Intel buys Shiva for $US185 million

Intel buys Shiva for $US185 million

In a move that confirms its long-stated intention of competing broadly across the networking industry, Intel has announced it will acquire remote-access pioneer Shiva.

The buyout will bring Intel into the remote-access and virtual private network (VPN) markets with a bang and will give it a foothold in voice-over-IP equipment with products to be announced shortly by Shiva. It will also deliver Shiva's large customer base of small and midsize enterprises to a company that has made that segment its first target for networking.

The chip maker will buy Shiva, which was founded in 1985 and helped to create the remote-access market, for approximately $US185 million in stock. The acquisition is expected to be approved by year's end.

Intel has steadily expanded its network offerings over the past two years; officials have suggested it will compete with full-line enterprise network vendors such as Cisco Systems and 3Com. Its products already include network interface cards, switches, hubs, routing switches, and edge routers for small and midsize businesses and workgroups.

The acquisition will give Intel access to Shiva's sales channels in the service provider market, expected to grow significantly over the coming years, and play a major role in new technology deployment.

The companies plan to continue Intel's emphasis on providing easy-to-use technology. Mark Christensen, vice president of Intel's small business and networking group, said Shiva's voice-over-IP capabilities would be a key part of Intel's competitive strategy.

"The integration plans for voice over IP did play a major role in this decision," Christensen said.

Officials would not detail plans for integration of the two companies' technology, but Christensen did say that Intel's Express Router would be merged with Shiva's WAN access products over time.

Lay-off plans

No immediate plans for lay-offs were announced, but the executives said efficiencies could require some reassignment of duties. Intel does not plan to close Shiva's headquarters or other facilities, Christensen said.

Analysts said the purchase will continue Intel's steady drive to control more of the network infrastructure.

"I suspect this is going to be one of a number of acquisitions to round out the networking line overall," said John Morency, principal analyst at Renaissance Worldwide in the US.

"It allows them to incrementally expand their reach . . . without forcing them to go too far and take on vendors and products that aren't anywhere near their core competency," Morency said.

Some say the ultimate goal is to speed up network links in order to sell new processors.

"If these faster processors don't get fed fast enough, you don't need them," said John Coons, an analyst at Dataquest.

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