All: food for thought - from the Bay thread...
FASTER THAN A SPEEDING BULLET
New networking devices may leave Cisco in the dust
Jonathan Marshall, Chronicle Staff Writer Tuesday, January 27, 1998
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Computers have set an awesome pace of innovation, doubling in power every 18 months. But the networking
industry is smashing that record with new devices that steer data up to 10 times faster than traditional products
for as little as one-tenth the cost.
These devices, called ''routing switches'' or ''layer 3 switches,'' will help cure the laggard performance and
frequent crashes that plague many overburdened corporate networks. And they make possible a host of
demanding new applications, such as video-conferencing, that overwhelm most networks today.
Routing switches also are shaking up the business of networking. Large companies such as Bay Networks
and 3Com, both of Santa Clara, as well as several smaller startups, are racing to market the devices in hopes
of grabbing market share from the slower-moving industry leader, Cisco Systems of San Jose.
Experts speak in superlatives about routing switches, which facilitate a new superfast networking technology
called gigabit Ethernet. ''This is a revolutionary change in technology,'' said John Armstrong, an industry
analyst at Dataquest.
''It's a fundamental, quantum leap in terms of per-
formance,'' said William Hawe, vice president of Bay Networks, which bought a small Mountain View
company for $155 million last summer to get its hands on the technology.
The new devices hit the market last fall just in time for Incyte Pharmaceuticals, a biotechnology company in
Palo Alto that ''maps'' human genes and sells the information to drug companies.
Incyte has about 1,500 computers on its network and pumps 2 trillion bits of data over that network every 24
hours, said Philip Kwan, manager of network operations at Incyte. Last year, Incyte's network crashed every
couple of weeks, costing the company $40,000 each time it had to restart DNA sequencing operations.
Then Kwan learned about the new routing switches. After checking several vendors, he picked Foundry
Networks, a privately held company in Sunnyvale. With its equipment in place, costing only two-thirds the
price of Cisco's high-end routers, the capacity of Incyte's network has soared from 200 million bits per
second to 4 billion bits per second.
''Ever since we switched over to the new gear four months ago, we haven't had one network failure,'' Kwan
said. ''And it's cut down on a lot of our speed issues.''
The soaring market for routing switches could pass $2 billion in annual sales within the next few years -- from
essentially nothing last year, industry analysts predict. This month alone, Lucent Technologies and Cabletron
Systems announced plans to purchase small switch companies in deals valued at about $200 million each.
This breakthrough in networking technology could mean bad news for Cisco. It dominates the $5 billion
annual market for traditional routers, which routing switches replace in many applications.
John Hart, chief technology officer of 3Com, boasts, ''We are way ahead of Cisco, a generation ahead. They
will come back with something sooner or later, but we aren't stopping here. We caught them short.''
''This has real implications for the Microsoft of the network business,'' said Drusie Demopoulos, vice
president of Foundry. ''Cisco made their money on devices (routers) that are now dinosaurs. It's as simple as
that.''
Cisco Vice President Jayshree Ullal admits that her company's routers don't run as fast as the latest switches
from competitors. But she said Cisco plans to introduce high-speed switches by March, when industry
standards finally are adopted.
In any case, she said, few Cisco customers currently need the gigabit speeds that these devices permit, so they
can afford to wait. ''The need for new technology is always hyped,'' she said.
But some customers aren't so patient. ''If we'd waited for Cisco, we'd never have met our corporate goals,''
said Incyte's Kwan. ''Anyone with network congestion problems who needs the speed has little choice'' but
to go elsewhere.
Miami Dade Community College in Florida, the largest community college in the United States, with 125,000
students, has more than 10,000 computers on its rapidly growing network. It was all set to spend a million
dollars on high-end Cisco routers and associated equipment late last year.
But instead it opted to buy faster and cheaper new routing switches from Bay Networks, said Miguel
Corteguera, enterprise network manager at the college. He said the Bay equipment cost just 15 percent of the
price for a router and is seven times as fast.
The college once was an exclusive Cisco customer. ''Now, we've decided to change over to Bay (Networks)
switches,'' Corteguera said.
General Dynamics Defense Systems in Massachusetts has been an all-Cisco network, but in the future, it
might opt to go with a powerful new routing switch announced by 3Com.
''With the newer technology, we could introduce multimedia and video-conferencing and keep the
performance acceptable,'' said network manager Peter Bissonnett.
Critics say Cisco's lagging technology reflects the same syndrome that hurt IBM after it came to dominate the
mainframe computer market: a reluctance to make its own products obsolete.
''Cisco has too much to lose in replacing their old, slow, expensive routers with new technology too soon,''
said Menachem Abraham, CEO of Prominet Corp., a Massachusetts-based switch developer. ''In any
industry, the most difficult thing is for a successful company to move on to the next generation, which will
hurt the last generation of technology.''
Still, no one counts out Cisco, given its immense resources, marketing expertise and quality customer
support.
Several times in the past, Cisco found itself behind in technology, only to come back and conquer the market
by buying companies with the products it needed.
''What makes them strong is not just their strength in routers, but their culture of being able to swiftly turn
direction when they sense they are losing market share,'' said Dominic Orr, president of Alteon Networks, a
small networking company in San Jose. ''They're very impressive.''
KG |
