Fore makes gigabit bet
Will a $250 million gamble on Berkeley Networks' high-speed Ethernet technology pay off?
That's the question some are asking after Fore Systems, long a bastion of high-speed asynchronous transfer mode (ATM) networking technology based on "cells," paid $250 million for a startup in order to get into the race for a piece of the multibillion gigabit-speed Ethernet pie, a "frame"-based technology.
Fore already has a stable of Ethernet technology from previous acquisitions, but it has always seemed ancillary to the company's primary focus: providing ATM networks for corporate campuses and service provider networks.
Now the cell-based specialist hopes to tie its ATM-based gear to the latest speed boost in Ethernet--the dominant means to connect PCs to server computers and a network--via the acquisition of Berkeley Networks. The idea is to tie local network backbones to an inter-network of ATM, according to company executives.
"There's no doubt it gives [the Ethernet side of Fore] a tremendous boost," said Donal Byrne, vice president of marketing for Berkeley.
Berkeley is the latest to fall in a high-stakes battle between the remaining gigabit Ethernet startups, once a fertile niche that has slowly ebbed due to the acquisition appetites of the big networking players.
Some believe Fore itself is ripe to be taken out, given its singular specialty, but most expect this latest move makes it likely that the Pittburgh, Pennsylvania-based networking firm will now remain independent, at least in the short-term.
"I really think that Fore needs to be in the frame business," said Craig Johnson, analyst with market watcher the Pita Group. "Acceptance and uptake, however, will be a challenge in the near term."
On Wall Street, Fore's stock dipped precipitously in the aftermath of the Berkeley deal. But Fore, like a host of others, touts predictions that the market for gigabit Ethernet is expected to grow to $1.5 billion, according to market researcher International Data Corporation.
One roadblock in the path of immediate results from the Berkeley deal is a lack of an interface into ATM-based layouts within the startup's own devices. Berkeley executives said support for ATM within its own shipping gigabit-speed equipment will arrive in the first quarter of next year.