Cisco claims Granite pays off

Evidence that Cisco Systems made a rare acquisition misstep is getting harder and harder to find.

This week's announcement of a second round of equipment supporting Gigabit Ethernet, the next-generation of the classic networking technology for connecting PCs and servers together, may quell any remaining doubts as to whether Cisco got something out of its $220 million deal for Granite Systems. The fall 1996 purchase was regarded as the first buy in the race to provide gigabit-speed switching devices.

The new products, reported by CNET's NEWS.COM last month, incorporates gigabit speeds in a line of high-density Ethernet switches called the Catalyst 8500 series. There has been pressure on Cisco to deliver next-generation Ethernet functions, given its role as the dominant networking player in the industry. Conversely, many believe Cisco has essentially "frozen" the market for gigabit-speed equipment by delaying its introduction until now.

Competitors--from the bevy of gigabit-speed start-ups to traditional rivals such as 3Com and Bay Networks--have had a field day wondering where the results of the Granite purchase went in recent months.

Cisco executives point out that what they bought from Granite was technology, not a finished product. "Scuttlebutt comes and goes," noted Alan Marcus, director of marketing for campus switching at the company. "I'm not sure what everyone was so concerned about."

"Almost exclusively our gigabit technology across Cisco is Granite technology," Marcus said.

Introduction of equipment from Cisco is sure to shake up a market that is glutted with high-speed technology options.

The company has already addressed the needs of current installations with new gigabit-speed support within its popular Catalyst line of switches. They augmented that this week with new additions to that line: two modules supporting Fast EtherChannel, a Cisco technology, and a new route switch processor that ties the new 8500 line to existing 5500 equipment.

The new 8500 line will roll out in two forms--an 8510 model available in June and a 8540 box scheduled for release in September, with prices for the new equipment starting at $24,995. MMC Networks is providing chip technology for the new line as part of the "engine" that controls the networking functions.

Separately, Cisco announced a new program called NetWorks to promote the use of low-cost Net access devices, therefore increasing the need for the back-end equipment Cisco provides. The program includes a set of NetWorks software that third parties can license. So far Sony and Samsung have signed up.

Also, Cisco announced another step in its partnership with Hewlett-Packard. The two giants will join forces to offer service providers a way to accurately bill and plan for outsourced networking services.

Cisco also rolled out a new feature for its AS 5300 remote access concentrator that supports voice and fax-over-IP services. The new gateway has a starting price of $550 per port.