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Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?


To: Frank A. Coluccio who wrote (4868)1/14/2002 9:26:57 PM
From: D. K. G.  Read Replies (1) | Respond to of 46821
 
Capital Rut Has Little Weight For Internet Route Controllers
By LISA BRANSTEN
Staff Reporter of THE WALL STREET JOURNAL


Which Way?

No matter how tough the economy gets, companies still are willing to spend on technologies that save them money. That's one reason venture capitalists are becoming attracted to a group of start-ups that help direct traffic flow on the Internet.

Often referred to as "route control companies," these firms specialize in technology that analyzes Internet traffic and then picks the best routes for that data according to certain criteria. For example, businesses can tune traffic so that employees access critical software over the highest quality networks while using cheaper providers for less sensitive work such as checking e-mail. Some products also allow companies to spread out their traffic among different Internet-service providers when service is cheapest.

In the past couple of years, four companies in the category have attracted nearly $120 million. One, Route Science Technologies, based in San Mateo, Calif., raised $30.5 million in November. Another, netVmg (www.netvmg.com) of San Jose, Calif., has raised $27 million to date and is in the process of raising more. Other companies in the sector include Proficient Networks (www.proficient.net) of San Francisco and Sockeye Networks (www.sockeye.com) of Newton, Mass.

The market for such services could be as big as $2 billion by 2005, says Peter Christy, a co-founder of market research firm NetsEdge Research Group in Los Altos, Calif.

Initial reactions are positive. Adam Joffe, director of technical operations for Sony Online Entertainment, says the netVmg software he is testing has saved him 20% to 40% by routing traffic via the cheapest provider.

But it won't be easy for these companies. For one thing the best business model remains unsettled with some companies offering the technology as a service with others selling software, hardware or a combination of the two. Both netVmg and Route Science have shifted from service to product companies. Also the competition between the upstarts should be stiff.

After losing its chief executive in December, netVMG is being run temporarily by Peter Wagner, a partner at Accel Partners, which was one of the company's investors. Mr. Wagner says he looks at the competition as validation that there is a market for "route control" products. "There's never been a good category that only had one company in it," he says. "You develop a company that's No. 1 in that category and that's how you build value."

Any Idea?

A lot more than money was lost during the investment boom. As entrepreneurs gained in power and financiers scrambled to get into hot deals, investors gave up many rights, too.

Consider what's happening for investors in idealab. The incubator started by serial entrepreneur Bill Gross raised about $1 billion in March 2000, giving the company a value of about $9 billion. No board seats, however, went to investor representatives.

Now some investors are angry about idealab's performance, which includes a string of shuttered companies such as eToys and Eve.com. They're angling to liquidate the company and get their money back. Without a board seat, however, they have little power. So when idealab offered last month to buy investors out at 10 cents on the dollar -- an offer that expires this week -- it was either take it or leave it.

Some call the offer unfair because they think they'd get more if the company just shut down. The buyout would cost idealab about $103 million if every investor took the offer, according to Marcia Goodstein, president of the Pasadena, Calif., company. Meanwhile, the company has more than $200 million in cash and about $180 million of stock in one of its most successful companies, Overture Services, formerly known as GoTo.com.

Ms. Goodstein says the offer is a good one. It values the company at about $900 million, about twice its true value, she says. It also reflects only a 90% decline in value over a period of time when some similar companies lost more than 99% of their value.

Late last year negotiations occurred over whether to put a representative of the last investors on the board, Ms. Goodstein says. The company took a pass. First, it was under no obligation to do so. And second, she says, angry investors didn't offer a candidate that met the company's one criterion: "We'd be happy to have a board representative who recognized idealab as a going concern."

Seedlings

Many telecom equipment companies have been having a hard time raising money. But Telica of Marlboro, Mass., has raised $60 million for product development and to increase sales and manufacturing. Telica returned to existing investors Highland Capital Partners and Oak Investment Partners to lead the new round. Telica says those investors decided to step up again because they like the company and because other potential investors offered money on onerous terms. Also, Trillium Photonics is announcing that it has raised $29 million in a second round of financing that was led by Spectrum Equity Investors and included JK&B Capital and Mohr, Davidow Ventures. The Ottawa company makes components for optical networks.

