Madge Networks believes there’s still some life left in the aging token-ring market. Late last month, Madge acquired the token-ring assets of Olicom for US$15 million and cash payments over the next three years to be based on Madge’s token-ring revenue performance.
Dan McLean, an analyst with IDC Canada Ltd. in Toronto, said the acquisition doesn’t amount to much.
“My response to that is: so what,” he said. “Token-ring is maintenance technology and is clearly a market in decline. Anyone that’s going to stake their present, let alone their future, on token-ring is probably not going to go too far in this industry.”
According to McLean, the deal can work to Madge’s advantage only if it is able to transition its token-ring users to other technologies, such as Ethernet.
“This industry is all Ethernet and IP right now and if you’re not a player there you might as well forget it,” he said.
But according to Graeme Allan, Madge’s vice-president of worldwide sales, token-ring users aren’t overly eager to make the jump to different technologies.
“There is a lot of indication that based on key developments in token-ring such as 100Mbps, the future of gigabit (token-ring), the desktop switching, the backbone switching, that the big token-ring shops will preserve their investments rather than make massive investments in Ethernet,” he said.
The bottom line, Allan noted, is that users want technology that can run the most up-to-date IP applications and token-ring allows them to do so.
For users who do decide they want to transition to other backbone technologies, Madge does offer Ethernet and ATM integration products that tie token-ring desktop switching to Ethernet or ATM backbones. But, Allan noted, Madge’s advice for users looking to upgrade their backbones would be to look at 100Mbps token-ring first.
The Olicom deal gives Madge sales, marketing and support talent, as well as a broader regional base, Allan said.
This is especially true in Canada, where Madge currently has no representation, he noted. Allan said the existing Olicom Canada team will remain in place to serve both Olicom and Madge customers.
