Newsletter -- Week Ending January 2, 2004

InternetAcceleration News Summary
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Throw Out Last Year's Christmas cards -- it's time to get back to work. Happy New Year. In case you missed it, we took a couple of weeks off from our newsletter rants. And it's a good thing that we did since there wasn't a lot happening. But, as our governor would say, WE'RE BACK! And we're in the news.

NetsEdge Research Group makes USA Today! -- And amazingly it's not part of a story on financial corruption (don't we wish). Larry Downes (co-author of "Unleashing the Killer App" and "The Strategy Machine") from time to time writes thoughtful columns for USA Today, and the one published today Internet Cleans Its Own House mentions our work on Spam.

Larry is a fascinating individual, having been educated as a lawyer and having worked as a management consultant, his interests and knowledge span a remarkable range of topics. The theme of the column (Now is the winter of our Internet discontent) is that problems in the Internet are almost always better solved by the Internet community rather than governments and law. Larry thinks that Spam is a good example (and he mentions some others) and what we've been describing an excellent example of an Internet solution.

Back to the Future? -- Remember those heady days when first Cisco bought Arrowpoint and then -- BANG -- Nortel quickly snatched up Alteon? When John Chambers was queried about this acquisitions and its high price, he would always point out that you had to interpret the price in terms of what it could do as part of Cisco, not what it could do as an independent. So Cisco would set the price (e.g. for Arrowpoint) and then Nortel would more of less have to match the acquisition price, with the problem being of course that Nortel's market cap was a lot smaller, so the relative price was larger, and for many markets, Cisco's market share was much higher than Nortel's, so the purchase was less valuable. This all seemed to show that what was good for the goose was not necessarily good for the gander. Two weeks ago, EMC acquired VMWare for a pretty penny ($635M), and then this week Veritas acquired Ejasent, in what you have to view as dájà vu, all over again. Are we missing something or does goose and gander logic apply here as well? VMWare was kicking butt by local standards, and being touted as a likely 2004 IPO. Ejasent, in contrast, had gone through wash-out financing, management change, several shifts in product strategies and hadn't won very many customers (and as far as we knew, not likely to IPO in 2004). While the corporate pitch probably looks good on paper the real question is its suitability to the post Internet bubble IT world that we live in. To be fair, Veritas paid a lot less for Ejasent than EMC for VMWare, but we can't really understand it just using linear algebra and portions. Maybe if we were smart enough chaos theory would show the way…

Today's Quiz -- How many companies are there in the Fortune 500? Send your answers to john@netsedgeonline.com. From the right answers we'll pick a winner -- the prize is lunch with Peter at Los Altos' famous Chris' Fish And Chips.

Despite the Holidays Over $80M Flowed Into Seven Infrastructure Startups. MarkMonitor, corporate identity management and brand protection solutions for the Internet secured $22 million in its third round of private financing led by Institutional Venture Partners (IVP), additional investors include Foundation Capital and Focus Ventures. Calient Networks, optical switching systems and software, closed $20 million in funding. StrataLight Communications completed a $19.5 million second round of venture capital funding led by TL Ventures, and included previous investors USVP, ComVentures, The Photonics Fund, and several strategic partners. WISeKey, Internet security provider, raised $7M in its second round. Trusted Edge, Inc., a document policy management provider, received $4.7 million in first-round funding led by Novak Biddle Venture Partners. AirWalk Communications Inc., a wireless CDMA Radio Access Network (RAN) developer, has accepted $8 million in equity capital from TL Ventures and the Korean Global IT Fund (KGIF). Purple Patch Wireless raised $372,000 in its first round from Scottish Enterprise.

As you know -- As spam has evolved from a nuisance into a denial of service attack, we've been doing a lot of research into how e-mail system operators will be evolving their spam blocking capabilities. Along a parallel path, Tumbleweed Communications has been doing a lot of interesting work helping to get attention to the subject of Phising -- attacks involving the mass distribution of spoofed e-mail mail messages appearing to come from financial institutions and retailers designed to fool recipients into divulging personal authentication data.Tumbleweed founded the Anti-Phishing Working Group which released the results of analysis of phishing scam attacks identifying over 90 unique email fraud and phishing attacks sent out to millions of consumers over the past 60 days, with a dramatic increase in the number of attacks over the past two weeks in particular.

