Network technologies and strategies for network resellers, integrators and ISPsBay and Nortel go Woodstock with mergerby Nancy WeilBOSTON - Northern Telecom (Nortel) ended weeks of speculation last week by announcing that it is buying Bay Networks for $US9.1 billion in a pairing that top executives at the two com-panies described in rapturous terms.

"It was almost a Woodstock-type experience," said Dave House, Bay chairman, chief executive officer (CEO) and president, of the discussions between the two companies that preceded last week's announcement.

Besides likening the talks to the 1969 Woodstock rock concert and lovefest, during a recent teleconference the executives played off each other's comments as if they had been a team for years.

House and John Roth, Nortel president and CEO, had each been searching for a pairing that would strengthen their respective companies and push them into the booming IP (Internet telephony) market. The companies also found they had a complementary set of customers with very little overlap, according to House.

If the deal gains approval from Bay shareholders and regulators, it will be the largest transaction to date in data network systems and the merged company will be the first to supply worldwide IP integrated networks offering voice and data, Roth said. Nortel has wanted to move into that market, but Roth said he knew that he had to be able to provide a more reliable network to users and Bay will supply the equipment to reach that goal.

Bay shareholders will get a fixed exchange ratio of 0.60 of one Nortel common share for each share of Bay common stock. Nortel expects to issue about 134 million common shares as part of the deal.

Nortel will integrate its Enterprise Data Networks business into Bay's operations. Roth will be CEO and a director of the merged corporation. House will be president of Nortel and serve on the board of directors.

No layoffs

There will be no layoffs, Roth pledged. The merger with Nortel would create a company with combined 1997 sales of $US17.7 billion. The merged company would operate worldwide with 80,000 employees.

When House took over at Bay nearly two years ago, he said he was not going to sell the com- pany, but "business changes very quickly, particularly when you're living in the Internet", he said.

The merger is expected to intensify Bay's competition with Cisco Systems, the networking giant and major provider of IP routers and equipment in the enterprise and service provider segments. On its own, Bay has not been a potent force against Cisco in those markets. In recent weeks as merger rumours swirled, analysts and industry observers have noted that if Bay were to align with a major telephone company, the competitive picture would significantly change.

The deal will have little effect on existing partnerships and agreements that both companies have with other firms. For instance, Bay is working with L.M. Ericsson Telephone Co on product lines to support the MPLS (Multiprotocol Label Switching) standard and that work will continue, House said. Likewise, Nortel will continue work with Cabletron Systems on its "Power Network" partnership, Roth said.

But how those agreements will shake out for Nortel remains open to question, said Jay Pultz, an analyst with GartnerGroup in the US.

Hazy future for partners

"It really makes you wonder about the future of the Nortel relationships with those companies," he said.

However, GartnerGroup has been predicting such alignments in the IP market. The market research firm has identified four basic camps: besides Nortel in the leadership position are Cisco, Lucent Technologies and the combination of 3Com, Newbridge Networks and Siemens AG.

Major telecom providers and networking companies are likely to continue consolidating and today's merger announcement represents a major step in that regard, Pultz said.

The move "is a lot like a Lucent strategy" of taking "more of a bulletproof, highly reliable technology" and porting that technology from the carrier side of the market into the enterprise, he said.

And while the merger holds promise, there still is the potentially messy issue of making it happen.

Nortel faces dual difficulties as it moves more definitely into the IP market.

"Nortel has got to keep its eye both on the market and also on integrating Bay internally," Pultz said. "You can't lose sight of what's happening in the marketplace."

Cisco approves 'poison pill' plan to deter hostile takeoversCisco Systems last week announced its board of directors has approved a share- holder rights plan designed to protect its investors in the event of a hostile takeover bid.

Known in the business world as a "poison pill", the plan is a strategic manoeuvre to make the company's stock less attractive to potential bidders, and to encourage bidders to solicit offerings through the company's board of directors, Cisco said.

A company spokeswoman said Cisco is not currently the target of a takeover bid, but added that such plans are not uncommon among large corporations.

Mac NetWare to be spun off

Like UnixWare and Novell DOS before it, NetWare for Macintosh will be spun off to another company for future development and support. Later this month, Novell will announce that Prosoft Engineering (, best known for custom software, will acquire all of Novell's Macintosh products.

It's rumoured that the first new product will be an improved NetWare client for Macintosh, one including native TCP/IP support.

Video streaming technology takes off

IBM and Lotus are integrating video streaming technology across their product lines with the expectation that real-time collaboration will enable several new applications, including distance teaching and technical support.

Learning Space 2.6, due by year's end, will manage servers doing live video or white-board sessions, said Bill Pence, director of development for Internet Media.

Lotus is pursuing a similar strategy with technology acquired in May from Ubique and DataBeam. Called SameTime, the technology gives users a way to both "attend" a live event via video window, and view related material. Lotus will integrate SameTime into Lotus Notes/Domino 5.0, due this fourth quarter.

NetManage buys FTP

NetManage will buy FTP Software to create a single-source PC connectivity provider of applications for Unix as well as IBM AS/400 and mainframe systems.

