Radware makes a play for Nortel's Alteon business

* Nortel's application delivery business includes Layer 4-7 switches for application acceleration and load-balancing

Radware last week announced plans to acquire Nortel's Alteon business, which includes Layer 4-7 switches for application acceleration and load-balancing.

Other rivals including Enterasys, Extreme Networks, Juniper and F5 have been making overtures to Alteon customers lately, trying to lure them to their own application delivery offerings as Nortel’s financial situation worsened. But with the intellectual property in house, Radware hopes to make a more compelling case to win over Alteon customers.

Under the proposed deal, Radware will buy the Alteon products along with intellectual property and some inventory and service contracts. Radware plans to market the gear under the brand name Radware Alteon, and Nortel would be able to resell it under an OEM agreement.

Radware says it will invest in service and support for the existing Alteon customer base, offering a 5-year support product plan, for example. In addition, it plans to continue to develop the Alteon gear.

“We can certainly make sure that [Alteon customers] don’t need to make [a migration] decision in a rush, not under pressure,” says IIan Kinreich, Radware’s chief operating officer. “They will have continuous support, as a starting point, as well as a migration path. We can also offer a path that would preserve their investment. Meaning, we could provide the same command language, for example, and the same network connection that they were used to.”

The deal is not finalized, however. Under the terms of the bankruptcy agreement, another bidder could put in a higher offer. It could take several weeks to finalize, according to Kinreich. “If everything goes smoothly, we should be looking at an end-of-March to mid-April closing,” he says.

Still, Nortel is eager to close the deal with Radware, according to a story from the IDG News Service (a Network World affiliate).

Nortel revealed in bankruptcy court documents filed on Feb. 20 that it wants to speed up the sale because it's worried it will get less money from the sale as time goes by.

Nortel had already shopped the assets around for several months before it sought bankruptcy protection on Jan. 14, according to an affidavit signed by Hyacinth DeAlmeida, leader of corporate business development at Nortel. And the sum Radware was willing to pay has gone down as discussions between the companies continued, particularly after Nortel declared bankruptcy, the IDG News Service reports.

Analysts say the deal is a good one for Radware.

Buying the Alteon business will eliminate one key rival in the application delivery market, plus Radware gains “an existing and reasonably stable client base,” according to William Terrill, principal analyst at research firm Current Analysis. “This allows Radware to focus more tightly on competing with F5 Networks and Cisco in the Layer 4-7 application delivery business and provides the company with an immediate additional client base into which it can sell,” Terrill wrote in a recent research brief.

Challenges remain for Radware, which needs to reassure Alteon customers that product support won’t suffer; try to keep Alteon customers from migrating to other vendors’ competitive products; and work out a strategy for dealing with the overlap between its existing products and the Alteon line, according to Terrill.

“With Nortel now in bankruptcy it clearly needed to offload businesses that were not strategic to its survival and its application delivery technologies clearly fit into that category. Radware is a logical choice for picking up this business as it ties directly into its primary market focus and allows it to boost its customer base and product line simultaneously,” Terrill wrote.

Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.

Copyright © 2009 IDG Communications, Inc.