Acquisition increases CiscoOs SONET investment

Acquisition increases CiscoOs SONET investment

By STEPHEN HARDY

Cisco Systems Inc. (San Jose, CA) heralded its intention to enter the optical internetworking arena with the acquisition of a company that manufactures Synchronous Optical Network (SONET) interface chips (see Lightwave, August 1997, page 1). The company recently signaled its continuing commitment to compete in the carrier environment with another SONET-related acquisition. Cisco expects the addition of expertise from PipeLinks, Inc. (San Jose, CA) will enable it to offer local service providers the ability to deliver integrated voice and data over existing SONET infrastructures.

Cisco has owned a 30% interest in PipeLinks since September 1997; the startup was founded in 1996, according to Cisco. The company?s first product, the Pathway-2000, combines SONET add/drop mutliplexer and TCP/Internet protocol (IP) technology. It is designed for integrated, fiber-based multitenant data and voice applications. It enables network operators to groom IP data and DS-1 (1.544-Mbit/sec) voice traffic over fiber facilities at small central offices and multisubscriber locations. Cisco says that in combination with its IOS software, the technology should enable providers to offer such services as managed Internet access and native local area network services over an existing time-division multiplexed infrastructure.

OWhile the Parkway-2000 is intended for multitenant integrated applications, we expect Cisco will create a larger-capacity system intended for larger enterprise installations,O says Chris Nicoll, principal analyst in the Carrier Infrastructure Group at Current Analysis. He expects this new product will provide IOS services, such as routing/switching, virtual private networking, and quality-of-service capabilities, directly on the optical ring. The new offering should be available in the first half of this year, he believes. The product plan includes European and OC-12 platforms within a year of the product?s release, he reports.

The PipeLinks acquisition gives Cisco a solid base from which to operate in the access arena, Nicoll states. OThe acquisition directly supports Cisco?s voice, video, and data convergence plan, providing additional support for this strategy over SONET rings. Service providers would be expected to use the new product, possibly called the ISR 3303, to roll out Internet/intranet access and managed IP and voice services over SONET. While Cisco has done well with IP-based service providers, this unit could give them a stronger product to address the ILEC [incumbent local-exchange carrier] market, as well as the IXC [interexchange carrier] providers looking to capitalize on direct SONET access to their networks,O he says.

Nicoll points out that competitors like Lucent, Alcatel, and Nortel Networks already have SONET access products.But some of these products have not been discussed in the context of converged networks, and none are optical routers, he says.

The acquisition involves a stock-for-stock transaction worth roughly $126 million. Upon completion of the deal, PipeLinks president and chief executive Amit Shah will report to Alex Mendez, vice president and general manager of Cisco?s service provider unit.q

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