ROVING TECHNOLOGY PLATFORMS COME BACK AROUND TO STRATUS

Four companies and five name changes later, technology that once belonged to Stratus Computer has found its way back home through a series of acquisitions. The saga culminated in the Feb. 11 purchase of Cemprus from Platinum Equity Partners by the company now known as Stratus Technologies, a maker of fault-tolerant server technology for the enterprise market.

Coming back to Stratus are its original — but since enhanced — telecom solutions, including: a fault-tolerant hardware platform based on PA-RISC processors, the HP-UX operating system, the Stratus Intelligent Network Application Platform, GSM applications and next generation connectivity solutions for SS7 and IP networks. Stratus hopes to take advantage of the telecom unit's play in GSM as well as its international penetration.

“GSM is clearly the big play,” said Ali Kafel, director pf the telecom business unit for Stratus. “That's where we have a lot of deployments, reference accounts and applications that could be brought over to the [U.S.] as GSM gets more popular here.”

Kafel ran the unit five years ago before it was sold to Ascend Communications (see timeline). His own route back to Stratus has been equally circuitous, wending through stints at Ascend, Lucent Technologies, Telica and Advanced Fiber Communications.

STRATUS TECHNOLOGIES' EVOLUTION

1990--Stratus Computer expands beyond enterprise market and into telecom 1998--Stratus Computer acquired by Ascend Communications Feb. 1999--Stratus managers do leveraged buyout of enterprise solutions, becomes Stratus Technologies June 1999--Lucent acquires Ascend in $24 billion deal May 2002--Platinum Equity buys Ascend and Stratus products from Lucent, changes name to Cemprus Feb 2003--Stratus Technologies acquires Cemprus from Platinum

“Stratus Technologies does big business in the U.S., but most of our telco customers are outside the U.S.,” Kafel said. “Now that companies like AT&T Wireless and Cingular are moving toward GSM, a very interesting opportunity has fallen in our lap.”

Among the 50 employees Stratus is bringing on from Cemprus, approximately 45 have followed the products throughout their ownership transitions. That unlikely circumstance has helped keep the product competitive, Kafel said.

“Cemprus did a pretty good job enhancing the product,” he said. “They evolved the processors and added Sigtran and [intelligent network] message sets for European applications.”

People who don't think it is a good time to get into telecom are missing the long-range view, Kafel said. “I am very confident that the worst is behind us. We are seeing signs of stabilization,” he said.

Still, a lot has changed since the enterprise and telecom divisions of Stratus parted ways more than four years ago. From a competitive perspective, Kafel sees a much smaller set of players. Primary competitors such as DEC, Tandem Computer and Compaq Computer are either gone or part of HP, and the dynamics around switch vendors as competitors has changed.

“It used to be very difficult to sell against switch vendors like Lucent and Nortel, but now Lucent is more of a distributor and less of a competitor,” Kafel said. “People are starting to see that it is not always the switch vendors that know best.”

With the re-acquisition, Stratus also picked up SchlumbergerSema as a distribution channel.

However, HP has done a decent job melding its acquired computing platforms and driving $2.5 billion to $3 billion out of the cost of its combined HP and Compaq businesses. The enterprise systems group accounts for about $1 billion of that savings, and it will soon be clear how tough a competitor the merged HP will be.

Being firmly established with offices all over the world, more than 870 employees and expertise in telecom technology — particularly in IN — carries a lot of weight, Kafel said.

So does the quality of Stratus Technologies' fault-tolerant product, especially the company's flagship ftServer 3300 launched in March, according to analyst firm IDC. In a recent report on Stratus, IDC said the key to ongoing success is getting increased market visibility for its products as well as the value proposition for fault-tolerant servers.

Adding 12% to 15% incremental revenue with the acquisition doesn't hurt either, Kafel said.