NETWORKING: Phoenix Rises Again

Enterasys, though known as a solid technology company, has often lacked the skills to market. That has been the major difference between it and Cisco. Cisco, on the strength of its market-savvy and a broad solution basket, had pulled away from the competition in the networking space. If Enterasys has to stand any chance against Cisco, it has to take the fight beyond the product labs. 

Enterasys-the big boy of networking in its heydays. An unsung pioneer of Ethernet switching that focused its entire energy on large enterprises. A company that bore the stigma of a SEC investigation for more than a year, coming out of it just a few months ago. The question that everyone asks today is: can an impressive customer base and a deep reservoir of technology resurrect Enterasys back to its glorious self? 

Enterasys executives surely want to forget the recent past. As was evident at a recent Asia-Pacific channels meet at Perth, the mood at the company seems to be swinging quite fast from a somber silence to a hopeful exuberance. The comment of Mads Lillelund, executive vice president (worldwide sales), Enterasys Networks, that "SEC issues are resolved; now we are focusing on business", symbolizes the emerging mood.

And when it comes to business, it is Asia-Pacific that"s the most prospective market in the long run for Enterasys. More than three quarters of the world population resides in this part of the world. And though the economy of this region lags behind the rest of the world, countries of this region are catching up fast with their governments beginning to understand the direct relation between network growth and GDP growth. The Asia-Pacific LAN network equipment market that Enterasys targets is projected to grow at a CAGR of 12.3 percent, according to IDC Research. Within this, new segments like virtual private network (VPN) equipment and intrusion detection system (IDS) are projected to grow at a CAGR of more than 20 percent.

"Network security is a core part of its networking hardware".  Atley Ng, President, Asia Pacific, Enterasys Networks

The Asia-Pacific market is still nascent, with countries like India and China still to see large gigabit LAN build-outs from a majority of their enterprises. Further, the region has not been affected so much by the global economic slowdown. 

In the networking industry, it is much easier to win a new customer than convert a competitor"s customer into your customer.

Worldwide, Cisco Systems-the number one networking company-has already captured a major part of the total customer base for networking products. Therefore, it is in such new markets like India and China, that a player like Enterasys has greater chances of market acquisition. Here, the customer base of networking products is growing fast, with constant and rapid upgradation of small companies to small and medium enterprises (SMEs) and SMEs to enterprises. New potential vertical segments like BPO and insurance have also sprung up in no time. These have driven the demand for faster and reliable (secured) networks.

Staying Enterprise Focused



One thing that everybody loves about Enterasys is its commitment to customers. Even in the tough days of SEC investigations, the large users of Enterasys products were not ready to give up on the company and switch over to other vendors. The single-most important factor for this solid loyalty has been Enterasys"s focus. Enterasys has stayed focused on the enterprise market, understanding the needs and developing the best-of-class networking switches and solutions to improve the productivity of large enterprises, many of them Fortune 500 companies. 

"Soon, MPLS-like functionalities in LAN switches will be there" Dick Bussiere, CTO, Asia Pacific, Enterasys

Staying focused is called for even more, today. Enterprises are expected to spend their money on networks. But these users have learnt from past mistakes. They now understand and value networking much more than earlier. It"s not just performance in terms of speeds and features that companies are expecting from networks. They want a complete infrastructure solution based on standards. They also want network investments to swiftly translate into business benefits like manpower productivity, process improvement, and efficient communication. In critical businesses like banks, information protection and network security are beginning to be very important. 

In such times, it is only elementary for Enterasys to lay claim to be the preferred choice for networking solutions at the top-end segment of the networking market, where its strength is already well-recognized by enterprise customers. Lillelund says, "Enterasys is the only networking player that truly focuses only on the enterprise space". According to him, others focus on both enterprises and service providers. And those who are rearranging their focus from service providers more to enterprises are only doing so because currently the service provider market is down. Once the service providers begin to do better, they will defocus on the enterprise space and go back to the service provider market, where they actually belong. 

It is also important to remain a top-of-the-line and best-of-the-breed provider of networking equipment for enterprises. The networking industry on the enterprise side has seen a major bifurcation. There is a clear distinction between the market for home, SOHO and SME on one hand and the market for enterprises on the other. Enterasys has been quite careful to stay away from the low-end market and preserve its premium tag as a high-end enterprise player. A case in point is the wireless LAN segment. "The wireless LAN products available in the Asian markets are mostly low-end plug-and-play products. And enterprises like banks will never plug in such equipment into their network, because of the security and reliability issues," Atley Ng, president, Asia Pacific, Enterasys Networks, argues. There is a great opportunity for Enterasys to fill this gap by coming up with a more dependable solution, Ng points out. Until then, Enterasys will continue to play down its wireless LAN activities. 

Emerging as the Cisco Alternative



There is one company that everyone in Enterasys knows. And that is Cisco. Try as hard as you can, it is hard for an Enterasys employee to keep the name slipping out of the mouth during a discussion on networking. 

