January 17, 2001
Allegro Networks, a carrier equipment startup backed by Bessemer Venture Partners, has announced that former Nortel Networks Corp. (NYSE/Toronto: NT) president Dave House has taken the helm as chairman, CEO, and president (see Ex-Nortel President to Head Allegro). It's quite a coup for the startup. House is a big name in the networking industry. After more than two decades at Intel Corp. (Nasdaq: INTC), he took over as CEO at Bay Networks in 1996, and became president of Nortel when Bay merged with Nortel in 1998. He left Nortel one year after the acquisition was completed.
So what's the House of Allegro working on? The company is intentionally vague on that subject. Witness the following hyphen-heavy passage from its promotional materials:
"Allegro Networks is on the verge of transforming the way service providers offer services by allowing facilities-based providers to partner with services-centric providers to offer customer-focused compelling services".
So, something-to-do-with-services, perhaps.
Fortunately a recent article by David Passmore, research director at The Burton Group, in the industry publication Business Communications Review, let Allegro's cat out of the bag.
According to Passmore, Allegro is building a box that will use "virtual routing" capabilities to allow long-haul carriers to resell capacity on their networks to local ISPs, ASPs, or cellular operators -- a process known as wholesale routing.
Passmore describes the product as a "router farm in a box," because it will use multiple, separate hardware processors to support each virtual router.
That's an important differentiator, because it should allow service providers to substantially reduce the cost of interconnecting their networks (or, "peering"). Currently, peering connections are enabled by connecting a port on the long-distance carrier's router to a port on an Ethernet switch, which in turn is connected to a port on the ISP's router. Allegro's product could consolidate those connections into one device -- a single point of peering, if you will -- reducing complexity, equipment costs, and the amount of space required in colocation facilities.
Allegro's nearest competitors in this space are Crescent Networks (see Crescent Comes Out), and IronBridge Networks Inc. Industry scuttlebutt has it that Ironbridge is running out of money and is having trouble finding new investment, although the company denies that there is a problem (see Ironbridge: Showing Some Rust?). Whether Allegro can execute its ambitious routing play will largely depend on its new top banana: Dave House.
So, what's his routing record? House says he felt his job at Nortel -- to bring IP routing technology to a circuit-switching equipment company -- was "successfully" completed before he left.
That's a claim that produces guffaws amongst industry observers, some of whom note that the Versalar routing products Nortel acquired when it bought Bay have since disappeared, and that Nortel's lack of a carrier-class IP routing platform is still the company's single biggest competitive demerit (see Nortel Discloses Terabit Router Plans ).
Still, House, 56, certainly seems to know what's required of him at Allegro. “I’ve managed development organizations for 35 years, and a critical thing, obviously, is getting the product out there into the marketplace,” he says.
While it was easy to tell when his job at Nortel was complete, his duties at Allegro are piling up at the door. “The job here is never finished. Clearly what we need to do now is very clear. We have to complete this product successfully, and we have to get it to the marketplace, and we’ve got a paradigm change in the business and a transformation of the way business is done in broadband access. We’re basically changing the nature of that business and the transformation’s got to happen..." Whoa! Slow down, Dave!
Overwhelming though it may seem, House isn’t going it alone. One remarkable thing about Allegro is the quality of talent it’s been able to attract. Four of its eight founders hail from Packet Engines, a startup that Alcatel SA (NYSE: ALA: Paris: CGEP:PA) bought in 1998. House replaces P.J. Singh as CEO, but Singh, a Packet Engines founder known for his work on gigabit Ethernet technology, will continue as chief technical officer (see Ex-Alcatel Crew Raises $25M).
The company says it will begin testing its product with carriers this year and shipping and booking revenues next year.
-- Phil Harvey, senior editor, and Stephen Saunders, US editor, Light Reading http://www.lightreading.com
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