Perspectives - Networking: Up And ATM

Networking can provide plenty of bread-and-butter work for resellers, but by developing skills in related technologies, it?s possible to get the jam as well, writes Simon Meredith

The internet and its spin-offs dominate the strategies of the major networking vendors. The move from Lan to intranet, from Wan to extranet and the ability to exploit the opportunities presented by electronic commerce are just some of the recurrent themes.

As a backdrop to this, there is the continuing struggle for perceived leadership in operating systems ? in terms of both technology and market share ? and the broader struggle, between Microsoft on one hand and the ?gang of four? Java supporters ? Sun, Novell, Netscape and IBM ? on the other.

Underneath all this is a current of development that is moving the market from the old 10Mbps Ethernet and 16Mbps Token Ring standards, to 100Mbps switched and Fast Ethernet, and beyond to Gigabit Ethernet and ATM. This is still the major source of bread and butter work for the networking reseller.

Intermingled with the networking market is computer and telephony integration and the integration of voice and data communications systems.

All of these developments are important to IT users, to the vendors and to resellers. According to Pim Bilderbeek, senior analyst in IDC Europe?s networking section, they present real opportunities. ?Certainly the intranet and internet is a major opportunity because more and more people will be connected to the network; more people will be conducting business across the network; and more companies will be investing heavily in networking,? he says.

Migration to higher speed, greater bandwidth systems also presents an opportunity, says Bilderbeek. Sorting out integration issues is also a major area of interest, but the voice and data market, he feels, has yet to take off properly.

The problem for resellers is knowing which area to focus on or, for those that are starting with little real expertise, knowing where to invest time and resources. Derek Sanders, European marketing programmes manager for networking channels at IBM, says: ?I?ve seen some dealers broaden their skills and take on networking but it?s only a small percentage that make it.?

He estimates that perhaps only one in 10 dealers that try to turn themselves into networking specialists are successful. ?Dealers are not always prepared to put the investment into developing new skills, they are more interested in taking the low-hanging fruit. You can only get through by sheer determination and by having a plan for two or three years.?

For those that make the investment, the rewards can be high. ?You finish up owning the right to the network and with the customer looking to you almost as the outsourced network manager,? says Sanders. ?But it?s how you get there that?s the real challenge.?

IBM?s plan is to help resellers by using specialist distributors ? Azlan, Globelle, Anixter and Northamber ? which can run dealers through the authorisation and training programmes independently. The idea is that they provide the services and support a dealer needs to get into networking while developing the skills and experience.

Where dealers focus their attention depends very much on where they are coming from, says Azlan sales director Richard Pryor-Jones. But there is room for everyone.

?If you look at the big corporate resellers, many of them are losing business without knowing it because they have no focus and all they can offer is a fulfilment service when the requirement is there,? he says.

When corporate dealers take networking seriously they tend to do a fairly comprehensive job, and many resellers in the middle ground will already have a networking focus. But reseller businesses with annual sales of less than #10 million may have to move to a niche to attract business.

?They are starting to look at key technology areas,? says Pryor-Jones. ?At network management, at network applications and at multimedia, so that they can go to the market with a spin and can still say: we?d like to provide you with all the other networking products as well.?

One of Azlan?s aims is to try to open resellers? eyes to opportunities in other areas such as the internet and voice and data, as well as the hardware products, which most networking resellers have been and remain focused on.

The hardware business is starting to condense and become more competitive. The main trend over the past few months has been consolidation, with mergers such as 3Com/US Robotics, Cisco/Stratacom, Newbridge/UB Networks and Crosscomm/Olicom taking place. This is narrowing the choice of partners for the reseller and increasing competition between networking vendors.

In addition, the traditional systems vendors ? IBM, Hewlett Packard and Digital ? are all vying for market share and Compaq is now trying to emulate them, having made its own internetworking acquisitions.

Paul Klinkby-Silver, MD of Olicom, which recently merged with Crosscomm, says the mergers and acquisitions frenzy has been driven by the need to adopt new technologies at speed. ?The main need is to get bigger and it is sometimes quicker to merge technologies than to re-invent the wheel. In our case, Olicom gets into new markets because our customer base is mainly in the workgroup, Crosscomm has backbone products, so all of a sudden there is an end-to-end solution.?

This is very much the story with Newbridge and UB Networks; the backbone and the Lan being brought together to achieve the much sought-after end-to-end solution. For these companies delivering the end-to-end solution is a matter of survival. They must do this to compete with and differentiate themselves from the big three ? Cisco, 3Com/US Robotics and Bay. Bilderbeek says: ?If you want to be a big player, there are only two ways to survive: be very good at something or do everything for everyone.?

This, it would seem, is what the main networking players are trying to do. But none of this should be taken for granted. While Cisco and 3Com/US Robotics are trying to be all things to all men, and in all markets, Bay is focusing on the enterprise, says Bilderbeek.

He adds that Cabletron, Newbridge and Crosscomm are likely to move the same way, even though they do have end-to-end offerings. They are likely to offer enterprise-wide solutions and to try to differentiate themselves with technology ? Newbridge has already set out its stall with virtual networking and Crosscomm is likely to focus on ATM components.

