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Despite merger, Ascend sticks to plan

As its merger with Lucent nears completion, Ascend hopes for vindication through that a next-generation routing device.

As the largest merger in the history of data networking approaches completion, Ascend Communications continues development on a next-generation routing device that it hopes will make the market forget about the company's past strategic blunders.

News of Ascend's internal plans for a next-generation routing device are significant because its previous foray into the market received relatively little acceptance. In addition, a slew of start-ups--many that include former Ascend executives--could easily fill the breach.

Instead, Ascend says it will rely on its own development teams and possibly technology it gains from Lucent.

"We're working on the next-generation high-speed router," said Ken Fehrnstrom, Ascend's vice president of business development, in an interview with CNET "The window isn't closing for that space. We would love to have something by the first half of this year, but based on our customer expectations we can have something out by the end of this year or even extend it into next year."

The company is in the throes of making final preparations to integrate with Lucent Technologies, the telecommunications equipment giant that purchased Ascend in a $20 billion deal last month. Final approval of the Lucent-Ascend marriage is expected sometime in the second quarter of this year.

Ascend has been one of the few companies to successfully compete against Cisco in data networking, carving out niches and a strong customer base in lucrative carrier accounts. That was believed to be the primary reason behind Lucent's overture.

High-speed routing technology--often enclosed in a switching device based on the Internet protocol, or IP--is thought to be the next major battleground for various networking equipment providers, from the post-merger Lucent to Nortel Networks, Cisco Systems, and start-ups like Juniper Networks.

The technology is expected to play a significant role in next-generation network build outs by various Internet service providers and traditional carriers moving to a more data-centric scheme.

Ascend will soon gain the advantage of Lucent's sprawling Bell Labs development arm. Lucent's own high-speed work has resulted in a set of IP-based switching devices announced last year that are shipping now, according to the company. That technology is expected to play a role in Ascend's own development, according to Fehrnstrom.

Observers note that the combination of Lucent and Ascend still leaves holes in the duo's post-merger high-speed product line that could be filled by the type of device Ascend is developing. "They've got some catching up to do there," noted John Armstrong, an analyst with market researcher Dataquest. "The challenge for all these guys is to leverage their existing strengths."

As for the company's current product--the so-called GRF high-speed routing device--Fehrnstrom admits Ascend did not promote it the way it should have, partly because of the acquisition of Cascade Communications around the same time in 1997.

News of Ascend's plans could deflate the options for some high-speed start-ups looking for ways to turn their technology into meaningful dollars. Many are in a position either to sell the company or return to the coffers of venture firms for another round of funding.

"We have looked at high-speed router companies that are focused on the service provider market," Fehrnstrom said. "It's a huge opportunity. All those companies want second sources."

Although development plans are typically altered by market dynamics, the lack of an acquisition play by one of the largest firms in the networking arena equates to one less opportunity for a start-up to cash in. As Ascend's chief technologist Jeanette Symons said in an interview: "A start-up has almost no chance to make it today."