advertising information
   personal technology

 custom news
 Headline News brief
 daily almanac
 CNN networks
 CNN programs
 on-air transcripts
 news quiz

CNN Websites
 video on demand
 video archive
 audio on demand
 news email services
 free email accounts
 desktop headlines

 message boards




Opinion: Europeans are on the move in U.S. data markets

March 13, 1999
Web posted at: 11:46 a.m. EST (1646 GMT)

by Fred McClimans, Network World columnist

Network World Fusion


Should U.S. high-tech companies receive more or less federal protection from being acquired by non-U.S. competitors?

More Less
View Results


(IDG) -- Something unusual happened last week. No, not the Monica interview - that wasn't unusual, it was odd.

Rather, we saw the makings of a full-fledged invasion from the shores across the Atlantic. In two swift moves, which happened so closely together they almost appeared to be a single event, France's Alcatel acquired both Xylan and Assured Access Technology in its quest to both expand its technology base and find a way to break into the lucrative U.S. market.

But it would be wrong to call this a technology invasion - after all, the technology isn't flowing to our shores, but away. Perhaps it should be called a cash invasion, since cash (or stock convertible to cash) is what the U.S. market is getting in exchange for technology.

Unlike Finland's Nokia, which started this recent invasion last year with the acquisition of Ipsilon, Alcatel has purchased both technology and brand-name assets in the U.S. in the form of switch manufacturer Xylan. For a mere $2 billion in cash and stock, Alcatel now has the right to place the Alcatel name right along-side Xylan (a firm fairly well known in the U.S. for both very good technology and a very volatile stock).

In fact, Xylan's name is perhaps just as valuable as its technology. Even though it's a huge enterprise (it is one of Cisco's largest resellers anywhere, for example), Alcatel is virtually unknown here outside the legacy telecom-equipment market (it began to gain a bit of name recognition last year when it snapped up Gigabit pioneer Packet Engines).

Meanwhile, German telecom biggie Siemens looks like it will use the same technique for breaking into the U.S. market. Just this week, it announced the acquisition of Argon Networks and Castle Networks to bolster its new "converged networks" team - Unisphere Solutions. It's also announced an investment in Accelerated Networks.

  Network World Fusion home page
  Free Network World Fusion newsletters
  Get Media Grok and The Industry Standard Intelligencer delivered for free
 Reviews & in-depth info at's bridges & routers page's hubs & switches page's network operating systems page's network management software page's personal news page
  Questions about computers? Let's editors help you
  Subscribe to free daily newsletter for network experts
  Search in 12 languages
 News Radio
  Fusion audio primers
  Computerworld Minute

And let's not forget 3Com. While Siemens has had a relationship with 3Com for some time now, they have been rumored within the past few days to be very close to a deal to acquire all or part of 3Com. If these rumors aren't true, they should be: Siemens, Alcatel and every other big international player looking to break into the U.S. market should be sniffing around every stable U.S. firm they can find.

Why the rush now to acquire U.S. mindshare? The U.S. market is still considered the flagship for networking technology. If you want to dominate the rest of the world, sooner or later you'll have to be a player in the U.S.

Equally important, the U.S. market is about the only stable market right now anywhere in the world. Asia is still in turmoil. South America is facing a very tough year ahead. And Europe is still feeling the impact of the global slowdown. Right now the smart money is flying as fast as it can to the U.S. shores. This stability will become critical as we approach the Y2K issue later this year. Put this all together, and the U.S. looks to be a hotly contested market over the next couple of years.

So Alcatel and Siemens (and even Nokia) won't be alone - expect more European takeover attempts on this side of the Atlantic. And that raises some interesting questions for Cisco. How will it keep its Alcatel-fed accounts internationally, now that Alcatel owns Xylan, for example? My hunch is that Cisco will have to fight very hard to keep account control from slipping to Alcatel - especially in those European sectors where service and support take a second seat to technology and U.S. market share.

If nothing else, it is refreshing to see how the dynamics of the U.S. vs. the Rest Of the World will play out, in everything from technology to policy. Last year, we saw the Europeans alter the shape of the MCI-WorldCom deal. This is a war that has a long way to go.

But don't let any of this affect your purchase plans. After all, the line between U.S. technology and U.S.-owned technology is already blurred beyond belief. Just ask all those employees of Bay Networks - now owned by Canada's Nortel.

Fred McClimans is CEO of Current Analysis, Inc., a competitive intelligence and analysis firm.

Euro to aid E-commerce, experts say
March 8, 1999
Europe enters uncharted waters as euro trading begins
January 4, 1999
Clinton advisers to warn that U.S. IT lead at risk
July 17, 1998

Europeans invade U.S. data market
(Network World Fusion)
Europe getting its Internet act together
(The Industry Standard)
France Telecom to offer flat-rate Net access
(The Industry Standard)
Alcatel/Xylan deal not just about convergence
(Network World Fusion)
Alcatel to acquire Assured, launch IP division
(InfoWorld Electric)
Voice-network vendor Alcatel to buy Xylan for $2 billion
(InfoWorld Electric)

Note: Pages will open in a new browser window
External sites are not endorsed by CNN Interactive.

Alcatel SA
Xylan Corp.

Note: Pages will open in a new browser window
External sites are not endorsed by CNN Interactive.

Enter keyword(s)   go    help

Back to the top   © 2001 Cable News Network. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines.