installed base and to establish a foothold in the carrier/service provider space. Today, about 10 percent of Cabletron revenue comes from the latter, and Patel's goal is to increase that to 30 percent in the next 18 months.
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