Acquiring a new edge, literally

Almost a year on, Earthlink’s purchase of New Edge Networks boosts product development

Not much has changed at the New Edge Networks site since the company was purchased by Internet provider Earthlink in April. The inner workings of the business network provider’s headquarters in Vancouver still resemble a carnival fun house; pirate themes and mannequins dressed as cowgirls turn the cubicle city into a strange maze of employee-driven individuality, and the more than 300 skilled workers’ "dress code" makes casual friday look stuffy and austere.

To its credit, Atlanta-based Earthlink bought New Edge for what it is: a company with methods that work. Along with keeping the executive structure and the culture intact, Earthlink has invested in the employees, offering bonus plans, 401(k) and more health care options. Such moves served to allay fears.

Linda Beck, the new president of New Edge Networks and seven-year veteran executive at Earthlink, said the curious culture at New Edge did not require too much of an adjustment for her, and that it helped that she worked among the different departments in the company since August of last year before being officially named president in January.

"I came from Silicon Valley," she said. "So that type of environment is something I’m comfortable with."

It may also help that Beck began her career at the National Security Agency, a federal entity considered by some to be more covert than the CIA and jokingly known as "No Such Agency," that pioneered computer networking and tracking systems prior to the consumer Internet advent, so perhaps pirate skulls and sombreros among the tech-minded are old hat for her. And anyway, Beck and her colleagues are results-oriented.

"We were looking for higher growth investments," said Beck. "We really wanted to get a company that would be the best possible we could buy."

Further, Earthlink bought New Edge because it is already successful in the business market, an arena that Earthlink last year decided to emphasize as it phases out its traditional consumer-based operation.

"We strategically wanted to get into business access space," said Beck. "From our point of view, it was just a great place to invest."

One hand…

What Earthlink got with the purchase was a turn-key business network company that runs exclusively broadband applications, allowing the company to gain a solid field position in that market, and to gain a foothold in the broadband network arena, a market with a compounded annual growth rate of 25 percent, according to a Compass Intelligence research study.

And it was a boon that New Edge founded the Retail Broadband Alliance, a 240-member-company strong organization that helps businesses make the transition to broadband networks. This is valuable, says Beck, because to be proactive in helping business to upgrade in the rapidly changing industry is to retain the confidence of customers. Such customers are found in the mid-size range – businesses with between 10 and 40 locations, said Beck, and it is this target market that attracted Earthlink to New Edge.

"In the mid-range market, New Edge is one that is at the top," she said.

New Edge Networks Communications Director Sal Cinquegrani said companies in this market sometimes don’t have the capacity to have an IT department, and rely on New Edge and now Earthlink to fill that void.

…washes the other.

What New Edge got from the deal was a shot in the arm to move to the next level. While the company has shown 28 consecutive quarters of revenue growth from the sale of broadband networks and services to businesses and other communications providers, it has lacked the capital to take it further. To this end, the Earthlink purchase was the key.

Beck said the company has poured what she will only describe as "millions" of dollars into New Edge in order to help it keep pace with the market and become a venue for new Earthlink ventures. One way New Edge and Earthlink have complemented one another is through product development.

Using the new Multi Protocol Label Switching application, which allows companies to automatically prioritize network traffic, Earthlink had been developing a product called Ready Office. The product addresses the growing number of employees who work from locations outside the office by allowing them to connect with their company intranet from home or elsewhere. In this instance, Earthlink had the Internet part dialed in, but New Edge was able to make it truly business friendly.

"(Ready Office) was a product we had offered on our site since the fall, and Earthlink has always operated sort of virtually," said Beck, "but New Edge has the practical know how and they were able to take that product and make it much better. The synergy with New Edge really made the product take off."

New Edge brought to Ready Office a tried-and-true method of tailoring office systems to specific companies. In fact, all New Edge sales people – actually called sales engineers – work with customers to build a network, rather than selling stamped networks.

Another avenue for growth that Earthlink provides for New Edge is an agreement with Germany-based business software maker, SAP. That company has recently focused on mid-sized businesses as well, which, said Beck, caused a light bulb to switch on when the New Edge purchase was finalized. Earthlink has entered into an agreement with SAP to market their products together. As a result, New Edge and SAP will advocate each other’s products in their sales programs. The match is good because broadband and MPLS applications help businesses run SAP software more effectively.

"We’ll be doing a lot of targeted marketing to our customers to offer business solutions that incorporate these products and applications," said Beck. "It is this type of value-add that is going to help us all."

What’s it all mean?

The world of technology is filled with jargon and acronym-based language that makes many tech professionals seem to the rest of us like they are from another planet. But this world of alphabet soup need not be so perplexing. Our crack team of researchers here at the VBJ has managed to demystify some of the more widely used industry terms. We encourage you to keep this helpful guide handy so you may feel better prepared the next time you need to avoid a Dot Zero Revision…

Below are some abbreviations and tech jargon, complete with easy-to-understand definitions:

DSL: Digital Subscriber Line. A technology that allows fast access to the Internet and other services, such as VoIP (see definition below).

IP: Internet Protocol. A standard for directing traffic over the public Internet.

ISP: Internet Service Provider. Communication companies that provide access to the public Internet.

LATA: Local Access and Transport Area. This refers to regional calling areas. There are almost 200 LATAs in the United States.

MPLS: Multi Protocol Label Switching. A technology standard for speeding up and prioritizing traffic over wide area networks.

NOC: Network Operation Center. Usually the nerve center of a carrier’s network. From the NOC, which is usually manned continuously, a provider can reroute communications traffic or troubleshoot service calls.

QoS: Quality of Service. This is a pre-specified measure of service quality the customer can expect from its communications provider.

SLA: Service Level Agreement. Service level guaranteed from communications providers on network performance, reliability, mean time to repair and so on.

T-1: Trunk level 1. A telephone line connection that can transmit data at a rate of 1.5 megabits per second.

VoIP: Voice over Internet Protocol. Internet telephone service that requires broadband access such as DSL or cable.

VPN: Virtual Private Network. Businesses use VPNs to link multiple remote offices/locations. VPNs can be designed to traverse the public Internet or private circuits.

Simple, right?
Extra-credit:

Dot Zero refers to the numbers indicating the initial generation of software. An example is MSWord 3.0. The idea, supported by many computer gurus, is that a "dot zero revision," meaning the first new edition of a program, should be avoided, as it will likely contain bugs. The wise ones will wait for Word 3.1 and so on.

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