Write to Lisa Bransten at lisa.bransten@wsj.com
interactive.wsj.com



To: Frank A. Coluccio who wrote (4868)1/31/2002 4:23:40 PM
From: Stang  Read Replies (1) | Respond to of 46821
 
Hi Frank:

Any opinions on this article?
Could this really be "Disruptive Technology" or just marketing speak?


Mesh Networks: Disruptive Technology?
By Gerry Blackwell



MeshNetworks Inc. (www.meshnetworks.com) aims to turn the wireless world on its ear.

In its vision of WLANs and wireless access networks of the very near future, MeshNetworks sees every client device also becoming a relay point or router for network traffic.

One immediate benefit is that such networks can in effect see around corners. Even line-of-sight network technologies like 802.11 can become non-line-of-sight - almost overnight if MeshNetworks can deliver what it's promising.

And the next-generation networks the company is building will also power mobile broadband services.

The Maitland FL-based network equipment maker is so sure it's going to turn things topsy-turvy that it actually has a director of disruptive technologies, Rick Rotondo.

Rotondo's title, he explains, is derived from Clayton M. Christensen's 1997 business book The Innovator's Dilemma, which tried to show established companies how to withstand the impact of revolutionary technology from upstarts like, well, MeshNetworks.

The definition of a disruptive technology?

"In real-world terms," Rotondo says, "it has to meet at least two of three criteria: be ten times cheaper than any alternative, have ten times higher performance, and ten times higher functionality. All three is best."

There are two parts to MeshNetworks' supposedly disruptive technology.

One is QDMA (quad-division multiple access), a proprietary radio technology developed for and currently used by the military.

MeshNetworks has enhanced the technology and is now commercializing it under an exclusive license from its original developer, White Plains NY-based ITT Industries (www.itt.com). ITT is also an investor.

QDMA's most notable characteristics are that it's IP from end to end and supports high-speed mobile broadband access and infrastructure-free "ad hoc peer-to-peer networking."

The company claims it can deliver up to 6 Mbps to each user in a QDMA wireless network.

The technology also has built-in GPS (Global Positioning System) capabilities and, in MeshNetworks' implementation, QoS (quality of service) for IP voice and video.

The ad hoc peer-to-peer part means that nearby clients in a QDMA network can talk directly to each other over the air rather than going through network access points and routers. (This is a capability also possible with both Bluetooth and 802.11.)

QDMA could work in any sub-10GHz frequency band. MeshNetworks has implemented it first in 2.4GHz and has already built prototype routers, relays and PDA-size client devices. Next it's developing equipment for licensed MMDS (2.5GHz) operators.

The company is using the prototype 2.4GHz gear in a five-square-mile QDMA-based test network around its headquarters in Maitland, a suburb of Orlando.

It now has an FCC experimental license to build a much bigger nationwide 4,000-node test network. This time it will use the next generation of QDMA client devices which come in a PCMCIA form factor. The company hopes to start building the new network in cooperation with service provider partners later this year.

The second part of MeshNetworks' disruptive technology, and the core intellectual property the company brings to the party, is the set of tricks and techniques for mesh networking.

This is the part about turning every client in a network into a relay point or router. It's the part MeshNetowrks can and is extracting and applying to other non-QDMA network technologies, including, first up, 802.11.

The company claims that by the end of this year it will start shipping a software-only overlay solution that lets 802.11b clients in existing networks work in mesh-mode. Each client device would run the MeshNetworks software.

It hasn't worked out pricing for this offering but it will likely be no more than the volume pricing for the chipset version it is also developing, which is less than $30.

So. Is this truly disruptive technology?

"We definitely meet the ten-times cost and ten-times performance advantages," Rotondo contends.

