Newbridge eyes ISP market for new hardware sales

The Canadian networking equipment firm today began customer trials for a new high-end network switch geared to help telecommunications carriers and Internet service providers (ISPs) build faster networks.

The hardware trial represents Newbridge's latest attempt to offer technology for the network "core," or backbone through which most Internet data travels, Newbridge product marketing director Len Fardella said.

The struggling networking firm was a leader in the market a few years ago, but has since been surpassed by rivals Cisco Systems, Nortel Networks and others in both revenue and new technology, Ryan Hankin Kent analyst Joe Skorupa said.

In an attempt to polish its tarnished image, Newbridge announced a corporate reorganization--yet the company's new chief executive has also said Newbridge is open to takeover offers.

Newbridge last month announced it would lay off 700 employees and outsource its manufacturing and customer service operations to save money after reporting dismal second-quarter financial results. A handful of top executives, including president Alan Lutz, left the company following Newbridge's seventh profit warning in the past 11 quarters.

During the first half of 1999, Newbridge received no revenue from hardware built for the network core, a market that is expected to grow to between $8 billion and $16 billion by the year 2003, according to Ryan Hankin Kent.

Networking rival Cisco, on the other hand, has led this market with 31 percent market share this year. Lucent Technologies ranked second with 28 percent, followed by Nortel with 12 percent.

Previously, Newbridge was the market leader with a hardware device that could run at 12 gigabits per second (Gbps). This technology is now sold mostly for the "edge" of the network, where service providers connect their networks with long-distance network operators, Skorupa said. Now Newbridge is hoping to make a comeback with a device that has the capacity to send traffic at 50 Gbps.

"They basically got leapfrogged by other companies because the service providers' traffic demands were such that they couldn't wait for Newbridge," Skorupa said.

Although Newbridge has close ties with telephone companies and can expect to garner significant sales from that market, it may be harder for the firm to push its products to ISPs.

As telephone networks have evolved to handle more Internet traffic, Newbridge hasn't been able to keep pace with phone carriers' new networking needs. Thus, Newbridge doesn't have the equipment base that a Cisco or Lucent--as a result of its Ascend Communications merger--enjoys.

Newbridge is a leader in asynchronous transfer mode (ATM) technology, which sends multimedia data across networks at high speeds. The new switch combines ATM with Internet Protocol (IP) technology, representing a new twist in the company's technology development.

Newbridge expects to ship the new switch, called the 670 Routing Switch Platform, early next year. Company executives declined to state which carriers are testing the equipment, but Reuters last week reported that SBC Communications and British Telecommunications plan to use the switch in trials.