Only a year or two ago, asynchronous transfer mode (ATM) technology was being billed as the inevitable replacement for the corporate network cornerstone, ethernet. Data transfer speeds on ethernet, which top out at 10 mbits per second, were going to get a quantum leap forward as LAN and WAN products based on ATM designs started emerging. But ethernet has proved harder to dislodge than most analysts had envisioned. The arrival of 100mbit ‘fast ethernet’ and then ‘gigabit ethernet’ technology, 10 times faster again, has now left the ATM camp retreating to non-corporate niches, most notably in the telecoms industry, where strong demand exists for its supersonic speeds. Much of the M&A activity around the turn of the year was inspired by those dynamics. Lucent Technologies, a long time fan of ATM, made its gigabit ethernet play in December with the decision to acquire Prominet for around $200m. Prominet was established in 1996 when the co-founder of Chipcom, Menachem Abraham, branched out on his own after his company was bought by 3Com. The Lucent deal follows similar moves into gigabit ethernet by Cisco Systems, which bought Granite Systems in 1996 for $220m, and Bay Network’s subsequent $155m swoop on Rapid City Communications in mid-1997. A corollary to these movements is the rapid consolidation underway in the ATM market. In December alone, three ATM companies changed hands. Siemens, through its public communications networks division, and partner Newbridge Networks, took control of ATM access switch maker RADNet for $75m At the same time, Larscom, a high-speed WAN access equipment vendor, paid $32m for privately-held NetEdge, which provides ATM edge access equipment. And that follows hard on the heels of the $8.2m acquisition of Data Labs by Yurie Systems, both ATM equipment makers.
Computer Business Review