In the private sector

These three privately held vendors stand out in an industry dominated by public giants and venture-funded start-ups.

Allied Telesyn

+Winning customers with value pricing

Allied Telesyn may not have the instant name recognition of Cisco or Nortel, but the company’s Ethernet network and access gear is all over the place. As James Mustarde, the company’s vice president of marketing, asserts: “There probably isn’t a Fortune 500 company that doesn’t have an Allied Telesyn product somewhere.”

Grandiose as that may sound, Mustarde’s guess is probably true, says Shirley Hunt, a Frost & Sullivan analyst. “The Fortune 500 company may use high-end Cisco equipment in its headquarters office and still use Allied Telesyn equipment in its remote offices, since the Allied equipment is compatible with the Cisco equipment,” she says.

Also true is that Allied Telesyn has been in the Ethernet switch business as long as or longer than most networking companies, Hunt points out. The company, a wholly owned U.S. operation of global technology conglomerate Allied Telesis Group, was formed in 1987.

But the company established itself in low-end, small implementations. Only within the last couple of years has it begun ratcheting up with advanced features such as high-speed connections to gigabit and 10-gigabit networks, Layer 3 switching and network management. The kicker is that Allied makes these features available at better prices than higher-end vendors, Hunt says. (Allied’s Layer 3 switches range in price from $1,500 to $11,500.) Plus, the Allied Telesyn devices are easy to configure and install, because the equipment itself handles most of the installation.

Allied Telesyn’s ability to provide an end-to-end, integrated network, including network management and zero-touch configuration, was a big draw for the city of Loma Linda, Calif., and its unique community connectivity program, says James Hettrick, IS director. In 2003, Loma Linda became the first U.S. city to mandate fiber and structured wiring in any new residential or commercial construction.

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For the project, the city uses Allied Telesyn’s iMAP Multiservice Access Platform, iMG intelligent Multiservice Gateways, Layer 3 switches and routers. “When we started this in 2003, we were amazed to find a vendor as far along as Allied Telesyn was with its products,” says Hettrick, noting that he was particularly impressed with the vendor’s Layer 3 and virtual LAN () features.

The modularity of the vendor’s products and the low base price also were impressive. “We’re not getting stuck committing more than we want to in any fiscal year. It was so willing to make the pricing structure work, and it wasn’t worried about selling us a high-dollar maintenance plan,” Hettrick says. Though Hettrick didn’t specify pricing, fiber-to-the-home customers can get passive optical networking or active setups in the sub-$500 range, Allied says.

Despite such warm fuzzies, Allied Telesyn faces a challenge in growing its enterprise business, Mustarde says. Broadening its product lines to support VoIP and wireless broadband is one way the company expects to boost enterprise sales, he adds. Hunt agrees that those are logical extensions, and says security management would be another important area for Allied Telesyn to consider.

As a company that has made its name as the lower-cost provider, Hunt says, “Allied Telesyn can use the same value-add strategy for security that it uses for other high-end features.”

Network General

+Corporate rebirth

Under the leadership of CEO Bill Gibson, who took the helm in December 2005, Network General is vying to become a leading application and network performance management vendor.

Today’s Network General came into being in July 2004, when private equity firms Silver Lake Partners and Texas Pacific Group acquired McAfee’s Sniffer Technologies division for $235 million. The original Network General, which developed and then launched the popular Sniffer network management tool, ceased to exist in October 1997 after being acquired by security software vendor McAfee Associates in a deal valued at $1.3 billion. The merged entity became known as Network Associates. While technology development continued – for example, Sniffer Enterprise Management and Sniffer Mobile shipped in 2002 – Sniffer largely played second fiddle to the company’s McAfee line.

On its technological strength, Sniffer maintained a loyal customer following even as Network Associates ultimately let product development languish. For a while, Network Associates did little more than provide help desk support, says Jeff Duke, senior network engineer with Indiana’s Office of Technology, in Indianapolis. “But I never feared that the product would dissolve, as I knew it was good enough that somebody would want to buy it. It’s the best of the best,” he says.

Since Network General has been reborn, product improvements have come at a steady pace. In fiscal 2006, ended Jan. 31, the company spent $30 million to research and develop new products, Gibson says. The work resulted in nine releases over the last 12 months. Those include InfiniStream 2.5, the “Sniffer on steroids” tool – as Gibson says – that provides insight into enterprise network performance over time, and the re-architected Sniffer Enterprise Visualizer 4.0, a Web-based tool that provides the ability to benchmark, graph and chart performance issues across the network or applications.

