The Switch Is On At Ascend - SRA purchase puts Ascend in a unique position
August 17, 1998
Inter@ctive Week via NewsEdge Corporation : As the
voice-data convergence market grows, executives at
Ascend Communications Corp. continue to make
strategic moves to make the company the premier
supplier of communications systems to carriers.
The networking equipment vendor agreed to purchase
Stratus Computer Inc. in a stock transaction worth
roughly $822 million. As a result, Ascend
(www.ascend.com) will acquire a robust hardware
Signaling System 7 (SS7) server platform.
Stratus (www.stratus.com) makes carrier-grade SS7
servers, which control telecommunications networks and
handle advanced call functions such as call forwarding,
and operations support systems software, which enables
carriers to record and bill for special services. Ascend
plans eventually to incorporate SS7 capabilities into its
data networking devices, which will let networks sense
when incoming traffic is carrying voice or data and can
help route calls to the appropriate network endpoints.
The purchase puts Ascend in a unique position
compared with its networking cohorts, including Cisco
Systems Inc., Lucent Technologies Inc. and Northern
Telecom Inc., which don't own comparable fault-tolerant
servers such as those made by Stratus. While these
companies do own SS7 gateways, they lack robust
server-based switches, which intelligently handle
telephone calls, according to John Coons, a senior
analyst at Dataquest Inc.
"It's a strategic move for Ascend to get into that space
of actually providing server resources for the public
carrier space," Coons said. "There aren't too many
vendors that own the whole solution. I've seen
partnerships and software acquisitions, but not of the
server hardware itself. "
Ascend has made other smart moves recently. The
company acquired Cascade Communications Corp. in
July 1997. The acquisition, which gave Ascend carrier-
grade switches, garnered skepticism concerning how the
companies would gel. But, according to Ken Fehrnstrom,
senior vice president of business development at
Ascend, 43 percent of Ascend's revenue -- which totaled
$3.3 billion last year -- were generated from Cascade
products.
"It's an unusual acquisition," Coons said. "It's strategic
in that folks are seeing telephony and voice will
ultimately go over the Internet. "
As data traffic over the phone network grows, carriers
want to off-load it to their data network. Data networks
based on frame relay and Asynchronous Transfer Mode
(ATM) protocols can handle multimedia traffic
efficiently, he said.
The telecommunications components are only part of
Stratus' business units, which include an enterprise
networking division and two software application
development divisions. Ascend will sell those three
businesses off after the acquisition is finalized.
"We don't want to divert our attention from the focus of
our core business," Fehrnstrom said.
Bruce Sachs, chief executive of Stratus, was formerly
CEO of Xylogics, a networking company bought by Bay
Networks Inc. He said he understands Ascend's
business. "This was the missing piece for Ascend," he
said. " They'll be able to take their remote access servers,
and frame relay devices and ATM switches and use
them to replace traditional Class 4 and 5 switches. "
Class 4 and 5 switches are traditional telephone switches
that handle voice calls. Because of the rise in the number
of people accessing the Internet via the phone network,
the phone network, which includes these switches, is
becoming congested. Frame relay and ATM switches
can handle data and voice traffic more efficiently than
the voice network, he said.
In addition to the SS7 platform, Ascend gets Stratus'
customer base, which according to Sachs, includes 27 of
world's top 30 service providers.
"We have the potential to grow very fast," Fehrnstrom
said.
Calling The Signals
Some key vendors looking to integrate Signaling System
7 (SS7) software into the voice-data convergence efforts
are:
Ascend Communications Inc. -- Markets the Ascend
Signaling Gateway. The addition of Stratus Computer
Inc. brings the company a fault-tolerant hardware
platform and more advanced SS7 software.
Cisco Systems Inc. -- Offers Signaling Controller 2200,
which interfaces with the Cisco 5000 and AccessPath
access servers.
Lucent Technologies Inc. -- Markets the PacketStar
Gateway Solution. Lucent's acquisition of MassMedia
Communications Inc. brings the company interworking
technology for SS7 networks.
Northern Telecom Inc. -- Markets the CVX-SS7 Gateway,
which provides SS7 capability. The gateway is based on
the CVX 1800 remote access switch the company
purchased from Aptis Communications Inc.
<<Inter@ctive Week -- 08-14-98>>
[Copyright 1998, Ziff Wire]
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