To: Gary Korn who wrote (1194 ) 2/18/1998 5:13:00 PM From: Maverick Respond to of 1629
NN article validates ASND's strategy Excerpts of The Meltdown at Newbridge BY IAN AUSTEN February 27, 1998, Canadian Business ust as shipping containers have made old-fashioned ports obsolete, ATM gains much of its efficiency through standardization. Instead of carrying packets of varying lengths, ATM breaks data down into so-called cells of equal size. Not only does that standardization improve the speed, a simplified header allows the cells to be switched rather than routed. The technical differences between routing and switching are complex, but the critical point is this: switching relies mostly on hardware rather than on complicated software machinations to move data. Unlike routers, switches are far less likely to be overwhelmed by great bursts of data and also offer significant increases in peak speed--at least twice as fast as the swiftest system yet found to move IP packets. Speed isn't the only advantage ATM offers. Right now, most major telecommunications companies have layers of different networks. Some carry everyday phone calls, others video, and several others still are devoted to different ways of moving data. ATM, by contrast, can handle all types of traffic in a single network that is less likely to be disrupted by sudden surges in volume. That and other factors have all compelled telephone companies, including Bell Canada, and other network providers to pick ATM as the future of their systems.it helps to look at the ATM network equipment market as something akin to the ink-jet printer business. The printers themselves aren't particularly profitable, but absurdly high margins on replacement ink cartridges more than make up for that. In Newbridge's case, producing networking equipment is the burden it carries to get into the really lucrative network management software segment. (One industry analyst estimates that the gross margins on Newbridge's software are at least 90%. While its equipment margins are lower, the same analyst still pegs them at about 60%, which is well above industry standards--Northern Telecom's overall gross margin, for example, is about 40%.)