Cisco's Parc Purchase: An MPLS Play

Cisco buys startup Parc Technologies for $9M to get specialized MPLS software. Expect more moves...

July 9, 2004

4 Min Read
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Cisco Systems Inc.'s (Nasdaq: CSCO) move today to buy out Parc Technologies Ltd., a routing optimization startup in which it already had a stake, is part of an ongoing effort to beef up its Multiprotocol Label Switching (MPLS) technology, according to experts following the deal.

Parc's MPLS software will be integrated with Ciscos IP Solutions Center -- which is software for virtual private networking and quality-of-service tasks -- says Cisco’s Cliff Meltzer, senior vice president for network management in the technology group.

Meltzer says that Parc's software helps unclog network traffic based on a series of primary and secondary routing algorithms. MPLS itself merges Layer 2 metadata, such as bandwidth, latency, and utilization, with Layer 3 packet delivery information. As it turns out, this is a complicated task that requires additional computational assistance.

“This turns out to be a very hard computational problem to solve as you get larger [networks]," Meltzer says. "Quite honestly, we weren't sure that they would deliver on it. They came through -- we did a number of field trials.”

The deal points to an industry trend to improve reliability of Internet and MPLS traffic by any means necessary, explains Abner Germanow, analyst with International Data Corp. "When you look at MPLS and the dependence that large carriers are putting on MPLS... any technology that helps enhance the reliability and management is valuable," he says.Cisco also plans to use Parc’s technology in security products, according to Meltzer.

In 1999, Parc was spun off from the Centre for Planning and Resource Control of London's Imperial College. Cisco was an early investor in Parc, and the two of them announced a bandwidth protection tool called MPLS Tunnel Builder Pro in October 2002.

Cisco originally owned about 10 percent of Parc, and today it paid approximately $9 million in cash for the outstanding shares, with the deal expected to close by Cisco’s first quarter of 2005, officials said. Cisco will take on 12 developers and engineers, and Parc CEO Gideon Agar will report to Meltzer.

Germanow notes the field of MPLS software is still a fertile area of development. "There's a fair amount of innovation" still to be done with MPLS, he says. "Just because you have a solid protocol doesn't mean you can manage that protocol very easily." That's not a knock on MPLS, just an indication that it needs more tools.

There are many companies currently working on specialized MPLS and routing technology. Some of these include Future Software Ltd. (FutureSoft), IP Infusion Inc., Motorola Computer Group’s NetPlane Systems, NextHop Technologies Inc., RouteScience Technologies Inc., Conexant Systems Inc.'s (Nasdaq: CNXT) former Virata division, and Wind River Systems Inc. (Nasdaq: WIND). NetVMG and Sockeye Networks were also in play, but both were acquired by Internap Network Services Corp. (Nasdaq: INAP) in October 2003.Internap, like many companies, is a Cisco partner, so a natural questions is: Did those acquisitions influence Cisco’s decision to buy out Parc?

“Not in this case. The seed for this was planted many years ago,” Meltzer says.

However, it's becoming evident that Cisco is not done in this market. Cisco is an investor in a related company, Corvil Ltd. of Dublin, though the companies have their differences.

“Corvil asks a different question," says Meltzer. "Corvil is really a QOS technology play: Within the applications and bandwidth that you have, can you satisfy this set of SLAs?”

Meltzer says Cisco’s ultimate plan for integrating Corvil with Parc’s and other technologies is not yet public. “There's actually more pieces to the story than just these two." This is an area of investment for Cisco that's a combination of in-house development and outside investment things. That’s a trend industry-wide, and “that will happen within the next 12 months."Sounds like more deals could be on the way. So onto the next question: What are the other routing and MPLS equipment vendors doing about it?

Cisco competitor Juniper Networks Inc. (Nasdaq: JNPR) insists it's not concerned. “We don’t really see it as a big deal,” says Tony Scarfo, vice president of partner management, regarding the Parc deal. For MPLS, Juniper works with partners Opnet Technologies Inc. (Nasdaq: OPNT) and Wandl Inc. “We really think this should be a third-party type solution,” he says.

— Evan Koblentz, Senior Editor, Next-gen Data Center Forum

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