It is clear, as far as Enterasys is concerned, that Cisco is the one that has to be chased. At one point of time, Enterasys was clearly in the run for the lucrative enterprise network market. And its worldwide position as a strong second to Cisco had further strengthened by the exiting of 3Com from the enterprise market for switch. In fact, in individual markets like India, Enterasys ran neck to neck with Cisco in the entire switch segment, with a perceived stronger position in the high-end of the

modular switch segment.

Somewhere in the middle, Enterasys lost its way due to its severe corporate-level problems, and was not able to consolidate its strong position in the high-end networking segment. Now that the corporate-level problems are seemingly resolved, the company is back with the goal of continuing what it did best-fight Cisco at the cutting edge creamy layer of the networking industry.

Enterasys executives are fairly confident about it, in spite of the competition in the form of new entrants like Extreme and Foundry in addition to old players like Cisco, 3Com and Nortel. According to them, Extreme, Nortel and Foundry are basically service provider-focused players. "3Com lost confidence of customers all over the world by defocusing on enterprises", says Lillelund. That in effect leaves Enterasys to mainly contend with Cisco. According to Bob Ray, vice president (corporate marketing), Enterasys, "Customers are beginning to look for choice. The objective for us in 2003 is to emerge as the clear alternative to Cisco".

But, that"s easier said than done. Gartner Research, which tracks the networking industry, maps the networking players on a matrix called the Gartner Magic Quadrant. The matrix positions the players based on two measures-completeness of vision and ability to execute. The Quadrant as of October 2002 has Enterasys grouped along with Alcatel and Extreme in the group of companies called visionaries, who have good vision but lack the ability to execute. Cisco and Nortel on the other hand are positioned as the leaders, who have both good vision as well as the ability to execute. 

Enterasys, though known as a solid technology company, has often lacked the skills to market. That has been the major difference between it and Cisco. Cisco, on the strength of its market-savvy and a broad solution basket, had pulled away from the competition in the networking space. If Enterasys has to stand any chance against Cisco, it has to take the fight beyond the product labs. 

So What"s the Arsenal?



Matrix N-series: A culmination of 15 years of innovation. It is Enterasys"s new addition to the Matrix family of enterprise class switches. It is a premium switch positioned for 10 gigabit LAN deployments. The N-series is an improvement over the E-series, by the fact that it will be based on a fully distributed architecture as opposed to the semi distributed architecture-based E-series. Distributed architecture makes a switch more robust and redundant compared to a centralized architecture.

However, the N-series complements the existing Matrix E-series switches. Enterasys has already introduced modules called distributed forwarding engines (DFEs) that can sit both inside the E-series switches as well as upcoming switches that will form part of the N-series platform. It is this kind of backward and forward upgradability that the engineers at Enterasys proudly boast about as clearly unmatched by competition. "Matrix 6000, launched in 1997, is upgradable even today. Can the competition claim similar upgradability for their legacy switches?", asks Dick Bussiere, CTO, Asia Pacific, Enterasys. Company executives also claim that Matrix E7 and N7 offer performance and capacities that surpass/match the competition, at half the prices.

Beefed-up Routers: Top executives of Enterasys clearly see a gap to be filled in the enterprise router space. Though the Junipers and Avicis of carrier-class routers are giving a tough fight to Cisco on that space, the enterprise router space is where Cisco almost totally monopolizes the market. From the days when there used to be strong competition from 3Com and Bay Networks, Cisco today has almost no serious competition here. Lillelund puts it this way, "There is no market where you can hold a monopoly for too long. Customers are beginning to look for an alternative to the Cisco router space." Thus, Enterasys is readying up a series of pump-primed XSRs to take on the Cisco series. The XSRs would have advanced IDS capabilities as well as SIP protocol support. As is evident from the recent acquisition of Tenor"s routing technology along with executives, much more is happening than meets the eye at the router labs of Enterasys. And one knows what Tenor used to be best known for-MPLS. Looks like a new expedition is shaping up to take on the Cisco 7000 backbone routers as well. 

Wireless LAN switches: Till now, wireless LAN has primarily been about appliances and access points communicating with each other. And the talk of integrating the wireless LAN access points into the traditional wireline switches has been just that-talk. And the talkers have been either the new kids on the block like Aruba and Tapeze or those already there, like Proxim. Enters Enterasys. With its N-series platform, the company plans to take the wireless LAN technology a level above the others. It claims that it would be the first to introduce a wireless LAN platform that has wireless functions directly loaded onto the ASICs of the switch. Already, the Matrix N7 DFEs comes with a design for integration of power-over-Ethernet capability to power wireless LAN access points and IP phones. Enterasys already has a wireless access appliance in the form of

RoamAbout.

Dragon IDS: Till now, network security was the domain for major security software and appliance vendors. For instance, companies like Internet Security Systems and Symantec have been dominating the IDS market. However, of late, networking majors like Cisco, Enterasys and Nortel have begun to focus more on this space. And Dragon is what Enterasys has unleashed in this market. "The market is changing. You can"t have software-only players in this space. We believe that security is a core part of our networking hardware", Ng emphasizes. Dragon IDS will form part of its various product portfolios like the XSRs, the Matrix and the Expedition.

Nareshchandra Laishram