Cisco buys StrataCom, jumps into WAN market

Cisco buys StrataCom, jumps into WAN market

A quick straw poll of Australian computer industry professionals indicates Cisco's $US4 billion purchase of WAN vendor StrataCom promises to result in some interesting manifestations in the local market.

"It's probably going to cause some problems for Bay Networks," said a WAN industry insider who requested anonymity. "Given that Cisco has locked up the router market in Australia, this alliance will allow them to leverage their high-end routers straight into the wide-area networks. It's a beautiful move for them.

"For Cisco to have access to this technology is a very strategic move, and is very clearly a move to get into the WAN market. Where are StrataCom's switches installed? They're installed on the big telecommunications carriers. This sets them up to do point to point," he said. "Bay is going to have to move very quickly to form a counter strategy to this. They don't hold the high-end of the router market, especially in Australia."

Although he acknowledges the acquisition is significant, Rob Willis, Bay Networks' general manager for Australia and New Zealand, disagrees with those who say Cisco's purchase of StrataCom will result in channel strife. "I don't think it'll cause a lot of friction in the channel. It's really a major WAN issue and that will be where it will have the most impact," he said.

As a result of the acquisition, StrataCom will license Cisco's IOS software and integrate it with its own switching products. Meanwhile, Cisco will distribute StrataCom products worldwide. In the long term, Cisco sources say the companies will move toward joint product development in IP routing and ATN switching.

Cisco president and CEO John Chambers says his company has been looking for a switch vendor to complete its product line. Interestingly, the move comes less than a month after IBM announced plans to buy Cascade Communications, a StrataCom competitor. Now the only thing missing in Cisco's arsenal is a hub vendor, and analysts say the internetworking giant is expected to acquire one of those soon.

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