Optical/IP Networks

Is Cisco Buying the Wrong Startup?

When Cisco Systems Inc. . http://www.cisco.com announced plans to buy Growth Networks, Inc. http://www.growthnetworks.com on Wednesday, it looked as though it had pulled off quite a coup.

For $355 million in stock - small change for Cisco - it bought some next generation switching fabric that promises to boost the performance of its top-of-the-range routers by an order of magnitude (see Cisco Buys Growth, Literally).

But will the acquisition of Growth Networks enable Cisco to catch up with the competition, in the form of Juniper Networks Inc. (http://www.juniper.net) and a bunch of Terabit router startups?

Or is Cisco buying the wrong company?

One of Growth Networks' closest competitors, Power X Ltd. http://www.px.uk.com, a Manchester, UK, based startup, says it is and that Cisco will end up regretting its choice. It says the architecture used by Growth Networks has an intrinsic problem: it can't guarantee low latencies.

And that's not sour grapes, according to Russell Johnson, vice president of sales and marketing at Power X. Johnson says that Cisco has done everybody except itself a good turn by purchasing Growth Networks.

"Customers have been holding back, waiting to see which startup was going to be taken out of the market by Cisco. Now they know, it'll free up the market. And with Growth Networks gone, we're the only show on the road that's still totally independent," he says.

Other companies developing next generation switching silicon are also OEM vendors, Johnson says. As a result, a lot of vendors would prefer to buy from Power X rather than go to a potential competitor.

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