In Indiana, Duke runs Visualizer to gather information from 30 or so Sniffers and generate reports on traffic and application flows across its 35,000-node network. “It’s a great product for improving performance” that keeps getting better, he says. “I used Visualizer as a Network Associates product, but it was not as scalable as it is now. Network General has done a good job of changing the way it works and helping to improve performance.”

Users should expect the same sort of improvements from Network General this year, Gibson says. The company has committed $30 million to the fiscal ’07 R&D line, and engineers are on track to deliver nine releases this year, he adds.

The goal, he says, is to reshape Network General from a tool vendor into a provider of an enterprise management architecture for ensuring business services delivery. “We want to go beyond the basic [service-level agreement],” says Gibson, who oversaw a similar transformation as COO of Crystal Decisions, a business intelligence software vendor.

Pouring big bucks into R&D is one way to make that happen. Acquisition is another. In February, Network General bought privately held Fidelia Technology for its business service monitoring application called NetVigil. Once Network General fully integrates the two this fall, users will get end-to-end management capability as well as the ability to individualize views of the infrastructure by business unit, Gibson says.

Indiana’s Duke is evaluating NetVigil and is excited about its potential as a management framework. “This will give us a complete solution that will manage everything and allow us to report and build business containers for each agency. I’ll then be able to show my CIO the percentage of network availability, application response times, uptimes, downtimes, etc.,” on an agency-by-agency basis, he says.

As Gibson plots Network General’s progress from tools to platform vendor, he gets fairly bullish with growth goals. He expects the company to increase revenue by 18 to 19% for fiscal ’07, or three to four times as fast as industry analysts predict for the market.

Gibson rationalizes his goal on “IT’s overwhelming reaction” to what the company has done so far, he says. Sales are up three times in the second half of fiscal 2006 over the first half of the year. “Take that mythical S curve. We’re in the area where it gets steep, and we think there’s still a couple of years of people moving to these new products,” he says. Duke thinks Network General is strong enough to take on Cisco and the other giants moving into the application performance race. “Network General,” he says, “is ahead of the game and paying attention.”

Stratus Technologies

+Back to the future

Fault tolerance and continuous availability are virtually synonymous with the name Stratus Technologies. That statement is as true today as it was in 1980, when the company, then known as Stratus Computer, launched with a focus on fault-tolerant computing for enterprises.

But the company has undergone significant change over the years. In a corporate nutshell, Stratus went public, got acquired and then privatized in a leveraged buyout. Today, it remains a privately held, partially employee-owned company. Stakeholders are Intel Capital, Investcorp, MidOcean Partners and NEC, which also inked a 10-year joint development agreement with Stratus last November.

There is a twist, though. Stratus has had debt in the public bond market, and has been legally obligated to release financials. Although its fiscal ’06 data is not yet available, annual revenue growth has been creeping up year after year, reaching $272 million in fiscal ’05, for the year ended Feb. 27, 2005. NW200 companies with similar revenue ranked at about the midway point.

Key to Stratus’ revenue picture are sales of the company’s ftServer servers. The ftServer line resulted from Stratus’ five-year transition from a vendor with proprietary hardware and software to one with open, Intel Xeon-based servers. For example, Xeon-based ftServer W Series servers operate with Windows, and the T Series servers support Red Hat Enterprise Linux. Stratus still offers its proprietary operating system in its ftServer V Series and Continuum systems.

At the Philadelphia Stock Exchange, V Series servers provide the fault tolerance and continuous availability required for the mission-critical options business, says Bill Morgan, CIO. “Stratus is the only vendor that offers a true fault-tolerant platform. Its implementation of fault tolerance is well done, efficient and, most importantly, stable,” he adds.

In a November 2005 technology report, Butler Group analyst John Holden gave the Stratus servers a thumbs-up, saying the ftServers offer a good and relatively affordable option for enterprises needing to provide bulletproof service levels.

Since moving to an Intel-based architecture, Stratus has doubled its user base to 5,000 customers, says CEO Dave Laurello, and it has penetration into new verticals such as healthcare and pharmaceuticals. He considers Stratus’ transition complete, with the December 2005 Linux rollout, and says he is driving the company to be more of a solutions provider. Disaster recovery and application availability are new focus areas, he adds.

For the Philadelphia exchange, which has been working with Stratus for 17 years, the company has risen to any challenge, Morgan says. “The engineers know us well, and we know them. Stratus has always been a vendor that understands its niche.”

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