x
Optical/IP

Alcatel's Packet Engines Break Down

Alcatel SA (NYSE: ALA; Paris: CGEP:PA) is discontinuing development on several carrier-class products it acquired by buying startup Packet Engines -- and the company is looking anew at potential acquisitions in an effort to revamp its approach to selling Ethernet equipment to telecom carriers.

Yesterday afternoon, Alcatel told employees that over the next several weeks it would be reducing its workforce of 150 employees in Spokane, Wash., by roughly one third. That facility, the former headquarters of Packet Engines, has focused on the development of Alcatel's PowerRail Distribution Router, which until yesterday was marketed to carriers by Alcatel's Broadband Networking Division. Alcatel bought Packet Engines for $315 million early in 1999.

"This is part of our effort to restructure Alcatel's carrier activities in several locations," says a spokesperson. Indeed, the move seems clearly in line with ongoing restructuring moves the company has promised worldwide in recent months (see Alcatel Cuts Canadiens,Alcatel to Lay Off 2,500 in US, Alcatel: What's Next?, and Alcatel Profits, Forecasts Drop).

Development on the Alcatel 7652, 7622, and 7212 PowerRail Distribution Routers has now ceased, Alcatel says. But the company says another series of products with the Packet Engines pedigree will continue to be supported "one hundred percent." Those products include the OmniCore series of switch/routers, which are marketed to enterprise customers by Alcatel's E-Business Networking Division, headquartered in Calabasas, Calif. That division will take over remaining resources in Spokane.

"The OmniCore products have sold well. The PowerRail hasn't been as popular as we had hoped," says Alcatel's spokesperson. "We will focus on another strategic approach to that market."

Sources claiming familiarity with the situation in Spokane say Alcatel is looking at the possibility of buying a startup in order to launch a fresh onslaught on the carrier market for metro Ethernet. The names being bandied about include Extreme Networks Inc. (Nasdaq: EXTR), Gotham Networks, and Riverstone Networks Inc. (Nasdaq: RSTN).

But Alcatel refuses to comment on any aspect of future plans for a new Ethernet strategy for carriers. "That's nothing more than rumor and speculation," spokespeople say.

Meantime, the Spokane staffers are "furious," according to sources close to the company. Reportedly, engineers worked doggedly to finish recent upgrades to the PowerRail series, only to be told they may be laid off -- as products are left unsold to accounts that wanted to buy them. Alcatel's spokesperson could neither confirm nor deny claims about the disposition of the new products at press time.

The uncertainty in the Spokane office contrasts with Alcatel's early hopes for Packet Engines.

According to Packet Engines founder Bernard Daines, who now heads up optical Ethernet startup World Wide Packets Inc., Alcatel wanted a leg up in carrier Ethernet when it bought Packet Engines. And it wanted a group of employees it could depend on.

"Alcatel was on a campaign to buy a company like ours, and one of the things they liked about us was that we weren't in Silicon Valley. Employee retention was very important to them, they said. Packet Engines' lead in rolling out Gigabit Ethernet in carrier networks was also important," Daines told Light Reading in an interview last year (see Bernard Daines).

According to Daines, who left the company after it was sold, Alcatel bungled the acquisition, reneging on promises it made and putting in aggressive and arrogant management that "stole morale" and stymied product development. "It's been going downhill ever since," he asserted.

- Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com
Page 1 / 6   >   >>
lightmaster 12/4/2012 | 7:59:12 PM
re: Alcatel's Packet Engines Break Down Riverstone vs Extreme makes sense, but Gotham? Its based on an ATM switch! I'm not against ATM for the right applications, but Riverstone and Extreme are targeted at a completely different market than Gotham. What are they thinking?
dynamohum 12/4/2012 | 7:59:12 PM
re: Alcatel's Packet Engines Break Down This is inhumane to do to a workforce! The upper management or may I call it cowards knew of the impending layoffs in that area, but let the employees bust butt for what?

Alcatel is going down!
skeptic 12/4/2012 | 7:59:11 PM
re: Alcatel's Packet Engines Break Down Riverstone vs Extreme makes sense, but Gotham? Its based on an ATM switch!
--------------------

I think Alcatel has a strategy of cornering
the market on ATM switches. Every time they
go out looking for an IP company, they come
back with another ATM switch.




--------------------
I'm not against ATM for the right applications, but Riverstone and Extreme are targeted at a completely different market than Gotham. What are they thinking?
---------------------

I can guess:

1. They want to buy a company.

2. The companies they want are too expensive.

3. Rather than buy the expensive company, they
go out and buy a troubled company (Gotham) for
a smaller price.


Its the same logic that led them to pick up Xylan
and Newbridge.



euler 12/4/2012 | 7:59:11 PM
re: Alcatel's Packet Engines Break Down omnicore family comes from xylan acquisition
gigabitnet 12/4/2012 | 7:59:10 PM
re: Alcatel's Packet Engines Break Down Wasn't the Power Rail series renamed to the Omnicore Series?

