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Force10: Where's the Exit?

LAS VEGAS -- Interop -- After Juniper Networks Inc. (Nasdaq: JNPR) recently spent half a billion dollars snapping up Peribit Networks Inc. and Redline Networks Inc., M&A chatter has turned to who Juniper didnt buy, rather than who they did (see Juniper Takes Two: Peribit & Redline and Juniper's Kriens Stuck On Traffic).

One name that often enters this conversation is Force10 Networks Inc. Often thought to be one of the potential means for Juniper to enter the 10-Gigabit Ethernet switching market, Force10 has so far been left out of the dance. Is time running out?

Foundry Networks Inc. (Nasdaq: FDRY) launched its new BigIron RX-16 switch on Monday, and that new high-end, fault-tolerant, 10-Gbit/s box further brings Force10's high-end dominance into question (see Foundry Flashes New Hardware). In addition, plummeting prices in Gigabit Ethernet gear point to Force10's biggest dilemma: the longer it waits to take the next logical stop in startup development -- acquisition or IPO -- the more it risks losing its startup edge, as larger public companies catch up in the technology race.

”Right now they have a good competitive position. They’ve been the leader in port density, but their position becomes compromised as competitors catch up,” says Stephen Schuchart, a senior analyst with Current Analysis.

Neither Force10 nor Juniper will comment on acquisition speculation, but Force10 vice president of marketing Andrew Feldman says that the company is being built as a self-sustainable entity, and that it has a "half-dozen" new customer projects in the works. Feldman also downplays concerns about the competition, saying that Force10 uses custom chips while the competition is relying on merchant silicon.

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