Alcatel buyout lets Xylan shoot for Cisco

Alcatel buyout lets Xylan shoot for Cisco

Fast-growing networking vendor Xylan was catapulted into the networking big league last week when it was acquired by telecommunications giant Alcatel in a cash deal valued at $2 billion.

Xylan's Australian managing director David Keane said even the biggest customers will be forced to recognise Xylan as a major player now that it operates as the data networking division of Alcatel.

"Competitors have never been able to say don't buy Xylan because they have bad technology or because they don't have good people - they've only been able to say don't buy Xylan because it's a small company," Keane said.

"Well I can now say don't buy Cisco because it's a small company," he quipped.

Nick Verykios, chief marketing officer of Lan Systems, the exclusive distributor of Xylan product in Australia, was upbeat about the announcement.

"It's business as usual for the moment, except that we might have to deal with more volume," Verykios said.

"Xylan sells a network in a box and when your looking at that kind of solution, what is equally as important as the technology is whether you've got the runs on the board and the size of your company," he said.

"This will definately allow Xylan to hit home with many more users."

Keane said Xylan resellers would more than likely get access to a whole new product set that could catapult them into the voice and data integration arena.

"If they're smart, resellers can make a lot of money. Traditionally there have been the PABX resellers and the data communications resellers and never the twain shall meet. Resellers and integrators have to understand that they can make a lot of money by combining these technologies.

"Alcatel are a long way ahead of Cisco in this arena," he added.

Keane also claimed customers were optimistic about the position the deal leaves Xylan in.

There would be little of the integration problems that have plagued many such acquisitions, he added, because Xylan was not as large a company as Bay and because Alcatel and Xylan had been long-time partners. Alcatel have previously owned a 5 per cent stake in the company.

"We've already done joint development and joint marketing. We understand each other's businesses," Keane said.

Should the acquisition go ahead as expected, Alcatel plans to reorganise into three separate divisions. There will be one focused on Internet networks and fibre optics, one on communications networks and one on corporate networking.

The new Internet division will primarily serve the needs of new telecommunications operators rolling out IP-based networks, while the communications networks division will offer products aimed at converging existing voice and data networks for more traditional operators, the company said during a press conference last week.

"Xylan is Alcatel in the domain of corporate data networks," according to Alcatel's president and general director, Serge Tchuruk.

"We went fishing with a line, not a net," he said, in reference to how Alcatel believes Xylan to be a perfect fit into its future strategy. Combining Alcatel's expertise in voice networks, ADSL (asynchronous digital subscriber line) and intelligent networks with Xylan's competencies in enterprise switching and routing, will enable Alcatel to offer corporate customers and operators a complete voice/data solution, he said.

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