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Motorola, Nortel invest in Wi-Fi start-up

The two big-name companies invest in Wi-Fi equipment maker Trapeze Networks as it helps its partners develop wireless strategies.

Motorola and Nortel Networks have each taken a stake in Wi-Fi start-up Trapeze Networks, the company said on Tuesday.

Motorola Ventures, the strategic equity investment arm of Motorola, and Nortel Networks invested in Trapeze's third round of funding. Financial terms of the agreements were not disclosed, but Dan Simone, chief technology officer for Trapeze, said the company raised a total of $22.5 million in this round.

The third round of funding, which was led by the venture capital fund Duff, Ackerman & Goodrich, brings the total amount raised by the company to $67.5 million since its founding in 2002.

Trapeze makes wireless switches used to centrally manage radios and bay stations that connect PCs, laptops and other Wi-Fi-enabled devices to a corporate network.

Trapeze had already announced a strategic relationship with Nortel earlier this year. The companies are jointly developing products and Nortel is reselling Trapeze's equipment. But this is the first time Trapeze has been officially linked to Motorola.

"For us, Motorola is a strategic partner," said Simone. "They clearly have a wealth of knowledge when it comes to wireless voice and data communications. We focus on wireless LAN technology. But we have similar views on the evolution of the market toward mobility and how cellular and Wi-Fi will come together."

Motorola recently announced several new products, including some new handsets that are designed to be used in both cellular and Wi-Fi environments.

Large companies such as Motorola and Nortel have taken greater interest in wireless LAN switching start-ups in the last six months as companies such as Cisco and Siemens snap up smaller start-ups. In January, Cisco announced it was buying Airespace for $450 million. Siemens announced it was buying Chantry Networks in December 2004.

"We have definitely benefited from all the activity," said Simone. "I think Cisco buying Airespace helped legitimize our architecture in the mind of the customers."