NetManage provides Windows applications for connecting to Unix and IBM midrange and host systems, as well as support tools for software vendors, and FTP Software offers centralised management software.

Xylan adds incentives for partners

by Philip Sim

SYDNEY - Xylan is putting its money where its mouth is, as it bids to drive sales of its switches through the channel.

The company last week announced a new channel program called Business Partner Select, which will give resellers access to training support and marketing tools and funds, according to David Ramsay, sales director of Xylan Australia/New Zealand.

"Resellers are critical to our success in growing every area of the switched network market. By partnering with leading resellers, we will have greater access to our target customers - especially for our OmniStack family of small switches," he said.

Ramsay expects Xylan to sign its first business partner in the next couple of weeks. However, it is still seeking top-tier resellers in the health, education, government, telecommunications and defence markets.

Benefits of Business Partner Select include:

Training Support - substantial discounts of Xylan Switch Expert and Switch Specialist certification and free updates on the use, configuration and installation of Xylan Omniswitch and OmniStack productsDemand-generation tools - marketing assistance through trade show support, direct mail and seminar programsCo-op marketing fund - funding assistance for approved marketing projectsDemonstration program - steep discounts on demo and lab equipment.

Australia gets PrivateWire

by David Binning

MELBOURNE - Optimistic that the Australian market for network security technologies will be spurred along by a rejuvenated interest in electronic commerce, US company Cylink has decided to land in the local market.

The company's flagship offering, PrivateWire, to be distributed in Australia by remote access specialist KNX, is software designed to allow secure multiple-user communication as well as access to data across a TCP/IP network.

According to KNX's managing director, Charles Greatrex, PrivateWire operates according to a five-layer security model. Authentication exists at the entry level, while payload encryption provides protection from third party interception. At the third level, the product guarantees that even if information is hijacked, that information cannot be changed.

At the fourth and fifth levels, there are source and location verification capabilities followed by the ability to develop public key encryption digital signatures.

PrivateWire also features a "non repudiation" service, which means that transmissions made using digital signatures can be played back to guarantee an author is who they say they are. Cylink's senior vice president, sales and marketing, Tom Butler, said that this is actually admissible as an official legal document in the US.

Butler said that KNX was chosen to represent Cylink due to its proven track record in providing secure access at the enterprise level. Greatrex said that the company has strategic partnership agreements with Telstra and is currently working with the ANZ bank to develop secure online transaction solutions.

Butler said that if e-commerce and other Web- based communication initiatives are to succeed in the real business world not only in Australia, but all over the world, capabilities such as user authentication "need to be better", otherwise organisations will not be confident of the benefits. Both Butler and Greatrex claim that few solutions integrators in Australia have adequate experience in this area.

Technical expertise

Following Cylink's recent acquisition of North American company Algorithmic Research, Butler believes Cylink has the user base and tech- nical expertise to become a leader in network security in Australia.

He said that Australia is tracking the US by between 12 to 18 months in terms of elec- tronic commerce sophistication. Cylink, while not having had a local presence until now, does have local sites for its technology as a result of a number of global agreements forged in the US. For instance, Citibank currently uses Cylink's PrivateWire product in Australia, Butler said.

Xylan beefs up switch

by Robin Schreier Hohman

SYDNEY - Xylan is beefing up its chassis-based OmniSwitch with new ATM cell switching modules, new software, and support for digital subscriber line, cable modem and other high-speed data network services.

The OmniSwitch is a multi-layer switch that integrates LAN and ATM switching, WAN connectivity, virtual LANs, IP-based firewalls and high-speed routing. It has a cell ATM architecture and can switch ATM to the desktop, LAN and WAN.

The new products are designed to increase the switch's ability to handle voice and video, control bandwidth and increase quality of service (QoS).

Xylan is also looking to make a name for itself in the carrier equipment market with the addition of features that enable the OmniSwitch to work as a broadband access concentrator.

Enabling the switch to serve as a concentrator is vital for handling high-speed connections.

Cabletron acquires FlowPoint, Ariel unitby ARN staff writersATLANTA - As part of its effort to gain ground in the remote-access realm, Cabletron Systems yesterday announced it has signed definitive agreements to acquire FlowPoint and Ariel communications systems group.

The announcement came at SuperComm in Atlanta, where Cabletron launched its broadband initiative to address the growing demand for higher bandwidth and more reliable networking products.

With the buyouts, Cabletron will be able to fill in its remote-access product lines, the company said.

It will add Ariel's DSL (digital subscriber line) central office concentrator, which is capable of decreasing network congestion through support for ATM.

The company will also have FlowPoint's subscriber side equipment, which will provide telecommuters, small businesses and branch offices with high-speed Internet access.

Ariel is a provider of end-to-end ADSL/ATM (asynchronous transfer mode) systems, which allows PC users 24-hour access to the Internet, corporate intranets and online services. FlowPoint makes customer-premise DSL and ISDN network access products.

ATM represents reseller opportunity, Fore claimsby Philip SimSYDNEY - Fore Systems has lashed out at critics of ATM (Asynchronous Transfer Mode) who claim the technology is all but dead.

