This is from Network World. Are they tempering their BAY takeover stance?
nwfusion.com
From our discussion last week on Starpower, the new CLEC in the mid-Atlantic region, we now have even bigger news on the CLEC front. MCI, in its bid to dress itself up for its WorldCom merger, has agreed to sell its Internet backbone business to Cable & Wireless. The sale price? A cool $625 million. The value? Absolutely priceless. [See MCI gives Internet business to Cable & Wireless, Network World Fusion, 5/28/98].
Not surprisingly, the response from MCI's competitors has been swift and to the point: It is simply not enough. The big question, however, is what should users do. Or perhaps I should say the "little" question, because I don't think they should do anything at this point. Let's take a look at this from a few different angles.
First, the portion of the network that MCI is selling is used to support its wholesale business,that is, the division that provides backbone services to other network providers, rather than directly to the general public. By selling off this segment of their network, MCI has simplified its network integration issues with WorldCom while setting itself up nicely to buy back leased Internet backbone services from Cable & Wireless in the future.
If there is a nicer deal, I'm not sure I see it.$625 million to NOT worry about what role Cisco will play in the new network is a pretty good deal in my book - especially when you can use the money to lease back those Internet services if you like
Further, the deal goes along way to removing one of the potential obstacles to the WorldCom MCI merger - the fear that it would control too much of the Internet.
And that brings us to the second point. Regardless of what MCI had done, GTE and everybody else in the "not MCI/WorldCom" camp would still be shouting: Not enough! This battle is far from over. While the merger still looks like a go, between now and the final signing of papers, we're going to see one heck of a corporate chess game. Both sides have lined up their spokespeople "pawns" and are about to start moving them around the board (over the next six months, you'll spot a lot of similarities to the never-ending Clinton/Starr match).
Third, let's recognize that the Internet today is so large and complex that we won't see radical or random changes no matter who sits in the boardroom of any particular backbone provider. And what changes we do see (some service degradation here, some innovated pricing schemes and SLAs there) will have more to do with the rapid evolution of Internet technology.
We see a similar, although less contentious, situation with Bay Networks. Bay's name is often the first to pop up in takeover rumors. Whether it is Lucent (rumored to be waiting for October when they can pool interests), Nortel (rumored to have made a "low" bid that was recently rejected) or any of the other traditional "big players" in the IT market that look hungry, the consensus among betting types is that Bay is in play. [See Sources: Nortel to snap up Bay by next month, Network World Fusion, 5/15/98]
Are there any shreds of fact to suggest an imminent acquisition? Nope. Are there any juicy tidbits of information to suggest that Bay is secretly negotiating as we speak? Nope. All we have is a few comments that suggest that Bay might consider any high-priced offer (who wouldn't?) and lots of speculation on the Street - certainly enough to fuel some Fear, Uncertainty and Doubt among end users everywhere.
Fortunately, the situation here is much like the MCI/WorldCom deal - it is hard to conceive of any movement in the near OR long-term that would degrade the services offered to present or soon-to-be Bay customers. Our networks - both public and private - have gone corporate, and are now too important to be subjected to rapid changes in service levels (something well known to most potential acquirers of networking firms). So as we hear increased battlin' tops mouthing off on the MCI/WorldCom deal, and as rumors of Bay being snack food for Lucent, users everywhere should sit back and take this for what it is - a good way to beat the summer news slump.
Yes, there will be further concessions from MCI, and yes, I still stand by my prediction at the beginning of the year that there will only three of the Big Four internetworking firms will make it to December.
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On a closing note, it has been very entertaining to read all the good comments in the Forum section regarding my opinion on Token Ring last month. [Jump into the forum]
The overall reaction seems to be split, with some users loudly calling Token Ring a dead technology, with others noting, correctly, that Token Ring still has a very loyal following that is not willing to abandon the technology.
While the Token Ring/Ethernet battle is long over, and the overall Token Ring market is not what we would term a "growth" market, there are still enough users out there to make it worth some vendors' efforts (look at Olicom).
But the question still remains: Will High Speed Token Ring be enough to turn lady luck to the side of Token Ring vendors? No. While it will help some firms make a good profit over the next few years as Token Ring shops upgrade, faster Token Ring is unlikely to bring new customers into the fold. And without new business, vendors will ultimately begin looking elsewhere for growth.
So if you're a Token Ring shop, evaluate your vendor not just on its Token Ring capabilities, but on its products in the overall high-performance networking market. That is, how will the vendor help you migrate to the high-speed Ethernet and ATM networks of the future? |