All of these vendors will be competing for the ear of the networking specialist reseller and are likely to try to persuade dealers to remain faithful to them alone.

The big names have obvious appeal and market acceptance. They are also more likely to be generating pull from the corporate market. But Klinkby-Silver believes smaller, more specialised players will have more appeal to the reseller as they are more dedicated and focused on smaller communities. He believes there will be price competition among the big players and this won?t be good news for dealers.

?The reseller does not want to get into a situation where it does all the hard work only for the customer to do a ring-round,? he says.

According to Bilderbeek, some price erosion is inevitable. ?It?s certainly happened in adaptor cards and stackable hubs and it will happen in switching as well. That?s why it?s so important to sell to network service providers and to ISPs because that?s where there is margin,? he says.

But not everyone can sell to the internal market, and if a price battle develops, Bilderbeek believes 3Com/US Robotics will be best equipped for combat because of its channel structures and experience in high-volume markets,

Vendors will certainly try to avoid price-fighting, though. Simon Poulton, technical marketing manager at Cisco Systems, says that although the basic router product might be very similar from all vendors, there are important differences in the product lines which offer distinct advantages. ?At Cisco, for example, we have very tight integration between our level-two switching and level-three devices, which allows us to give the customer better performance, particularly when it comes to multimedia.?

Similar examples could be provided by other vendors and, while price is always a factor, says Poulton, it is not everything.

Vendors with end-to-end solutions want users to adopt their products across the board and want resellers to go solus with them. This should not be regarded as a crime against choice, says Klinkby-Silver, even though it may mean that some products that are not perfectly interoperable.

?Wouldn?t anybody want that?? he asks. ?Interoperability could be more of a challenge than people want to let on. What standard is ATM, for example? Who?s standard is it? Can you guarantee that if you plug one manufacturer?s product into another?s it will work??

Poulton agrees: ?From a purely commercial point of view we would like resellers to be dedicated to our products. I don?t think we put any more pressure on them to do that than any other vendor, but we do make it attractive to them.?

So what about the poor old users? Don?t they deserve a choice? ?The user does have a choice, there are plenty of other vendors,? says Klinkby-Silver. And if you mix and match, he says: ?You are going to lose your ability to provide excellence to the end user.?

Sanders begs to differ. He says that a reseller with Cisco and Bay accreditations, for example, ought to find it fairly easy to become IBM accredited. Yes, IBM too is after as much of the Lan market as it can get, but it has a big SNA legacy and the ingrained blue blood in the corporate IT department to fall back on.

IBM has a built-in differentiator, as does Digital. The problem for these companies is moving away from the dependency on that legacy. Yet while it is in place, it gives them staying power.

For dedicated networking vendors, making their product stand out from the crowd is getting harder. Most are currently promoting either some kind of technical advantage or a management structure such as the Cisco Fusion architecture or the company?s internetworking operating system (IOS), Bay?s Baysis, 3Com/US Robotics? Netbuilder system or Newbridge?s Vivid architecture.

These provide a fairly high degree of differentiation and the vendors are using high-speed technologies and mix-and-match combinations of these technologies. The race towards Gigabit Ethernet is now on and, partly as a result of this drive, ATM has come to the fore once again. Talk about voice, digital video and multimedia across the network is fuelling the fires.

Chris Blenkhorn, a networking consultant at IBM Networking Systems, says: ?People?s perception of what computing can do has changed. They have seen what can be done with graphics and images and video.

?More people have used the internet and seen very high quality presentations and all of these things drive up the demand for bandwidth. There are now lots of organisations that want to use high resolution graphics, images and video.?

But ATM may not be the golden chariot that some vendors would have us believe. While it has got the bandwidth, with users its history is already slightly tainted and the convention of Ethernet is more than holding its own.

Poulton says: ?The heat went out of the ATM market because 25MHz to the desktop never really happened. It was too little, too late, and that had a ripple effect on users. It is valid on the campus backbone, but you have got to use its capabilities ? put your security cameras on it, put voice across the network or multimedia.

?If you use it just for data, however, for most people Fast Ethernet will be more flexible and cheaper.?

By the end of this year, Gigabit Ethernet will be deliverable, and at 1,000Mbps it is going to provide most of the bandwidth and speed network users need. But it won?t be such a simple transition from 100 to 1,000Mbps as it was from 10 to 100Mbps, warns Blenkhorn. The standards are being developed, but the first implementation will be single-mode over fibre on fibre channel.

Multimode and copper wire standards will follow, but it could be 1998 or even later before Gigabit Ethernet is available over UTP cable.

There are always going to be companies that believe ATM will deliver competitive advantage, says Bilderbeek.

ATM will appeal mostly to those firms that need to move large quantities of data across the Wan or want to run serious multimedia applications across the network.

The opportunity for resellers to migrate users from Ethernet to Fast Ethernet and then on to Gigabit Ethernet and ATM is very tangible and does not take much learning beyond the L2 standards to provide.

But those that want to exploit the growing market for CTI on the network, for video feeds and interactive multimedia, will find that they have to invest some time in learning the new technologies.