On the third criteria, it's a question of whether you interpret it to mean ten times the value or ten times the number of features. Rotondo argues that the extras in the company's QDMA-based technology - built in QoS and GPS and support for infrastructure-free peer-to-peer networking - are ten times more valuable than any alternative.

"I wouldn't bet my pay check on the last one," he concedes, "but I would the first two."

Whether its technology is "disruptive" according to a definition laid out in some book most of us haven't even read is ultimately beside the point, of course. The real question is, what can MeshNetworks do for 802.11 and 802.11 users?

The software solution for 802.11 networks will do a couple of things, says MeshNetworks CTO Peter Stanforth.

While it will not add any mobile broadband capabilities beyond what 802.11b can already support, it will extend the range and link robustness of existing Wi-Fi networks by allowing mesh-style multi-hopping.

Instead of a network client communicating with the nearest access point or base station, it finds a nearby client and hops through it - or possibly multiple clients - to get to the nearest POP.

One major benefit is that mesh networks provide non-line-of-sight linking which dramatically increases network coverage. The initiating client may not have line of sight to a POP, but the next one it hops to will, or the one after that.

"There are fixed wireless providers we've spoken to who tell us that without a non-line-of-sight technology they will miss anywhere from 40 to 60 per cent of their market," Stanforth says.

Mesh networks also reduce the distance of each link. This is important because in any wireless network there is always a trade-off between packet throughput and link range.

All other things being equal, as data throughput requirements increase - as in 54-Mbps 802.11a networks - range is reduced.

Mesh networks can facilitate higher throughput without sacrificing effective range - or greater range without loss of throughput.

Furthermore, because link distances are shorter in a mesh network, there is also less inteference between clients. And that makes for much more efficient re-use of frequency.

Stanforth says the primary advantage MeshNetworks has over other technologies, especially others targeting operators using MMDS and PCS spectrum, is that because of its non-hierarchical topology, it offers far superior frequency re-use.

It comes down to how many bits per hertz per square mile you can squeeze out of the network. "We will get orders of magnitude better bits per hertz per square mile than hierarchical network systems like cellular," Rotondo says.

This also equates to the number of simultaneous users at a given throughput rate for a cell sector or POP. MeshNetworks claims it will outperform hierarchical systems on this measure by a factor of ten to 30 times.

Sounds impressive.

We did think of a few possible downsides to such a network architecture, but Rotondo and Stanforth had answers.

No, they say, individual clients in a retrofitted 802.11b network will not take a performance hit because of overhead associated with establishing and maintaining the mesh topology.

There is certainly some overhead, but the intelligence in MeshNetworks' technology more than compensates for it, says Rotondo. "When you take it on balance and say, 'What's my real packet throughput?' in general we're as good as or better than [a native 802.11b network]."

Nor, they claim, is security a problem - at least from a technological point of view - even though packets destined for one client pass through another to get there.

Security features in the company's QDMA-based systems include a hardware firewall on a chip that makes it impossible for a client to access somebody else's packets.

That feature will not be available in retrofitted 802.11 networks using the software overlay technology, but there are plenty of other security tricks MeshNetworks uses, including route diversity.

In a well-populated mesh network it will be possible to send packets by different routes so that any one client-relay point will see only every second or third packet in a transmission hopping through it.

And the hardware firewall will be a feature of the mesh-enabled 802.11 gear the company hopes to get existing manufacturers to make under license.

"Security is clearly a big issue," says Stanforth. "We've spent a lot of time working through it - to the point that we do not believe it will be a significant issue [in selling the technology], beyond the fact that it's not easy to give a two-second answer as to why it shouldn't be."

Longer explanations and white papers will convince network operators, he believes. But in the case of wireless ISPs, we wonder how easy it will be for them to convince subscribers that using their devices as relay points is such a great idea.

This is a quibble, though. We think any 802.11 network operator - whether access service provider or enterprise - that doesn't watch very closely what MeshNetworks does in the next few months really ought to read that book Rotondo and Stanforth are so big on.

January 25, 2002


80211-planet.com

Thanks in advance

Stang