In other financial news -- for the quarter ending September 30, 2003 Globix's revenues were $13.8 million, compared to $18.0 million in 2002, a decrease of $4.2 million or 23.3% less than the same period a year earlier. Loss from operations for the quarter ended September 30, 2003 was $4.0 million, compared to $10.1 million in 2002. For the fiscal year ended September 30, 2003 revenues decreased 26.6% to $60.1 million, from $82.0 million for the fiscal year ended September 30, 2002. ProactiveNet, Inc., application performance measurement and analysis, reported at the end of its fiscal third quarter, that the company had completed its third consecutive quarter of growth in 2003, and increased revenue by 310% over the same period one year ago. No financial data was given.

Corporate news: F5 Networks and IBM sign patent cross-licensing agreement where F5 gains access to IBM's patents relating to Application Traffic Management and IBM gains access to F5's patent portfolio. RealNetworks has sued Microsoft for violations of federal and state antitrust laws, alleging that Microsoft has illegally used its monopoly power to restrict competition, limit consumer choice and attempt to monopolize the growing field of digital media.

MicroVault, secure e-mail encryption company, has changed its name to NetCourier. Wasn't Network Courier the name of the company that Microsoft bought about 15 years ago which became its forerunner for Exchange? (My middle age memory is failing so if you remember more details let me know john@netsedgeonline.com.)

Acquisition and merger news include -- VeriSign, critical infrastructure services for the Internet and telecommunications networks, has entered into a definitive agreement to purchase Guardent, privately held Managed Security Service Provider. VeriSign will pay approximately $140 million in stock and cash for the stock of Guardent. Netegrity, provider of identity and access management solutions, has acquired Business Layers, the eProvisioning company. Netegrity will pay approximately $42.5 million for Business Layers. Of this amount, $15 million will be paid in cash and approximately $27.5 million will be paid in shares of Netegrity common stock.

Companies forming or extending partnerships -- Lockheed Martin has integrated Forum's XML Web services security technology with its Radiant Trust Platform. Lockheed and Forum Systems will deliver products and services to government agencies and enterprises, including the Department of Homeland Security. Aventail and Radware have partnered to deliver a joint solution for optimized, cost-effective remote access. Amazon.com expands music samples agreement with Loudeye on retaining access to a comprehensive music samples catalog. Foundry Networks has signed a contract with BBC Technology, provider of products and services to both the BBC and other global media-driven organizations, to purchase and install Foundry Networks networking solutions, including Internet routers, Layer 2/3 and Layer 4-7 switch technology and associated services. Radio Television Hong Kong (RTHK) has partnered with VCAST and Equinix to use Equinix's Hong Kong Internet Business Exchange (IBX) centre as one of the distribution points for RTHK's global radio and television webcasts.

In product news -- Check Point Software Technologies and Sun Microsystems, successfully participated in and completed interoperability testing, providing the only Internet security solution for multiple test sites in North America's largest real world demonstration of the next generation Internet Protocol Version 6 (IPv6), prompted by the U.S. Department of Defense (DoD)-mandated transition to IPv6 by 2008 for all inter- and intra-networking. DataPower Technology announced the availability of firmware release 2.5 for its XML-aware networking hardware (the DataPower XS40 XML Security Gateway and DataPower XA35 XML Accelerator). Mobile Diagnostix Inc. announced support for the Blackberry wireless platform in the latest build of its Mobile Care Framework. Reactivity announced that its XML Firewall prevents XML denial of service (DOS) and other XML attacks. Blue Coat Systems announced that its secure proxy appliances could safeguard customers from the recently discovered spoofing vulnerability in Internet Explorer (IE) 6. Along the same theme, TippingPoint reported that its UnityOne Intrusion Prevention Systems provides protection for a security flaw in Internet Explorer for which a patch does not currently exist. Commtouch, proprietary anti-spam solutions, said its spam detection center saw a 33 percent increase of spam outbreaks in December 2003, with over 44 percent of the spam outbreaks having personalization and random characters.

Keynote Systems reported that major online shopping sites continued their crawl to Christmas Day displaying continuing inconsistent and slow performance for holiday shoppers attempting to purchase gifts on the Internet. And, for the week beginning 12/22/03 and ending 12/28/03, Keynote's E-Commerce Transaction Index showed that the overall average response time for completing a transaction was 13.86 seconds, while the success rate for completing a transaction was 97.33 percent. These are the best overall averages since Keynote first began issuing press releases reporting on the Index's performance this holiday shopping season (beginning the day after Thanksgiving).

