Startups Seeking Entry To Enterprise Networks

Is your enterprise willing to purchase networking hardware from startups? That question, which arose during a panel discussion at last week's Network Outlook conference, is perhaps a timeless one in the annals of networking. But over the last few years, it was one that was largely irrelevant since nobody was purchasing anything.

As IT budgets start to increase again, there's hope in startup land that smart appliances can win customers, and then maybe an even bigger payoff via an acquisition or an IPO. The key questions startups need to answer (according to the smart people on the panel), are whether or not the equipment can cure prickly pain points, and how soon it can deliver ROI.

"If the pain point is high, enterprises will take the leap of faith [and buy from a startup]," said Promod Haque, managing partner at Norwest Venture Partners. But if the need isn't pressing, Haque said big enterprises will often wait a year or more to buy from bigger suppliers (like Cisco or Nortel) instead of going with wares from a new company.

Haque, whose legacy of wise investments is a long one, has some skin in the application-processing game, as chairman of "application router" startup Cast Iron Systems. He was joined on the panel by Roy Johnson, CEO of web-accelerator startup Redline Networks, and Jim Ricotta, CEO of DataPower Technology, which produces XML acceleration smarts that it sells as software or in a box.

Johnson said startups have a chance if they can not only show return on investment quickly, but can also convince enterprise buyers that their application can replace existing devices, such as servers or dedicated load balancing boxes. Ricotta said his company foresees a "clash of titans" between networking and server vendors as the lines of application processing blur, and as such is already offering its technology in OEM-ready form.If acceptance means getting inside someone else's switch, "we'll do it," Ricotta said.

Erik Suppiger, senior research analyst for IP infrastructure at investment bankers Pacific Growth Equities, was also on the panel, and said the time is right for networking hardware startups to stake a claim in the closet.

Innovative network-processing hardware, Suppiger said, "is not a strength or a focus for Cisco right now." Haque was even more blunt: "I think some of these larger companies are fundamentally incapable of innovation," he said.

Clearly, networking hardware startups have flourished when the need, price and ease of implementation were right -- nobody at the conference needed to be told the story of NetScreen Technologies, and its recent happy ending. Whether or not the current startups follow a similar path to riches depends in part on how successful they are at getting into your network sooner, rather than later.

(Is your firm willing to purchase networking hardware from startups? Take our online survey and let us know.)0