Saturday, March 21, 1998Ascend Braces For Challenge
By Joe McGarvey
March 19, 1998 10:35am
Inter@ctive Week
Sometime in the next couple of weeks, Ascend Communications Inc. is expected to introduce enhancement to its line of remote access equipment and new editions to its venerable line of Max concentrators.
With signs that its dominance in the remote access arena is beginning to decline -- including sinking concentrator sales over the past few quarters -- and increased competition from established competitor Cisco Systems Inc. as well as start-up Aptis Communications Inc. and Assured Access Technology Inc., analysts say that a product face-lift for Ascend couldn't come at a more opportune time.
"Ascend seems to be at a critical juncture in its existence," says Virginia Brooks, an analyst at Boston-based research firm Aberdeen Group Inc. "They really need to make improvements to the Max."
Essentially the only game in town at one point, the Max family of remote access equipment is now joined by several competitive boxes that equal or exceed the Max in terms of the number of simultaneous dial-in connections it can support. The recently announced Cisco 5800, for example, houses about 700 modems in a single unit. Aptis appears to be the current leader in terms of modem capacity, topping out at 1,344. The Max TNT, the latest and greatest member of the Max family, introduced in the fall of 1996, offers 288 modems.
Although the Max has been criticized for lacking some of the industrial-strength hardware required to ensure failure-free operations in cramped and heat-inducing conditions, it's also taking a hit as modem density becomes a major selling point to Internet service providers and carriers that are desperately trying to accommodate increases in numbers of subscribers.
Ascend's technology was good first-generation equipment," Brooks says, "but as things move forward, it's sort of a green-field opportunity again."
Kurt Bauer, vice president of access product management at Ascend (www.ascend.com), sees things a bit differently. Instead of jumping ahead of Ascend, the competition is just beginning to catch up to the Max line, Bauer says. "We have the broadest, most capable WAN [wide area network] product line in the industry," Bauer says, referring to the Max TNT's ability to mold to a variety of dial-up and direct connection configuration sets.
In addition to increased competition, though, other factors may help to derail Ascend's momentum in the remote access arena, says Maribel Lopez, an analyst at Forrester Research Inc. Early difficulties in upgrading central site equipment to handle modem calls at speeds of up to 56 kilobits per seconds may have given Ascend's chief competitor, 3Com Corp. (www.3com.com), some added leverage among Internet service providers, according to Lopez. 3Com may have won converts because its equipment required a software-based modem upgrade, while much of the Ascend equipment required hardware replacement.
Although Lopez says last year's merger with switch vendor Cascade Communications Corp. probably had little effect on Ascend's remote access business, she adds that anytime a company consolidates with another of nearly equal size, some hiccups are likely.
Perhaps the biggest cause for concern at Ascend, however, is a recent drop-off in remote access revenue over the past year. While the company's overall sales rose from $270.3 million in its third quarter to $292.5 million in its fourth quarter, figures from research firm Dataquest Inc. show Ascend's concentrator revenue dropping in the four quarters of 1997 -- falling from $163.9 million in the first quarter to $161 million in the second quarter, $126.6 million in the third quarter and $116.3 million in the fourth quarter.
To make matters worse, Cisco, which started the year a distant third behind 3Com and Ascend in concentrator revenue, grew 53 percent. Cisco's fourth-quarter revenue in the remote access market was only $13 million behind Ascend's.
"Ascend takes Cisco very seriously," Bauer says, "but we intend to keep pressing our technological and product advantage and continue aggressive pursuit of the market."
Although Ascend officials will not discuss details of the upcoming product rollout, a source familiar with the announcement says that Ascend will add voice capabilities to its existing remote access products. In addition, Ascend will unveil a new member of the Max family, the Max 6000, that offers significantly more modem capacity than the Max TNT.
Given all of the factors that are threatening Ascend's position in the remote access market, analysts say, the forthcoming announcements in many ways pose a make-or-break situation.
"Ascend is clearly at a critical juncture just due to the sheer weight of the competition," Lopez says. "If they don't hit a home run with the next product, they will lose their lead in the market."
Ascend Feels The Pressure
Industry events and competitive forces are putting pressure on Ascend Communications Inc., once the unassailable leader in the remote access business.
The venerable Max family of remote access equipment is showing its age.
3Com Corp. has gained ground among Internet service providers through its ability to upgrade modems to 56-kilobit-per-second speeds through software. Most Ascend equipment requires hardware upgrade.
The integration of Cascade Communications Corp. may have deflected Ascend's attention from the remote access business.
Cisco Systems Inc. is rapidly closing in on Ascend in sales of remote access concentrators.
Cisco and several start-ups recently released "carrier-class" remote access gear that can expand to thousands of modems in a single storage rack.
Random Access
From the you-heard-it-here-first department: As mentioned in a February issue of Inter@ctive Week, Sun Microsystems Inc. was expected to release commercially its oft-delayed JavaStation network computer in the next couple of weeks. After months of ironing out software wrinkles, the JavaStation is ready to go prime-time, retailing for just under $1,000 with a monitor. Don't be surprised if Sun (www.sun.com) times the product release with its JavaOne conference at the end of the month.
While no one can offer more than circumstantial evidence to back up reports that some of Ascend Communications Inc.'s remote access equipment overheats and bursts into flames -- the reports may be nothing more than hyperbole or urban myths started by Ascend's rivals -- some analysts say a remote access meltdown is not all that unusual. If Ascend's (www.ascend.com) boxes did go up in flames, one analyst says, it wasn't the first or the last time, as carriers and Internet service providers continue to push the capabilities of remote access equipment in an attempt to accommodate runaway growth.
Despite the recent flurry of voice-over-Internet Protocol announcements, giving service providers the raw ingredients for offering corporate clients an end run around skyrocketing long-distance charges, don't expect businesses to entrust their voice communications to the Internet anytime soon. That's the opinion, anyway, of Dave Curley, vice president of marketing at Mitel Corp. (www.mitel.com),
which is targeting the intranet as the first venue for significant integration of voice and data. "There is no way that businesses are going to put their voice business on the Internet because of the degradationof quality," Curley says. "Today, it's still a toy."Send musings to Joe McGarvey at jmcgarvey@zd.com.
Source: Inter@ctive Week |