Customer wins included -- Houston Energy, L.P., an independent offshore oil and gas exploration company, worked with EMC partner MTI to deploy the EMC Celerra NS600 Network Attached Storage (NAS) system. Navio has purchased and deployed DataPower's XML security networking device. Norfolk Mental Health Care NHS Trust will deploy Venation's V-WEB network performance and content delivery solution. New Zealand Department of Conservation (DOC) is using Peribit Sequence Reducers to ensure high-speed connections between three of its very remote facilities and its headquarters in Wellington and Vinciti Networks, a managed technical services provider, has deployed Peribit SR-20 Sequence Reducers to increase WAN link capacity and performance between its facilities in Bangalore, India; Phoenix, Arizona; and Santa Clara, California. Virgin Money in conjunction with Telindus, has selected Extreme Networks as the preferred supplier for new Gigabit Ethernet networks for its Norwich, UK and Sydney, Australia networks. Network Physics announced that the company has acquired their 25th customer. NetScaler, Inc., application intelligent networking company, will close the current calendar year with more than 200 customers, which represents more than a twofold increase in the total number of customers worldwide over last year. Nortel Networks selected Rendition Networks' TrueControl family of network configuration control solutions. Columbia University, Princeton University's Center for the Study of Brain, Mind & Behavior and Stanford University School of Medicine selected BlueArc's SiliconServer to power file serving and research applications that require storage and manipulation of high volumes of data.

Executives making the news -- STARBAK Communications promoted Gregory Casale to chief executive officer. Casale joined the company in June 2003 as president and chief operating officer. TeraCloud, storage resource management software, named Gary Tidd as president and chief executive officer. Niklas Heuveldop appointed president and chief executive officer of ServiceFactory, Swedish supplier of WiFi business support systems. Force10 Networks named Howard Lee country manager of Korea. ScriptLogic, desktop administration software for Windows-based networks, named Charles Clements as vice president of worldwide sales. Mark Uicker joins anti-spam solutions provider, Commtouch, as vice president of business development. Dave Williamson joins Bridgewater Systems, dynamic IP and data service fulfillment solutions, as vice president of sales. Boingo Wireless hired Karen Black as senior vice president of engineering. Former RealNetworks executive, Paul Bialek takes interim role as chief executive officer at TeleSym, wireless VoIP. MontaVista Software appointed Scott Jaffe as vice president of business development. Fortinet appointed Harold Covert as chief financial officer.

See links below for the complete text of those items mentioned above plus other news.

The InternetAcceleration newsletter and www.internetacceleration.com are produced by NetsEdge Research Group. For more information or to keep us updated, contact John Katsaros john@netsedgeonline.com.

Product News

Mobile Diagnostix Adds Support for RIM Blackberry Wireless Platform
Mobile Diagnostix Inc. announced support for the Blackberry wireless platform in the latest build of its Mobile Care Framework...more>

Check Point And Sun Microsystems Secure North America's Largest Ipv6 Test
Check Point Software Technologies and Sun Microsystems, successfully participated in and completed interoperability testing, providing the only Internet security solution for multiple test sites in North America's largest real world demonstration of the next generation Internet Protocol Version 6 (IPv6), prompted by the U.S. Department of Defense (DoD)-mandated transition to IPv6 by 2008 for all inter- and intra-networking...more>

Reactivity XML Firewall Protects Against XML Parser Vulnerabilities
Reactivity recommended SOAP message validation and content filtering like its flagship Reactivity XML Firewall as the best way to prevent XML denial of service (DOS) and other XML attacks...more>

DataPower's Version 2.5 Achieves Breakthrough for Scaling Operational Complexity of Real-World XML Web Services
DataPower Technology, announced the availability of firmware release 2.5 for its XML-aware networking hardware (the DataPower XS40 XML Security Gateway and DataPower XA35 XML Accelerator)...more>

Navio Deploys DataPower's XML Web Services Security Hardware to Reduce the Complexity of its "Trusted Transaction" Services
Navio has purchased and deployed DataPower's XML security networking device...more>

Advisory: Blue Coat Secures IE Spoofing Threat
Blue Coat Systems announced that its secure proxy appliances can safeguard customers from the recently discovered spoofing vulnerability in Internet Explorer (IE) 6...more>

Reports of Email Fraud and Phishing Attacks Jump Over 400% During the Holidays
Tumbleweed Communications and the Anti-Phishing Working Group released the results of analysis of phishing scam attacks (mass distribution of "spoofed" e-mail messages with return addresses, links, and branding which appear to come from banks, insurance agencies, retailers or credit card companies) identifying over 90 unique email fraud and phishing attacks sent out to millions of consumers over the past 60 days, with a dramatic increase in the number of attacks over the past two weeks in particular...more>

Internet Explorer Vulnerability Resolved by TippingPoint's UnityOne Intrusion Prevention Systems
TippingPoint's UnityOne Intrusion Prevention Systems provides protection for a security flaw in Internet Explorer for which a patch does not currently exist...more>

