Cisco confirms interest in router startup

Cisco confirms interest in router startup

Cisco Systems' next acquisition could be a router start-up it has funded.

According to Cisco's 10-Q filed Nov. 19, the company made an investment in BCN Systems, a Santa Clara company staffed with ex-Cisco and ex-Juniper Networks routing and switching engineers, on Oct. 30. BCN is developing "a family of next-generation networking products that encompass the experience and expertise of our engineers, partners and customers," according to the BCN Web site.

That customer is Cisco, according to the 10-Q.

"The Company has the right, but not the obligation, to acquire the portion of BCN it does not own, with such purchase dependent upon the Company's sole determination as to whether certain technical conditions have been met," the document states. "The aggregate total purchase value of BCN could range from approximately US$45 million to approximately US$195 million depending upon the achievement of certain milestones, including those that would be determinable only after closing."

Some analysts believe BCN is developing a new range of edge routers for Cisco.

"We believe BCN is developing next generation enterprise/service provider edge routers to replace the 7600 and/or 10000 series at Cisco," state Nikos Theodosopoulos in a recent bulletin on Juniper's third-quarter results. This was mentioned in the Juniper bulletin as an example where Cisco and Juniper are poaching each other's talent to develop competing products.

The founder and CEO of BCN is Michael Beesley, who was the lead engineer on several mid-range routers at Cisco before his departure in 1997. After that, Beesley was also one of the lead engineers on Juniper's M40, the lead engineer on the M20 and "pivotal" in the design and implementation of the company's T640 core router, according to the BCN Web site.

Other observers believe some of the Procket Networks intellectual property Cisco acquired for US$89 million six months ago has found a home at BCN and in the next-generation 7600 and 10000 series successors. Back in June, Cisco Routing Technology Group Vice President Mike Volpi said the Procket engineers would be working on service provider edge extensions to Cisco's new, modular IOS-XR operating system, and a follow-on generation to the 40G bit/sec silicon packet processors Cisco unveiled with last May's launch of the CRS-1 core router, but oriented towards lower-end systems.

Cisco would not comment beyond what was stated in the 10-Q.

"If BCN has access to IOS-XR, then the Procket engineers are indirectly working on this because when you think about it, the big (unfinished) job in IOS-XR is filling out the edge features," says Mark Seery, an analyst at RHK Inc.

The CRS-1's IOS-XR operating system kernel is obtained from QNX Software Systems. Calls to QNX were also not immediately returned.

The 7600 routers are almost four years old and the 10000 series routers are five years old, so both are due for a refresh. Cisco CEO John Chambers recently said during Cisco's first-quarter fiscal 2005 earnings call that he is "comfortable" with Cisco's "evolution plans" for both products.

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