Extreme Hatches Switch Surprises

Extreme Networks Inc. (Nasdaq: EXTR) is about to make a surprise entrance into the 802.11 wireless LAN switch market. The vendor is also said to be working on a set of high-speed Ethernet products that could include the industry's first 40-Gbit/s Ethernet gear, Light Reading's sister site Unstrung has learned.

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— Dan Jones, Senior Editor, Unstrung

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metroshark 12/5/2012 | 12:18:05 AM
re: Extreme Hatches Switch Surprises I wouldn't be surprised if their 40Gb/s story is similar to the CWDM trick they did a few years back. It does not take a genius to put 4 WDM transceivers and a WDM mux/demux on a line card and then claim 40Gb/s interface.
metroman 12/5/2012 | 12:18:05 AM
re: Extreme Hatches Switch Surprises
So Extreme are going to enter the wireless market. Not that suprising really....

Working on 40 Gig products.. Sounds like they didn't like Cisco's announcement. If this is the best they can do, they must be a bit desperate.

Are you a bit short on news today?

fiber_r_us 12/5/2012 | 12:18:02 AM
re: Extreme Hatches Switch Surprises There is no effort in the IEEE on 40G Ethernet... thus, it would be difficult to legitimately call anything that ran at a serial 40G "Ethernet". I agree it is probably a 4x10G WDM...
a-dude 12/5/2012 | 12:17:59 AM
re: Extreme Hatches Switch Surprises In the last year or so.. I have heard of so many companies in the wireless lan area that it is surprising... Is the market and the margins on the wireless lan product that significant?? Also the security concerns that are there for 802.11.. Are they real??
Any ideas ...
russ4br 12/5/2012 | 12:17:57 AM
re: Extreme Hatches Switch Surprises Some data on the WLAN market:

WLAN (Infonetics)
Feb 2003 (Total Telecom)
result from Q402

$1.68 bi for 2002 (hardware)
$455 mi for 4Q02

Market Share - Vendors
Cisco, LinkSys leaders
Buffalo, NetGear, D-Link close behind
Symbol, Proxim (?)

50% consumers
41% enterprises
9% service providers

Regions (revenue)
NA 58%
EMEA 22%
Asia 17%

The market size is approaching US 2bi. It's bigger already than the Core Router markets, where you have players like Cisco, Juniper, Avici, Procket and others.

metroman 12/5/2012 | 12:17:56 AM
re: Extreme Hatches Switch Surprises a-dude

It seems that the 802.11 stuff, which has been around for many years BTW has found a niche. Suddenly operators have realised that they can set up wireless hot-spots where the business traveller can sit and do their work. The issue is that there are only so many public places (coffee shops etc.) that can be signed up. People are trying to sign up every outlet they can to tie up the market. The vendors are trying to get in on the act. I think it is a short-medium term volume play.

In short a tactical gain.

metroshark 12/5/2012 | 12:17:55 AM
re: Extreme Hatches Switch Surprises I am not convinced if the hot-spot model can lead to profitability. The range of 802.11 technologies is very short by definition. Each base station needs an uplink, which is typically the most costly part of this whole deal. In order to subsidize the monthly access costs of the uplink, the hot-spot needs to maintain a high density of wireless users who are willing to pay a premimum for wireless. However, the people who spend a lot of time at the typical hot spot locations (coffee shops, etc.) are not necessarily the customers who will generate a lot of revenue for the providers.

The hot-spot model works pretty well for places like airports, etc. where a large number of business customers are around at all times and the bandwidth of a single uplink can be easily distributed to a large number of base stations.

Of course, 802.11, especially 802.11g is a great technology for wiring homes or small businesses as well. I just don't think 802.11 is going to be the solution for the public last mile access problem.

metroman 12/5/2012 | 12:17:54 AM
re: Extreme Hatches Switch Surprises Metroshark

I agree with you but I think that you also need to look at the competition.

GPRS and 3G standards are only going to give the user a share of the timeslots that the operator decides to set aside for data use. Most operators do not have the users to justify large numbers of data time slots.

In a coffee shop the network can be as simple as a single user DSL service, a wireless router with NAT and a modem. You can buy these retail for <$250. Operators will most likely sell a pre-paid service.

In airports the like of Extreme can sell a few switches to provide a wired interconnection of the Wireless Access Points making it a profitable solution for them.

Operators see 802.11(x) as a means of competing with mobile data standards. The main users will be business users, they can sign up a company with a mobile workforce for a fixed number of minutes/bytes per month. The network can be built cheaply using DSL.

Adding to my original post, I think that the likes of extreme see the follow-on switch revenues. Cisco have also seen it in their purchase of Linksys.

I think the retail volume business for 802.11 will be very large. Only a small fraction of the market for home wireless has been tapped. As you say this could be the place to hit. High volume retail business.

metroshark 12/5/2012 | 12:17:53 AM
re: Extreme Hatches Switch Surprises Metroman,

I agree that the equipment cost to setup a hot-spot is very low. However, the service costs could be much higher. Many of the current commercial hot-spots use T1 for internet access. The cost of T1 access could be up to $1000/month. The monthly rates for business DSL access is lower, but still in the several hundred dollars per month range. I just don't see how a Starbucks hotspot can turn in profits with this kind of monthly internet access costs unless it can generate end-user revenue in the $2000-$3000 dollar range every month.

Airports is an exception. Wireless service in airports (and hotel lobbies, conference centers, etc.) will be a winner due to the high density of business customers.

I agree with you that the potential for 802.11 applications in the residential market is unlimited. 802.11g has so much bandwidth that it could completely eliminate the need to wire audio/video components to anything but the power cord in 2-5 years.

beowulf888 12/5/2012 | 12:17:51 AM
re: Extreme Hatches Switch Surprises Metroman commented:
"I just don't see how a Starbucks hotspot can turn in profits with this kind of monthly internet access costs unless it can generate end-user revenue in the $2000-$3000 dollar range every month."

My understanding is that T-Mobile is paying Starbucks to be their hotspot (Please correct me if I'm wrong). I tought T-Mobile's $30/month rate a little dear, though -- I can't imagine many people use Starbucks so regularly as to make it worth their while to shell those kind of bucks to T-Mobile.

I'm sure T-Mobile bought its T-1s in bulk (or do they provide them?. I doubt if they're paying $1000 month per T-1, but the Cisco Access Points, and network equipment no doubt a represent a substantial investment. We'll see if it's still around in a year...

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