6/21/2004 -- Cisco isn’t the only networking player that’s beefed up its routing expertise of late. Earlier this month, Hewlett-Packard Co. spent $28 million to acquire core routing technology from Riverstone Networks Inc., a manufacturer of routers for carrier networks.

HP has a pre-existing OEM agreement with Foundry Networks to deliver routing solutions for the edge. But the acquisition of Riverstone’s XGS core routing technology signals a move away from the edge and toward the core – which brings HP into more vigorous competition with Cisco and Foundry.

According to Joel Conover, a principal analyst for enterprise infrastructure with Current Analysis Inc., the acquisition of Riverstone’s routing technology was a veritable steal for HP. “Simply put, HP could not have designed a 10 Gigabit fabric technology for this cost, and the acquisition also gives HP a boost in time to market, harnessing the momentum it is building in its Adaptive EDGE marketing strategy,” he notes.

For the record, HP’s $28 million buys only the hardware design and software operating system technology rights to Riverstone’s XGS technology. Riverstone will maintain ownership of its operating system software, and both companies will develop the XGS technology across their respective product lines.

HP, for its part, says that the Riverstone technology forms the basis of its ProCurve EDGE Fabric core switching solution. HP’s new solution is part of its Adaptive EDGE architecture, says Conover, which emphasizes a passive core in which all network intelligence is shifted away from the core and (paradoxically) toward the edge. This is a serious challenge to the status quo in the enterprise switching market, he notes: “In contrast, a cost-effective, high performance, highly available, scalable fabric, combined with HP’s ‘intelligence at the edge’ implies a less intelligent core that flies in the face of traditional LAN designs and the current postures of much larger competitors.”

HP stressed that the Riverstone technology isn’t intended as a replacement for its OEM deal with Foundry, but Conover isn’t convinced. “While no one outside HP and Riverstone knows exactly what that technology contains, it is safe to speculate that Riverstone’s next- generation XGS core switching solution was designed to be at least as functional as competing enterprise core switches,” he notes. “How HP uses that technology is up to HP, but it is safe to assume that HP could eliminate its dependence on Foundry if it chose to do so.”

Conover says that HP’s Adaptive EDGE fabric technology will have an impact in many of the same markets in which its more conventional edge products have enjoyed success. This could mean that HP plans to abandon its long-time stance vis-à-vis Cisco, in which it both partnered with and competed against the networking giant. “HP needed to take decisive actions to position itself against major networking rivals such as Cisco,” he says, noting that HP’s “partner/competitor” relationship with Cisco “has been an inhibitor to the growth of HP ProCurve as a direct competitor to Cisco.” The Riverstone acquisition shakes up this arrangement, he concludes. “With the acquisition of core networking technology, HP is finally endorsing the ProCurve business and HP’s overall strategy for the networking market, drawing clear lines in the sand with regards to where it stands in relationship to Cisco.” -Stephen Swoyer