Siemens, Ericsson ready to buy?

Telecommunications giants Siemens AG and LM Ericsson appear to be ready to make their moves - via the acquisition route - into high-speed routing for Internet telephony.

Siemens is reportedly looking to buy gigabit router start-up Argon Networks of Littleton, Mass., and Internet access router maker Assured Access of Milpitas, Calif. Both companies' products are targeted at ISPs.

Ericsson is reportedly eyeing Torrent Networking Technologies of Silver Spring, Md., for about $400 million. Torrent's IP9000 router was initially targeted at enterprise customers, but Torrent has refocused the router for ISP points of presence.

Spokespeople at Argon, Assured Access and Torrent declined comment. Siemens and Ericsson representatives did not return phone calls by press time.

The deals would give Siemens and Ericsson some leverage in the burgeoning IP convergence market. Sales of high-speed data network equipment to service providers are taking off as the Internet and private IP data networks become the infrastructure for new multimedia applications.

Argon's product is the GigaPacket Node, a router that combines IP and ATM to let service providers provision virtual private network services to businesses. The device scales from 20G bit/sec to 160G bit/sec in non-blocking mode.

Assured Access' dial access concentrators enable ISPs to handle hundreds of Internet access calls from end users. They support channelized T-3, T-1/E-1 and fractional T-1/E-1, and Primary Rate ISDN access. They also support from 84 to 210 Ethernet ports, 12 to 30 Fast Ethernets and multiple routing protocols.

Torrent's IP9000 router is available in an eight-slot, 10G bit/sec configuration or a 16-slot, 20G bit/sec option. The IP 9000 can support 128 Fast Ethernet interfaces in its maximum configuration.

Voice network giants such as Siemens, Ericsson, Lucent and Nortel Networks are rapidly gobbling up data network companies to meet service provider requirements for high-speed data networking gear, and to better compete with Cisco, the leading supplier of data equipment for the Internet.

Siemens reportedly allocated more than $1 billion at the start of its fiscal year in October to acquire U.S. network companies, one source says.

The German technology giant is looking at a number of router vendors, and reportedly has hired an executive to oversee its American acquisitions, according to the source.

"The Siemenses, Nokias and other overseas companies have been busy in Silicon Valley, and I think they're establishing some solid relationships and making some smart investments," says David Helfrich, general partner at Communications Ventures, a Palo Alto, Calif., venture capital firm.

Helfrich says these companies have paid attention to Cisco's successful strategy of acquiring innovative technology companies and are emulating it.

To date, Nortel has spent roughly $9 billion to acquire Bay Networks, Cisco's longtime rival in IP routing. Lucent has acquired smaller companies, such as Gigabit Ethernet start-up Prominet and remote access router company Livingston, but the company is expected to make a bigger, more significant purchase soon.

Cisco, meanwhile, has been swallowing smaller voice network companies, such as Selsius Systems and Summa Four.