The Gigabit Ethernet cat is out of the bag.
In the aftermath of last week's Spring Networld+Interop 97, the first signs of market distinction are appearing. And the big networking companies are beginning to sniff around for acquisitions, analysts said.
There have been few bumps in the road along the way toward a common standard for Gigabit Ethernet technology, which moves data across a network at 1,000 mbps (megabits per second). Although dozens of start-ups debuted various implementations of next-generation Ethernet technology, questions remained about interoperability. The Gigabit Ethernet Alliance, however, did display several examples of disparate gigabit-speed products communicating.
"The focus we have right now is to give customers the confidence that the equipment is interoperable," said Bert Armijo, field marketing manager for gigabit start-up Rapid City Communications. "Everybody's got unique industry strengths."
The Gigabit Ethernet standard is scheduled to be finalized in the first quarter of next year, a date that has remained solid for some time. "Everyone's been somewhat surprised at how quickly the movement has come with the standard in comparison to efforts that dragged on like the ATM Forum," said Esmerelda Silva, analyst for market researcher International Data Corporation.
The companies that may have separated themselves from the Gigabit Ethernet pack, based on interviews with several industry analysts and observers, include those that have incorporated popular layer-3 switching techniques in their gear and offered value-added software to govern network services.
Vendors such as Extreme Networks, Rapid City, Foundry Networks, GigaLabs, and Prominet scored points for taking the gigabit-speed implementation and wrapping enhanced functionality around it. Alteon Networks also won converts with its server-centric approach to the market and early distribution agreement with heavy-hitter Sun Microsystems.
The message behind the state of the emerging market is simple: Adding a higher-speed box will not necessarily solve network problems. "I think what we found at the show is that the gigabit-speed Ethernet guys realize that the big-bandwidth approach alone is not going to fly with users," said Skip MacAskill, analyst for the Gartner Group consultancy.
The start-up players who separated themselves from the pack were the ones who incorporated switching techniques at layer 3, normally a protocol level for router-based communications. "They'll be better positioned by definition," noted Craig Johnson, principal analyst for Current Analysis.
"I would expect some fallout would happen very quickly," observed MacAskill, with acquisitions coming as soon as next month and extending into the summer. Two rumors were especially prominent at last week's show: Bay might pluck Rapid City Communications to satisfy some time-to-market issues, and 3Com could gobble Extreme Networks to add layer-3 intelligence and gigabit-speed service enhancements to its previously announced Gigabit Ethernet strategy.
The start-ups left out of the buying spree could find it hard to survive in a market where sales channels and wide distribution are essential keys for survival, no matter how technically advanced the technology. Hewlett-Packard and Digital Equipment, which both made gigabit-related announcements at the show, could also dive into the acquisition frenzy to fill holes in product line functionality.
Others, such as XLNT Designs, could find a lucrative niche by incorporating uplinks for technologies such as FDDI (fiber distributed data interface) into its products. But it seems clear that the Gigabit Ethernet market, which is expected to grow to about $1.5 billion by the year 2000, according to most analyst estimates, will be very kind to some start-ups, and hard on others.