Alcatel Creates New Internet Division

In response to what it calls "the explosion of Internet demand," Paris-based Alcatel Alsthom S.A. will create new division that will develop and provide networking equipment to carriers and service providers. The new division will consist of existing Alcatel business units combined with several wholly owned companies. These include Gigabit Ethernet developer Packet Engines and Internet equipment maker Xylan Corp, whose acquisition was announced earlier this week.

Martin de Prycker, formerly director of network strategy, has been appointed president of the Internet Division, reporting to Krish Prabhu, senior executive vice-president of Alcatel Telecom.

Assured Access enters Alcatel fold

Alcatel also announced that Assured Access Technology Inc. will join Alcatel and become part of the new Internet division. In its second acquisition of the week, Alcatel yesterday agreed to buy Assured Access in a cash transaction with an implied value of $350 million, which, according to Alcatel, includes the equity purchase price as well as a technology development incentive plan. The transaction is expected to close in approximately two weeks.

Assured Access provides public data networking products for carriers and service providers, including multiservice access products for data and voice over Internet protocol (VoIP). The company will retain its name and continue to be headquartered in Milpitas, CA, where it employs 96 people of whom 54 are R&D engineers. Prycker will serve as chairman of the company, while Arthur Klein, a founder of Assured Access, will remain CEO.

Fitting the pieces together

Alcatel divides the evolving Internet market into three broad segments: new carriers, existing operators, and enterprise. The new division will address new "greenfield" operators segment, such as Internet service providers, competitive local exchange carriers, as well as newly created data operations of existing operators..

The acquisition of Xylan, announced earlier this week, will serve the enterprise segment. Xylan's edge and aggregation routers provide will equip service provider points of presence (POPs). Remote access node technology for dial-up is available through the newly acquired Assured Access company, which also integrates voice over IP (VoIP) gateway functions.

Finally, Packet Engines brings wire speed gigabit routers that offer high performance IP switching applicable for use as core routing devices.