"If ATM is dead, then we're selling to a lot of corpses," said Michael Green, Fore System's senior vice president of worldwide sales.

Both Green and local general manager Charles Spooner claimed emphatically that ATM still represents a massive opportunity for resellers and integrators in Australia. He says the local success enjoyed by the company over the past 12 months with just a two-man team is proof of that.

The company has already scored numerous contracts in Australia including high-profile wins over Cisco at Monash University and Charles Sturt University.

Ready to embark on its next growth phase, Fore is set to take on a number of reseller partners. It is looking for high value add partners with services expertise.

Spooner said Fore "was very close" to announcing its first partner and has also just announced an outsourced service and support arrangement with NCR. That agreement will provide customers and integrators with 24 x 7 service and support.

Green scoffed at suggestions that ATM was overly complex to master and support and that Gigabit represented a more practical choice of technologies for resellers to specialise in.

"I think it is a myth created by our competitors that ATM is much more difficult to manage than Ethernet. Our resellers find that once they've made the initial investment in learning ATM, it is much simpler to maintain and manage," he said.

ATM allows the reseller or integrator to attach greater value add to its solution, which could include services like voice and video. "The more value add you provide the greater the customer loyalty," Green said. "Gigabit Ethernet is going to be a commodity product. A lot of people are going to be selling it, so there is not going to be a lot of margins."

What's more, Gigabit is still an immature product whereas ATM is a mature technology, well proven in the market, Green said. "The issues Gigabit Ethernet is going through are the same issues ATM went through years ago," Green said.

According to the Dell'Oro Group, the ATM Campus LAN switch market was worth $US261 million globally in the first quarter of this year. Of that market, Fore has a 28 per cent market share. On the ATM adapter side, Fore has a commanding 58 per cent market share.

Resellers wanted for funky remote access gearby Philip SimSYDNEY - Funk Software is looking for resellers and integrators with experience in remote access to hawk its Steel-Belted Radius server.

The company has just released the latest version of its product for the NT and Solaris platforms and believes it is well placed to be adopted by ISPs and carriers offering advanced remote access capabilities such as virtual private networks and roaming capabilities.

RADIUS stands for Remote Access Dial-In User Services. A RADIUS server keeps track of and takes care of remote access authentication, authorisation and session accounting (AAA) information.

Before RADIUS, this type of information needed to be stored on every individual remote access server, limiting its usefulness particu-larly where more than one brand of remote access equipment was used.

While most remote access equipment purports to adhere to the RADIUS standard, first developed by Livingston, most vendors have added "vendor specific attributes" to their equipment, said Funk's international sales director Taylor Treese. Steel-Belted RADIUS acts as middleware to connect a wide range of remote access equipment while still retaining the capabilities and functionality of these individual products.

It also enables users to leverage their existing directories such as Novell NDS directory or Windows NT domains. Version 2.1, which is available for Solaris and NT, adds support for directories based on SQL databases.

Increased RADIUS demand

Steel-Belted Radius, which costs $6499 RRP, also adds additional accounting capabi-lities to RADIUS which Treese claims is a weakness of the standard Livingston server.

He admits that, so far, there has been little interest shown in RADIUS by corporate users. "We're a little ahead of the curve," he said. However, he believes demand will soon ramp up as corporate use of remote access and directories is constantly increasing. Right now, however, he believes there is a ready market for these types of capabilities with ISPs who need the type of authentication and accounting capabilities provided by Steel-Belted RADIUS to bill and manage their users.

Funk Software's Steel-Belted RADIUS is being distributed by Logical Connections.

Logical Connections

Tel (02) 9999 0644

Fax (02) 9999 0655

Router, remote access markets suffer declineby IDG staffSYDNEY - Worldwide sales of routers and remote access devices are in decline, network analyst firm the Dell'Oro Group reports.

Based on worldwide figures for the first quarter of 1998, both router and remote access sales declined 6 per cent when compared to the previous quarter. Dell'Oro said worldwide router sales are down to $US1.3 billion for Q1 '98, while remote access sales declined to $US500 million for the same period.

Dell'Oro Group figures suggest the situation is favouring the big players who benefit from increased market share at the expense of competitors.

In the router market, Cisco Systems remains on top with 63 per cent worldwide market share on Q1 '98 figures of $US818 million, down from $US867 million. Bay Networks came in a distant second at 10 per cent with revenues of $US126 million for Q1 '98, down from $US141 million.

The remote access market remains locked in a three-way battle between 3Com (26 per cent share), Ascend and Cisco (both 25 per cent share).

Other notable networking vendors such as IBM, Micom/Nortel, Shiva, Lucent, Microcom/ Compaq and Cabletron are struggling according to the report. The companies have only secured market shares of 4 per cent or less in both the router and remote access markets.

Drop me a line

ARN's Network Solutions section is designed to keep network resellers, integrators and ISPs informed about the latest in network technologies and strategies. Drop me a line at with any news leads you want followed up or opinions you feel are important to this sector of the channel.

Follow Us

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.


Show Comments