According to my users manual it was.
skeptic 12/4/2012 | 7:59:10 PM
re: Alcatel's Packet Engines Break Down What drivel. Sounds like the skeptic was fired from Xylan; s/he's obviously got an axe to grind.
==================

I'll grind that same ax on Ascend, Xylan, Gotham,
fore, newbridge, Packet engines and even longer list. You are interesting in that you must be
one of the fewpeople in the world who is
convinced of the value in Xylan's portfollio of
third-rate products.

Let me guess? You also probably thought that
ATT buying Ascend for billions was a "great deal"
at the time.






------------------

Your comment about Xylan being a company "in trouble" at the time of its acquisition also has no basis in reality. Xylan was profitable and growing top-line revenues when it was purchased. If that's "in trouble", then you're Bill Clinton and we'd best start defining what is is.
-----------

Xylan was an old, third-rate company who at the
time of the purchase was facing competition from
a whole set of companies that it was not going
to be able to compete with. They were not market
leaders and if you look at their products, they
seemed to sell, more often than not, based on
price and little else.

And when a company is being purchased, you don't
look at their current revinues, you look a few
quarters out and see if what they are selling
can remain competitive. There are people who
waste billions who don't understand this and
get scammed buying bad companies. You would
fit right in with them.

Then again, there are also people who do M&A
by talking to executives and reading trade papers
without even bothering to understand the products
the company is selling.

D&K 12/4/2012 | 7:59:10 PM
re: Alcatel's Packet Engines Break Down OmniCore is the Packet Engines PowerRail box set.

OmniSwitch and OmniSwitch Router are the Xylan boxes.

The OmniCore box outperforms both Extreme and Foundry in throughput tests over a twelve hour period. 230,000 web pages for instance against 32,000 range for the Cisco 6509 or the Foundry box. The Extreme box comes close to the 5200, but who really cares. If I still have one of those crank start routers between me and what I want access to, a really fast switch fabric is a waste of time.

Cisco, Foundry and Extreme have been winning the deals. Riverstone has also been doing very, well in he last six months. Alcatel sells data like IBM sold OS/2. Any of you still running OS/2? I didn't think so.

Alcatel seems to want to dedicate itself to the task of selling the PCX 4400 box; the data side is dead on the vine.

The blokes in Spokane are already picking up jobs at World Wide Packets, just a few blocks from the Alcatel office on Sprague.

If I were building a greenfield network with high availability and throughput for IP data and VoIP, OmniCore is what I would use.

Too bad those silly Frenchman don't realize what a great box they have in the 5200.

RIP

D&K
Confucius 12/4/2012 | 7:59:10 PM
re: Alcatel's Packet Engines Break Down And omnicore is targetted at a special kind
of customer. One who doesn't really care about
quality or features. Only price. If you can't
afford cisco or juniper, if the prices on used
equipment on ebay are too high, if you are
running an ISP where a working network isn't
a priority, then omnicore is for you.


What drivel. Sounds like the skeptic was fired from Xylan; s/he's obviously got an axe to grind. Your comment about Xylan being a company "in trouble" at the time of its acquisition also has no basis in reality. Xylan was profitable and growing top-line revenues when it was purchased. If that's "in trouble", then you're Bill Clinton and we'd best start defining what is is.
skeptic 12/4/2012 | 7:59:10 PM
re: Alcatel's Packet Engines Break Down omnicore family comes from xylan acquisition.
------------

And omnicore is targetted at a special kind
of customer. One who doesn't really care about
quality or features. Only price. If you can't
afford cisco or juniper, if the prices on used
equipment on ebay are too high, if you are
running an ISP where a working network isn't
a priority, then omnicore is for you.

Gotham would make a good addition to the omnicore
family.

SPecial_Guy 12/4/2012 | 7:59:09 PM
re: Alcatel's Packet Engines Break Down >Confucius say,
>"What drivel. Sounds like the skeptic
>was fired from Xylan; s/he's obviously
>got an axe to grind."

Confucius must be a current Alcatel employee or an idiot who bought Xylan equipment. I can't think of any other reasons that someone would defend Xylan. Skeptic was absolutely correct when he identified the types of customers that Xylan attracts. No self respecting network architect would be caught dead with OmniSwitches, OmniSwitch Routers, or OmniStacks in his/her network.

Enough Xylan bashing, though, I think everyone who knew the Packet Engines product feels a tinge of sadness when they look back at the Alcatel acquisition and now the disbanding of the group. I think it is all for the best though. The PowerRail will never suffer again under the 'Omni' banner.

'Today, the shadows are long because we have lost a light that shined brightly and gently.'
Page 1 / 6   >   >>
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE