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Technology Stocks : Xylan -- Ignore unavailable to you. Want to Upgrade?

To: Glenn who wrote (3465)	11/17/1998 7:10:00 PM
From: Gary Korn	Read Replies (2) \| Respond to of 4135

Competition doesn't worry Xylan CEO Kim says his firm is well-positioned in the enterprise switch market, despite presence of Lucent, Nortel. Network World, 11/16/98 Xylan is usually described as occupying a narrow slice of the enterprise network market - the sparsely populated middle ground between the teeming mass of start-ups and the handful of multibillion-dollar companies that own the top tier. But Steve Kim, founder, president and CEO of the Calabasas, Calif., company, says Xylan has already cracked the top tier of high-end enterprise suppliers. This is thanks to what he describes as Xylan's advanced technology offerings and missteps on the part of competitors. In this interview with Network World Editor in Chief John Gallant, Kim opines on Xylan's strategy, the impact of Lucent and Nortel in the enterprise equipment market, and more. Note: Material in bold is in addition to what was printed in Network World. With all of the consolidation and change taking place in the network market, is Xylan's strategy changing? We have the same strategy we've had for over five years - offering true high-end, switch-based solutions. When you are dealing with high-end customers, there are a lot of different problems you need to solve. We need to offer Layer 2, 3 and 4 solutions, constantly boost the speed of our products, work in heterogeneous environments, etc. Those are difficult things to do. Our competitors are trying to do those things by buying other companies. It's taken us five years to develop these compelling end-to-end solutions. But they're all developed internally - no acquisitions. We have the same [Application Specific Integrated Circuit] family, one network management platform and one architecture. It is very hard for our competitors to patch together all of the things they've bought into a single solution, especially when you are talking about end-to-end virtual LANs, security or directory services. Our approach brings the customer a lower cost of ownership and a longer lasting product line. But the positive side of acquisitions, at least if you believe Cisco, is that they enable you to get into new technology areas without risking a lot on research and development. You can wait to see which areas will be important and grab the hot start-ups. That sounds like some kind of a visionary approach to networking - acquiring companies to keep up. You can go out and acquire bits and pieces of technology. But customers don't want a hodge-podge; they want an integrated solution. Does that mean you aren't interested in acquisitions? We always look at them. But we're smarter about this. Sometimes companies are making acquisitions just to recruit people. But we've built 10 development centers around the world, in places like India; Irvine, Calif.; Utah; North Carolina; Salem, N.H.; and Acton, Mass. And at those centers we are constantly expanding our capabilities. That's almost like buying companies. We let these centers focus on adding unique functions and capabilities, and they help us to recruit people. But we're also looking at areas such as voice over IP. The problem is that the prices for these companies are way up, and we're afraid we will lose all the good people before the deal is even done. Speaking of acquisitions, what do you say about all the rumors that Xylan will be acquired? There have been rumors out there for the past two or three years, and I'm not going to comment on them. You know, companies usually get bought out when they feel they've reached their limit. That is not the case with start-ups, of course, but look at Bay Networks. They just couldn't come up with the solutions customers needed, and they were losing their market share to Cisco and Xylan. So they threw in the towel. Do you think Cisco has locked up the enterprise market? [Laughs.] This is a growing market and people are always looking for better alternatives, better technologies and better pricing. To be a $10 billion or $15 billion company in the future, we have to get 10% of the switching market. We'll give Cisco 90% and take 10%. How is the enterprise market changing with the entry of Lucent and Nortel Networks? The dynamic is changing because voice/data integration is happening. Unless Lucent, Nortel and Alcatel can get into enterprises, they'll lose their other markets. From our point of view, their acquisitions mean we're seeing less competition. Nortel and Lucent don't have expertise in data, and they don't have the game plan to be successful in the enterprise. They can offer single-vendor solutions for carriers, but when they get to the enterprise, I don't think they can be successful. Data is all new to them. Data is much more complicated. How will these huge companies adapt to these changes? We don't see Lucent and Nortel out there. Lucent bought Prominet, and now we don't see Prominet anymore. What are the key future directions for Xylan? We have more bandwidth now than people will need for the next five to 10 years with gigabit or ATM. People will be focusing more on the services for these networks: security, directories, quality of service and multicast. They're the keys for the future. It's easier for us to develop those services because we have one architecture.

To: Glenn who wrote (3465)	11/17/1998 11:22:00 PM
From: E_K_S	Read Replies (1) \| Respond to of 4135

I agree...Here is an article that shows what Intel is looking for ... Intel eyes more networking firms (http://www.news.com/News/Item/0,4,28903,00.html?st.ne.ni.lh) From the article:"...Santa Clara, California-based Intel has made other networking acquisitions in the past few years, including Case Technologies and Dana Communications, and has made investments in Xircom. Intel sells its so-called gigabit Ethernet switches, which speed data in corporate networks, through a distribution agreement with Fore Systems. Fore gets most of its revenue from powerful, expensive switches used by corporations to combine voice and data traffic on their networks. The Pittsburgh-based company uses its Intel partnership to broaden its product line..." ===================================================================== It seems that the top candidates for XYLN are LU or IBM and maybe Nortel. I really do not think Intel is interested. EKS