Looking to provide its customers with the latest in high-speed networking technology, Compaq Computer (CPQ) will roll out a gigabit-speed switching device next week based on technology licensed from start-up Extreme Networks, according to sources familiar with the company's plans.
The move could be a boon to the start-up networking firm and also could help Compaq raise its profile in the networking market. Gigabit Ethernet is the next-generation version of the classic network technology for tying PCs and servers together and to a network. A standard is expected to be ratified in June.
A spokeswoman for Extreme declined to confirm the existence of an arrangement with Compaq, but she did note that the start-up has licensing arrangements with several companies. A Compaq spokesman could not immediately be reached for comment. Extreme already provides technology to 3Com.
News of the deal could help Extreme survive in the midst of a glutted market for gigabit-speed technology. Independent gigabit-speed start-ups could find it increasingly hard to compete in the coming months, due to the rollout of similar equipment by large firms, as reported last week by CNET's NEWS.COM.
The Compaq relationship is an obvious signal of close ties between the start-up and the PC giant, but Extreme's executives recently discounted the notion that the company is looking to be acquired.
"We were not founded to be sold--but there's nothing wrong with that strategy, by the way," said Gordon Stitt, Extreme's president and chief executive, in an interview.
But some analysts believe the start-up could be the next company to be plucked by a large player such as Compaq. "They're an acquisition target, obviously," said Esmerelda Silva, analyst with International Data Corporation.
Under the terms of the deal, Extreme will reportedly license its Summit 4 switch to Compaq and the two will jointly develop alternative configurations for gigabit-speed gear.