Commtouch Reports 50+ Ways to Spam Viagra
Commtouch, proprietary anti-spam solutions, said its spam detection center saw a 33 percent increase of spam outbreaks in December 2003, with over 44 percent of the spam outbreaks having personalization and random characters...more>

Online Shopping Sites Crawl to Christmas, Says Keynote
Keynote Systems reported that major online shopping sites continued their crawl to Christmas Day displaying continuing inconsistent and slow performance for holiday shoppers attempting to purchase gifts on the Internet...more>

Online Shopping Performance Improves Slightly in Final Rush to Christmas, Reports Keynote
For the week beginning Monday, December 22 and ending Sunday, December 28, Keynote's E-Commerce Transaction Index showed that the overall average response time for completing a transaction was 13.86 seconds, while the success rate for completing a transaction was 97.33 percent. These are the best overall averages since Keynote first began issuing press releases reporting on the Index's performance this holiday shopping season (beginning the day after Thanksgiving)...more>

Corporate News

RealNetworks Files Antitrust Lawsuit Against Microsoft
RealNetworks has sued Microsoft for violations of federal and state antitrust laws, alleging that Microsoft has illegally used its monopoly power to restrict competition, limit consumer choice and attempt to monopolize the growing field of digital media...more>

MicroVault Relaunces as NetCourier
MicroVault, secure e-mail encryption company, is now NetCourier...more>

Corporate News -- Agreements / Partnerships

F5 Networks and IBM Sign Patent Cross-Licensing Agreement
Under the terms of the agreement, F5 gains access to IBM's patents relating to Application Traffic Management and IBM gains access to F5's patent portfolio...more>

Lockheed Martin has integrated Forum's XML web services security technology with its Radiant Trust Platform - an essential backbone for trust services
Lockheed Martin has integrated Forum's XML Web services security technology with its Radiant Trust Platform. Lockheed and Forum Systems will deliver products and services to government agencies and enterprises that need to safely aggregate and share XML and legacy data. Companies are working together to support the Department of Homeland Security...more>

Aventail and Radware Forge Partnership to Provide Secure, Fault-Tolerant, and Scalable Anywhere Access
Aventail and Radware partner to deliver joint solution for optimized, cost-effective remote access. Strategic alliance includes joint sales, support and marketing...more>

Amazon.com Expands Music Samples Agreement with Loudeye on Multi-year Terms
By using music samples from Loudeye, Amazon.com retains access to a comprehensive music samples catalog available with the vast majority of new release material available on or prior to their official release dates...more>

Foundry Networks Wins New Contract with BBC
Foundry Networks has signed a contract lasting up to five years with BBC Technology, provider of products and services to both the BBC and other global media-driven organizations, to purchase and install Foundry Networks networking solutions, including Internet routers, Layer 2/3 and Layer 4-7 switch technology and associated services...more>

RTHK Partners With Equinix and VCAST to Deliver Online Programming
Radio Television Hong Kong (RTHK) has partnered with VCAST and Equinix to use Equinix's Hong Kong Internet Business Exchange (IBX) centre as one of the distribution points for RTHK's global radio and television webcasts...more>

Corporate News -- Mergers and Acquisitions

VeriSign to Acquire Guardent
VeriSign, critical infrastructure services for the Internet and telecommunications networks, has entered into a definitive agreement to purchase Guardent, privately held Managed Security Service Provider. VeriSign will pay approximately $140 million in stock and cash for the stock of Guardent...more>

Netegrity Acquires Business Layers
Netegrity, provider of identity and access management solutions, has acquired Business Layers, the eProvisioning company. Netegrity will pay approximately $42.5 million for Business Layers. Of this amount, $15 million will be paid in cash and approximately $27.5 million will be paid in shares of Netegrity common stock...more>

Corporate News -- Finance News

MarkMonitor Secures $22 Million in Private Financing
MarkMonitor, corporate identity management and brand protection solutions for the Internet secured $22 million in its third round of private financing led by Institutional Venture Partners (IVP), additional investors include Foundation Capital and Focus Ventures...more>

Calient Networks Secures $20 Million
Calient Networks, optical switching systems and software, secured $20 million in funding...more>

StrataLight Communications Raises $19.5 Million
StrataLight Communications completed a $19.5 million second round of venture capital funding. This round was led by TL Ventures, and included previous investors USVP, ComVentures, The Photonics Fund, and several strategic partners...more>

WISeKey Raises $7 Million
WISeKey, Internet security provider, raised $7M in its second round...more>

Trusted Edge Secures $4.7 Million Investment
Trusted Edge, Inc., a document policy management provider, has secured $4.7 million in first-round funding led by Novak Biddle Venture Partners...more>

