Joining the telecom crowd: Intel buys a piece of networking real estate

Taking its first major step in the telecom market, chip giant Intel last week announced its intent to acquire Dialogic Corp., a well-established name in the voice-over-Internet protocol niche.

Under the terms of the deal, Intel will pay $44 per share in an all-cash tender offer valued at approximately $780 million. Dialogic will then operate as a wholly owned subsidiary of Intel's enterprise server group.

Buying Dialogic will springboard Intel into the telecom game, said John Miner, vice president and general manager of Intel's enterprise server group.

A key to the merger on the Dialogic side is the sheer size and power of Intel and the ability to leverage that weight. "This will further improve the rapid time to market of our products and it will allow us to deploy new applications," said Howard Bubb, president and CEO of Dialogic.

"We will definitely have the full strength of Intel behind us, and that puts steroids behind what we do," said John Landau, vice president of marketing with Dialogic.

Intel views the evolving converged world as another opportunity to move its products. "As it evolves from a non-intelligent network to an intelligent network, there is a tremendous opportunity for processors," Miner said. "Our vision is that at the intersection of voice and data, there is an Intel server."

This move also represents a mainstreaming of the open systems approach, which will help the network evolve, Bubb said. "Standards can cause problems, but to build a network, you need standards."

Intel's move into telecom also will have far-reaching effects on some voice over Internet protocol players, including RADvision, a protocol stack vendor that has a relationship with Dialogic.

"This represents a clear statement that Intel wants to be on the who's who list of telecommunications," said Michelle Blank, president of RADvision. "Intel is not seen as a serious networking company," she said. "This gives them a viable product offering."