I until recently was an employee of Proteon. I in fact worked on the IBM SNA products you described, and yes we did develop the products jointly with IBM.
Proteon was known to have the best router code in the business. Unfortunately, they didn't know how to market it effectively. Five years ago when I started there they had a large percentage of the token ring adapter maket only second to IBM. Unfortunately, management seem to take the shortsighted view and concentrated their business in this area instead of the router market. They had the additional problems of trying to sell routers which were a much more sophisticated product through the same channels as their commodity token ring adapter cards. It is the feeling of most of us that worked there at the time that Proteon should've been another Wellfleet or Cisco.
About a year and a half ago, after a string of six quarters of losses they attempted to redefine the type of business they were in, concentrating on the access router market and the licensing of their router source code. The source code licensing deals made with IBM, Motorola/Codex, Digital and others brought an influx of cash and a return to profitability. Additionally Proteon has attempted to enter the Ethernet NIC and switch market, but I don't think they've had much penetration.
The problems that Proteon has to face now are that they have a good base of router code to put into the access routers, but they have to sell a lot of these products to make any money at it because of the low margins associated with these <$1000 routers. Also, with no "backbone class" router of their own to connect the access routers to, there will be some pressures in the market for customers to look to other companies that can provide the "complete" solution.
I suspect that any large source code deals have already been made, and the supply of cheap cash will start to dry up. If the access router sales don't start to take off, the future doesn't look too good for them.
As far as Proteon being the target of a takeover by a second-tier company, I've always said "Why buy the company when you can buy the source code?" |
