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Enterasys Mulls Switch Switch

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LR Mobile News Analysis
Light Reading
4/23/2003

Enterprise network equipment vendor Enterasys Networks Inc. (NYSE: ETS) may soon decide to follow rivals such as Extreme Networks Inc. (Nasdaq: EXTR) and Nortel Networks Corp. (NYSE/Toronto: NT) into the wireless LAN switch market. However, the move has ramifications for sales of its existing line of 802.11 access points.

Here's the scoop: The Cabletron spinoff [ed. note: it loves being called this] now sells standalone 802.11 access points for the enterprise market -- competing with companies like Avaya Inc. (NYSE: AV) and Cisco Systems Inc. (Nasdaq: CSCO). These access points contain a lot of intelligence (management smarts). In industry terms they are "fat" [ed. note: not "phat," homies].

Technically speaking, it would not take Enterasys long to develop an 802.11 switch, together with some simple lightweight (or "thin") access points for it to manage, according to Jeff Manning, wireless LAN marketing manager at Enterasys.

The questions is: What impact would this have on sales of Enterasys's existing porky points. The company's current R2 fat access point have a lot of additional features onboard, Manning notes, whereas the lightweight access points offered by the switch vendors are much simpler and less expensive. "All the cost in that Mobius [Symbol's WLAN switch] kind of architecture is back at the switch," he muses. "So... Yeah, we'll have to sell more switches."

Manning says he doesn't see the need for Enterasys to sell a switch -- yet. "Customers haven't been asking for this," he says. "But they will... It bears investigation." But analysts counter that the laddy doth protestetheth too much: "Any incumbent Ethernet vendor who doesn't go in this direction will lose out," pipes Chris Kozup, senior research analyst at the Meta Group Inc. "Ultimately the customers will demand that they move in that direction."

Enterasys has a funny name (not unlike an intestinal disorder, perhaps). At press time it wasn't clear what impact this may or may not have on sales of the inchoate 802.11 switch which it may (or may not) one day sell.

— Dan Jones, Senior Editor, Unstrung

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