Extreme, Virtela Go Into Net Monitoring

Network monitoring services are the wave of the future, both companies have decided

October 11, 2005

3 Min Read
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A couple of product releases this week could signify a new phase for the networking industry, one where monitoring and management become the moneymakers for vendors.

Yesterday, Extreme Networks Inc. (Nasdaq: EXTR) took the wraps off its Premier Services Program, where the company monitors the performance of a customer's network. And today, service provider announced its Remote Monitoring and Management (RMM) offerings, with services ranging from simple watchdog monitoring to hands-on network management. (See Extreme Intros Premier Services and Virtela Offers RMM.)

In both cases, the companies would watch for signs of performance failures in a LAN or WAN -- which nodes are getting underutilized, for example, or which parts of the network will need upgrades to keep up with traffic growth rates.

These kinds of services have been around for years. But more companies might start getting into the managed services business, including equipment vendors.

For one, it's a path to recurring revenue streams at a time when equipment margins are under serious pressure, thanks in part to low-cost Asian competition. On a more immediate front, enterprises and even service providers need to keep a tighter rein on their Ethernet and IP networks as real-time traffic -- voice and video -- becomes more prevalent."They want to be able to get a better handle on what's going on in the network," says Bruce Todd, Extreme's director of services marketing. "As we get into a maturing market, the need for services is greater."

(Nasdaq: CSCO) trod this ground a year ago with the $128 million acquisition of NetSolve. And CEO John Chambers closed out 2004 telling analysts Cisco would have to offer guidance and consulting to its customers, teaching them how to wield the network -- a hand-holding approach that seems to mesh well with the Netsolve buy. (See Cisco Nabs NetSolve and Cisco Rolls Out Roadmaps.)

Because the managed services business hasn't found its Microsoft Corp. (Nasdaq: MSFT), Virtela believes it's got a shot at attracting customers.

"It's a fragmented play. There's no one large player," says Jeff Phillips, Virtela's vice president of product marketing. "There are VARs [value-added resellers] that can monitor your equipment, but they're very geographically focused -- just the southeast United States, for example."

If anything, the business has been the purview of the big business consultants such as EDS Corp. and IBM Corp. (NYSE: IBM). Their problem might lie in being too big, though. "[IBM has] the reach, and you're also paying for the name, but they've had trouble coming down below the Fortune 500," Phillips says.And carriers can offer managed services -- (Nasdaq: MCIP) has a managed LAN offering, for example -- but they don't always offer monitoring alone as an option, Phillips notes.

Virtela considers RMM to be separate from the company's primary business, which involves constructing logical networks out of lines leased from carriers. Virtela will offer RMM to companies that don't patronize its other services, and it doesn't see RMM as a gateway to getting, say, new MPLS customers. (See Virtela Expands Into MPLS.)

Virtela is willing to manage a customer's network, intervening if performance metrics get out of whack. Extreme, on the other hand, wants to be just in the monitoring game.

Extreme's Premier Services Program involves building reports on network utilization, pointing out the spots that are consistently congested and forecasting the nodes that might need upgrades to handle growing traffic patterns. The Premier Services Program is available only as a hosted service; Extreme doesn't yet offer customers the tools so they can try this on their own.

This does mean Extreme needs a staff to provide these services, but Todd won't disclose how many employees are working on the Premier Services Program. The total is less than 100 but "more than sufficient" for foreseeable growth, he says.Craig Matsumoto, Senior Editor, Light Reading

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