Siemens silences Unisphere

In an effort to round out its packet voice switching portfolio, Siemens AG has absorbed the voice division of Unisphere Networks Inc., a company funded by Siemens three years ago.

The private transaction for an undisclosed amount of money gets Siemens Unisphere's SMX 2100 media gateway, which translates traffic among traditional voice, ATM and IP networks. Siemens also obtains Unisphere's SRX softswitch, which sets up and manages calls across packet and circuit networks.

Unisphere will hold on to its ERX edge router and its MRX switch router, which feature IP, MPLS and ATM support. The company's future plans call for expanding into 3G wireless and cable networks, Unisphere President and CEO Jim Dolce says. Unisphere will also focus on DSL access to packet networks, he says.

The Siemens-Unisphere deal is not surprising, according to Christin Flynn, an analyst with the Yankee Group. Siemens has been selling Unisphere's equipment with some success overseas, both as Unisphere- and as Siemens-labeled equipment.

The deal allows Unisphere to better compete with Cisco Systems Inc., Juniper Networks Inc. and Riverstone Networks Inc. in the edge router market, and with Equipe Communications Corp. and WaveSmith Networks Inc. for the multiservice switch/router market, Flynn says.

The general manager of Unisphere's voice unit, Eve Aretakis, will become president of Siemens' packet-voice unit. About 200 Unisphere research, product management, sales support and customer service workers will become part of Siemens. They will continue to work in the same 40,000-square-feet of space they work in now in Westford, Mass., at least through year-end, Dolce says.

Unisphere was formed in 1999 by combining three start-ups that Siemens had purchased: Argon Networks, Castle Networks and Redstone Communications.

They pieced together a portfoilo that included a softswitch, media gateway, edge router and service software, with the intent of supplying carriers with everything they need to build packet-based voice/data networks.

But the providers interested in such a comprehensive portfolio were generally newcomers that were building networks from scratch. These competitive local exchange carriers have come up on hard times - many have failed - and have cut back spending.

The market now, says a spokeswoman for Unisphere, is with established carriers that want to deal with the big established switch vendors such as Siemens.

Unisphere has also had trouble breaking into the U.S. market. Two-thirds of the company's sales are to service providers overseas. Siemens accounts for 40 percent to 50 percent of Unisphere's router sales, Flynn says.

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