Divide and conquer: NEC access group spins off into new company

NEC America has spun off its access product division into a new company called NEC Eluminant Technologies. The new organization will continue to support NEC's established asynchronous and Sonet multiplexers and digital loop carrier systems, while developing access products with an eye to the future of fiber.

Eluminant is a wholly owned subsidiary of NEC, but it will be more nimble and responsive than its parent company. One of the hallmarks of Eluminant is its agility in decision-making, said Curt Benton, president and CEO.

"We're not going to go through six committees to make a decision. We know we are creating some organizational stress [within NEC], but that really just reflects the marketplace we are working in," he said.

The Eluminant strategy is to continue its in-house development efforts and sift through NEC America and NEC Japan for technologies that will complement its business. In addition, Eluminant will form strategic partnerships and when appropriate, acquire companies.

"We have the license to go and do whatever is necessary to focus on the access marketplace. And we can do so with an element of risk that has never been tolerated [at NEC]," Benton said. That also means that Eluminant suppliers can be NEC competitors.

Vista, the first product under the Eluminant moniker, rolls out in a few months, said Jim Holley, vice president of marketing. It is a carrier-class add/drop multiplexer (ADM) designed for the metro area access marketplace.

"Vista is a Sonet ADM with a twist," Holley said. It can host digital subscriber line directly from the Sonet shelf, and it can support T-1 based high bit-rate DSL, fractional HDSL and asymmetrical DSL. In the future, other types of DSL also will be supported.

"It shows our strong focus on the last mile or access network," he said. "We won't compromise the design by including stuff that makes the product popular in the backbone." Eluminant's goal is to lead the access market with simple, efficient technologies.

Although Eluminant will act much like a start-up, it has an old hand's deep pockets. The access products division overnight became the new company, which is born with established product lines and $140 million in revenues.

In addition, Eluminant gets to use NEC's established distribution channels and will work closely with NEC's other business groups to maintain integrated network management and product interoperability.

The NEC reorganization follows several other recent changes in the switching and access vendor community. The frenzy was perhaps touched off by Lucent Technologies' Livingston Enterprises Inc. acquisition.

Earlier this year Northern Telecom bought Bay Networks, and became Nortel Networks. Siemens Corp. and Ericsson both reorganized to focus on the surge in data-and competition.

One reason Lucent and Nortel Networks are integrating acquired companies is to tap into brand image, noted Mike Arellano, an analyst with Degas Communications Group. Certainly Lucent and Nortel are well-recognized domestically, but they also have a strong global presence in switching, he said. As the access market heats up, they hope to translate their switching experience and recognition to access.

NEC is less a limited global identity and therefore has less to lose in terms of branding, Arellano said. "NEC really only has a strong position in switching in Japan. So it makes sense that they try to develop a global brand for access products because they're not well-known in switching overseas," he said.

SPRINT SWITCHING Sprint is deploying Tellabs' AN2100 Gateway Exchange switching system, which combines Tellabs' echo canceller and Titan 5500 digital cross-connect technology with packet and cell technologies to perform multimedia adaptation and switching.

NOTHING BEATS A PONTIAC US MidTel, a Pontiac, Mich.-based CLEC, is building its local and long-distance network using switching and access solutions from Siemens. The CLEC is installing the EWSD switching platform and will add Siemens' FastLink Sonet products.

December 16, 1997 Lucent Technologies completes its acquisition of Livingston Enterprises.

August 31, 1998 Northern Telecom acquires Bay Networks for $9.1 billion. Merged company changes name to Nortel Networks one month later.

October 1, 1998 Siemens Corp. reorganizes; the telecom networks division becomes information and communication networks division.

October 12, 1998 Ericsson refocuses its business on wireless communications and Internet-based technology.