Ethernet start-up signs NEC

Alteon Networks is moving fast out of the gigabit networking starting gate, lining up key partnerships in its bid to be among the few start-ups left standing when the Ethernet market shakes out.

A little more than a month after signing a reseller agreement with Unix systems giant Sun Microsystems, the server switching start-up has corralled another third party, NEC.

In the fragile world of nascent networking companies, a partnership advantage can be key, according to analysts. The heated start-up battle for a share of upgrading Ethernet-based networks to 1,000-mbps technology makes these relationships necessary, they say.

Gigabit Ethernet is an emerging standard, expected to be ratified by the first half of next year, that takes existing Ethernet technology and turbocharges it from its current 100-mbps speed. Numerous companies are shipping, or have announced plans to ship, products prestandard in order to gain a foothold in the market. Alteon focuses on server-to-network connections, thus the deals with a huge Unix supplier and the largest Microsoft Windows NT server company in Japan.

The company's single-minded approach to the market--with its server-based network switches and interface cards--has given it an advantage when making partnership deals, according to Dominic Orr, president and CEO of Alteon. He said other deals spanning Unix and Windows NT systems vendors are in the works, but refused to disclose details.

Skip MacAskill, analyst for the Gartner Group consultancy, noted that Alteon has done well so far by targeting an easily understood market--server connections to a network--and has parlayed that focus into high-profile partnerships.

"There's very little [Gigabit Ethernet] product that's available out there so these deals will get them into some good distribution channels," MacAskill said. "It gives Alteon some credibility."

One downside of Alteon's strategy, from MacAskill's point of view, is that the company may be viewed as a pure "niche player" that does not take advantage of the market for network backbones, the interconnection points between network sites in a campus environment.

This market boasts higher margins for Gigabit Ethernet entries who add advanced services and option to a basic gigabit-speed switch. Other gigabit players, such as Extreme Networks and Prominet, among others, have targeted the backbone market.

Under terms of the deal, NEC will deliver Alteon's products to the Japanese and Australian markets. The two vendors will jointly develop an ATM (asynchronous transfer mode) uplink for Alteon's AceSwitch. NEC officials said the company plans to deliver gigabit-capable systems by the third quarter of this year.