Extreme acquires Soapstone’s assets for less than $5M

Ethernet equipment vendor Extreme Networks (NASDAQ: EXTR) has acquired the remaining core technology assets of Soapstone Networks (Pink Sheets: SOAP.PK) for an undisclosed sum that Extreme will only say is less than $5 million.

Extreme will take ownership of the Provider Network Controller (PNC) control plane software that Soapstone launched late last year, just months before announcing it was reviewing strategic alternatives after the market for its gear didn’t develop as anticipated.

With no sales of the PNC, Soapstone’s board voted to liquidate the company earlier this summer, dismissing all but 14 employees. Extreme is not acquiring those remaining employees but is talking with some that were recently let go. It reported a net loss of more than $10 million in the second quarter.

Soapstone  was created two years ago by Avici Systems as that company’s core router business began to decline after about a decade of selling to companies including AT&T.

The  PNC, which was built using Avici’s existing control plane, was designed to help automatically secure network resources for services in multi-vendor networks.

The first version of the PNC was tailored for Provider Backbone Bridging – Traffic Engineering (PBB-TE), a connection-oriented Ethernet transport technology that Nortel Networks had begun championing the year before. Soapstone’s product was designed to help that point-to-point technology graduate to a multipoint-to-multipoint environment, a transition fraught with some engineering challenges.

Extreme, which followed Nortel in support of PBB-TE, had already been working with Soapstone and had achieved interoperability with the PNC. But the equipment vendor says its acquisition of Soapstone is not all about PBB-TE.

Soapstone was working this year on introducing versions of its products for a variety of packet-based technologies such as PBB, PB and Q-in-Q. (The company spent nearly $2.5 million in research and development in the second quarter alone.) Extreme said Soapstone’s product could ultimately be used for control plane management, service provisioning and service assurance for a variety of packet-based networks.

And where Soapstone previously had to put a lot of effort into designing for multivendor networks, Extreme plans to reintroduce the product as one optimized for Extreme’s gear.