SJ Mercury interview with House (Bay).
[Interesting. References to all major networkers except ASND]
mercurycenter.com
Posted at 7:50 p.m. PDT Sunday, April 12, 1998
Networking changes
business practices
Dave House left Intel Corp. in 1996 to join Bay Networks as
chairman, chief executive officer and president. He faced major
challenges with the networking company, including organizational
structure and competitiveness. Mercury News Business Editor
Peter B. Hillan and Columnist Dan Gillmor spoke with House at
his Santa Clara headquarters. This is an edited transcript of that
conversation.
QWhat is the network today?
A At the start of our fiscal year, all employees got a poster that
says, ''Our purpose is to revolutionize the way people work,
learn and play by eliminating the constraints in distance and time.''
This is what the network does; it really is changing the way
people operate, socialize and learn.
A few of us remember 10 years ago when the memos and letters
and little envelopes with the strings and the people that pushed
carts with the mail. Today, everything's done electronically and
we can communicate so instantaneously.
Network defines businesses today more than anything, more than
the physical plant, more than the (organizational) chart because it
controls the access of information and who communicates. It
breaks down organizational levels; it flattens the organization and
provides us ways to form teams of people who collaborate
around problems that emerge and self-join kind of activities, then
leave those activities and go to others as newer problems emerge.
QWhat does Bay Networks do?
A Well, we're the guys who make industrial-strength networks
-- the New York Stock Exchange, 70 percent of all stock
transactions, computer-based security trading, trading floors,
banking of all types, retail, investment, commercial banks, large
retail chains where the bar-code readers feed back to the
database.
We make high-performance, scalable, reliable and managed
networks. That's a great place to be because networking is
becoming so central to the way that people do business today.
You know, every business is getting to the point where it has to
have that kind of networking. So the market is kind of moving
toward us.
We're propeller-heads; this is rocket science.
QWhat are your immediate challenges?
A We're trying to reach the chief information officer, the chief
executive officer and the chief financial officer at companies
where we have not been visible in the past. We often have the
network engineering manager recommending Bay, but the
top-level manager would flip the decision based on the business
relationship that they had with competitors. Particularly Cisco has
done a phenomenal job with that, the best in the industry when it
comes to relations and communicating and high-level selling.
QAre you able to attract the personnel you need?
AIt was a big problem a year-and-a-half ago. Now it's pretty
easy to attract people to Bay Networks. It's the place to be. I
have a friend outside who is a technical headhunter. He does
software and hardware engineers. And he told me six months
after I was here, ''It's amazing. It used to be that Bay was where
you went to get people. They wanted to go start-up first, then to
Cisco, then from Cisco to 3Com, and the last place was Bay. It's
just turned all around.''
QWhat is your view of the next 12 to 18 months within
networking?
AWe're going through some important inflection points in
networking technology, so you're seeing some negative financial
reports out of the industry. I think there's a lot of uncertainty in the
market because of technology changes. Gigabit ethernet is one of
the big changes. Routing switches is another of the big changes,
which is basically moving the routing function out of software into
silicon.
The impact of Internet and Web technology on corporations has
been staggering in terms of the traffic loads and the Internet
protocol. The old world was a multi-protocol world and this is a
unified protocol world or evolving to it. We still have our legacies
to deal with but it's really in some ways simplified the network
because everything's IP; all the growth traffic is IP traffic and so it
allows you to do a level of optimization. And everybody's out
busily trying to IP-optimize everything, IP turbo-charge things.
Our focus has been to IP turbo-charge existing networks, not
change networks.
QWhat is it that's freezing technology decisions today?
A I think the decisions are taking longer because there's more
analysis being done, because people haven't made the decisions.
If you look a year ago, if you wanted a high-performance
backbone on your network, (asynchronous transfer mode) was
the technology. ATM has got some expensive complexity and the
biggest issue is there's not a good availability of ATM-trained
people.
QWill Year 2000 issues divert a lot of spending away from
other things in the next 12 to 18 months?
AWhat's happening is it's driving people to more quickly go to
client server-based systems because the client server-based
systems were written in the last 10 to 15 years and they were
written to be 2000-compliant. They're moving away from old
mainframe-based systems that were written with code that dates
back to 40 years ago, and typically wasn't 2000-compliant. As
people are rushing to put in these client server-based systems,
these are all network-based systems, so that drives the demand
for networking equipment.
QSo you're seeing less retrofitting?
APeople don't retrofit much. They just add capacity, and the
network kind of grows. When they do upgrades is when they
move, when they open a new building. That's when the put in a lot
of networking gear and add to that gear a little bit over the life of
the building.
QNetwork servicing is a growing segment of Bay's business, are
you finding the engineers, who are comfortable with a service
label rather than a design label?
AThere's a different set of people who gravitate toward service
than gravitate toward design and often their expertises are
different. That is, a good service guy doesn't necessarily make a
good design engineer. A good design engineer doesn't necessarily
make a good service engineer. There's a certain philosophical
satisfaction out of working your way up the pecking order in
service.
We've got people who can come in and diagnose a problem and
fix it. There's a logical rush out of that. They're heroes and they
get recognition. We've got a guy in New York in the financial
district who's ''Michael Jordan.'' He's known throughout the
industry. He is the best. I wouldn't ask him to design a product,
but, man, when the New York Stock Exchange has got a
problem, I want him there.
QCould you do some capsules for us of your main competitors,
what they're doing better than you, what you're doing better?
ASure. Of course, Cisco's three times our size and 10 times our
market cap. That's an opportunity. Cisco is a marketing and sales
company par excellence in the IBM tradition. (CEO John)
Chambers came out of IBM and Wang. They do a phenomenal
job of account control, a wonderful job in terms of executive
communication, and of high-level selling and use of FUD -- fear,
uncertainty and doubt -- and professional relationships. They
have good technology but not excellent technology. They're
usually not first with things, but they clearly get the job done.
3Com is No. 2 in size from a revenue standpoint, but they're in a
bunch of businesses that Cisco and Bay are not in, PalmPilots and
modems. Take that out and they're about our size, maybe a bit
smaller than our size in the network business. They make a lot of
closet switches and closet products. They don't have the big
network center stuff, so you don't see them in big corporations.
Cabletron is No. 4, and they're going through some interesting
problems now! But they're the direct sales guys. In some ways,
they're like the Dell Computing of the business, except they kind
of are on the wrong technology path. |