AirWalk Secures $8m In Private Equity Funding
AirWalk Communications Inc., a wireless CDMA Radio Access Network (RAN) developer, has accepted $8 million in equity capital from TL Ventures and the Korean Global IT Fund (KGIF)...more>

Purple Patch Wireless Raises $372,000 in First Round
Scottish Enterprise led the round...more>

Globix Reports Financial Results for the Fourth Quarter and Fiscal Year 2003
For the quarter ending September 30, 2003 revenues were $13.8 million, compared to $18.0 million in 2002, a decrease of $4.2 million or 23.3% less than the same period a year earlier. Loss from operations for the quarter ended September 30, 2003 was $4.0 million, compared to $10.1 million in 2002. For the fiscal year ended September 30, 2003 revenues decreased 26.6% to $60.1 million, from $82.0 million for the fiscal year ended September 30, 2002...more>

ProactiveNet Announces Record Quarter As Sales Rise 310%; Enjoys Third Consecutive Quarter of Growth
ProactiveNet, Inc., application performance measurement and analysis, completed another record sales quarter. The Company, at the end of its fiscal third quarter, completed its third consecutive quarter of growth in 2003, and increased revenue by 310% over the same period one year ago. No data was given...more>

Corporate News -- Executives on the Move

TeraCloud, storage resource management software, named Gary Tidd as president and chief executive officer...more>

ScriptLogic, desktop administration software for Windows-based networks, named Charles Clements as vice president of worldwide sales...more>

STARBAK Communications promoted Gregory Casale to chief executive officer. Casale joined the company in June 2003 as president and chief operating officer...more>

Mark Uicker joins anti-spam solutions provider, Commtouch, as vice president of business development...more>

Dave Williamson joins Bridgewater Systems, dynamic IP and data service fulfillment solutions, as vice president of sales...more>

Boingo Wireless hired Karen Black as senior vice president of engineering...more>

Niklas Heuveldop appointed president and chief executive officer of ServiceFactory, Swedish supplier of WiFi business support systems...more>

Former RealNetworks executive, Paul Bialek takes interim role as chief executive officer at TeleSym, wireless VoIP...more>

MontaVista Software appointed Scott Jaffe as vice president of business development...more>

Fortinet appointed Harold Covert as chief financial officer...more>

Force10 Networks named Howard Lee country manager of Korea...more>

Customer Announcements

Houston Energy Adds Storage Infrastructure Depth with EMC Celerra NS600
Houston Energy, L.P., an independent offshore oil and gas exploration company, worked with EMC partner MTI to deploy the EMC Celerra NS600 Network Attached Storage (NAS) system...more>

Norfolk Mental Health Care Trust improves web infrastructure and efficiency with Venation V-WEB
Norfolk Mental Health Care NHS Trust to deploy Venation's V-WEB network performance and content delivery solution...more>

New Zealand Dept. of Conservation Creates High-Speed Links To Very Remote Locations
New Zealand Department of Conservation (DOC) is using Peribit Sequence Reducers to ensure high-speed connections between three of its very remote facilities and its headquarters in Wellington...more>

Vinciti Networks Manages Global Traffic Growth With Peribit Sequence Reducers
Vinciti Networks, a managed technical services provider, has deployed Peribit SR-20 Sequence Reducers to instantly and transparently increase WAN link capacity and performance between its facilities in Bangalore, India; Phoenix, Arizona; and Santa Clara, California...more>

Virgin Money Selects Extreme Networks & Telindus for Gigabit Ethernet Network
Virgin Money in conjunction with Telindus, has selected Extreme Networks as the preferred supplier for new Gigabit Ethernet networks for its Norwich, UK and Sydney, Australia networks...more>

Network Physics Closes Year with 25th New Customer
Network Physics has acquired their 25th customer. The company's NP-2000 products troubleshoot application and network performance issues and directly link network and application performance to business goals...more>

NetScaler Achieves Major Customer and Product Milestones
NetScaler, Inc., application intelligent networking company, will close the current calendar year with more than 200 customers which represents more than a twofold increase in the total number of customers worldwide over last year...more>

Rendition Networks Selected by Nortel Networks
Nortel Networks selected Rendition Networks' TrueControl family of network configuration control solutions as solution for customers...more>

BlueArc Moves to Head of the Class in Higher Education Market
Columbia University, Princeton University's Center for the Study of Brain, Mind & Behavior and Stanford University School of Medicine selected BlueArc's SiliconServer to power file serving and research applications that require storage and manipulation of high volumes of data...more>

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