Packet Design will spin off its initial company, called Vernier Networks. It plans to focus on a set of hardware and software for corporate wireless networks that provide a more sophisticated set of technology services, Estrin said.
Estrin's Packet Design is similar to other technology entrepreneurial efforts, sometimes known as "incubators." Packet Design intends to incubate technology ideas, then spin them off as companies while retaining equity in the ventures. As such, Estrin says Packet Design plays the role of a "perpetual start-up," something Estrin and her husband, Bill Carrico, were eager to do after departing prominent positions at Cisco Systems and returning to their start-up roots.
The Mountain View, Calif.-based Packet Design will likely announce two more spinoff companies in the next six to nine months, according to Estrin. Packet Design's overarching focus is to improve the performance of various parts of the Internet, with a particular focus on wireless, security and routing technologies, Estrin said. Estrin left Cisco in April of last year to start Packet Design.
Vernier is developing a set of technologies that will allow a corporate network administrator to provide selective access to their networks over a wireless link. If a visitor to a company needs wireless Internet access, but a company does not want them to access the entire contents of its internal systems, an administrator could allow the visitor to access the Net only.
Analysts said Vernier enters a highly competitive market, ripe to move beyond basic wireless connections to more advanced technologies. "We'll definitely see a lot more competition among the (wireless) hardware players in terms of software integration and those higher-level things like security and management," said Yankee Group analyst Sarah Kim.
In focusing on wireless networking for corporations, Vernier is hoping to take a chunk out of a rapidly developing market. The corporate market for wireless networking kits alone is expected to grow from $1.3 billion in 2000 to about $3 billion in 2003, according to analyst firm Cahners In-Stat Group.
Initial funding for Vernier will come from Packet Design. By the third quarter of this year, it is expected that Vernier will look to outside investors for further funding as it closes in on the launch of its actual product, Estrin said. Vernier intends to sell systems as well as license its technology to third-party equipment providers.
Packet Design itself has thus far raised $24 million in venture funding.
Vernier's technology builds on both the 802.11 wireless technology standard as well as the emerging "Bluetooth" standard, allowing for selective access to wireless networks rather than the current "all or nothing" approach, Estrin said. Vernier supplies both access control and authentication technology, for example, so that a baggage handler at an airport using a wireless device could not access an airline reservation system by mistake.
Vernier's technology has been in tests at the University of Washington since January.
The company has been developing the technology for the past year. It hopes to have 20 employees by the end of 2001. It will operate initially out of Packet Design's headquarters and act as a subsidiary of Packet Design for the next three to four months, Estrin said. Tom Colson, previously a vice president at NuvoMedia before it was acquired by Gemstar, will serve as Vernier's general manager.
Despite tightening venture capital markets amid increasing economic uncertainty, Estrin said she remains confident in Packet Design's model to rely on third-party investors to take the funding lead once her company implements a technology idea.
"There's still funding out there," Estrin said. "It certainly has not changed our strategy at all."