It was akin to the big fish being eaten by the little fish, and in this case the little fish has been growing with a healthy appetite. The little fish also keeps changing its stripes.
The little fish is YDI Wireless, a company without a big brand name but with an acquisitive nature. It started operating under the name Terabeam Wireless last year following its acquisition of that company.
The big fish was Proxim Corporation, which was purchased out of bankruptcy in July by Terabeam/YDI Wireless. Proxim had about 360 employees to start the year, compared to about 100 at YDI. The combined company now has about 290 employees, most of them from Proxim.
The story of Terabeam/YDI reads a little like a Russian novel because there are so many different names involved, although in this case, most are pronounceable. It's a fascinating novel for those interested in corporate evolution. And the next chapter is being written now.
The History YDI Wireless has been on an acquisition tear since it was created in 2003 by the merger of Telaxis Communications Corporation, a public company, and privately held Young Design. Both companies were focused on millimeter wave wireless products. Young Design itself had earlier acquired technology and products through the purchase of Zeus Wireless and the Link radio access products.
YDI, with headquarters in Falls Church, Va., made its first acquisition with KarlNet, one of the pioneers in software for wireless network management. Next was Terabeam Corporation, bought in mid-2004. Terabeam was founded in early 2000 with former AT&T Wireless chief Dan Hesse as its first chairman, president and CEO. Terabeam launched with big dreams for its free-space optics technology but, despite some successes, never saw the market develop. Terabeam also had some expertise in the millimeter wave technology at 60 GHz.
Hesse left Terabeam after the acquisition, as might be expected, and became head of Sprint's Local Telecommunications Division in mid-2005.
Because Terabeam was better known, YDI kept the name for business purposes while closing Terabeam's headquarter offices.
That same year, YDI bought another troubled wireless company, Ricochet Networks of Denver. Ricochet had a proprietary portable wireless technology it sold commercially in about a dozen metro areas, but was then operating only in Denver and San Diego.
Then came the biggest fish yet, Proxim, which itself was created by a merger of Western Multiplex Corporation and Proxim. Proxim declared bankruptcy after a series of patent infringement battles with Symbol Technologies, 3Com, Cisco Systems and others. Terabeam outbid the competition in a bankruptcy court auction, getting Proxim for $25.2 million in a deal completed July 28 of this year.
As a consequence of the Terabeam/YDI purchase of Proxim, Thomas Bennett resigned as YDI president and COO. He was replaced by Kevin Duffy, former CEO of Proxim. Duffy would leave about six weeks later, in early September, although he was around long enough to participate in a second-quarter earnings conference call with analysts where he talked about regaining market share. The new president and COO is David Olson, previously senior vice president of operations and global sales for YDI.
Going Forward Now, Terabeam/YDI is busy remaking itself once again, this time under the Proxim Wireless brand. Proxim has the best-known name, the most products and the sales channels.
"We're putting the Terabeam brand in the background in favor of Proxim," says Amit Malhotra, marketing vice president. "Unlike Terabeam, Proxim has a very solid worldwide customer base, revenue stream and brand recognition. We don't want to disrupt that."
William Terrill, an analyst with the Burton Group, says it makes sense for Proxim to be the go-to-market brand for the company. He also says he's glad Proxim won't go away because some of its products in the point-to-point (PTP) and point-to-multipoint (PTMP) technologies are "very, very good."
As noted, Proxim itself came with mixed parentage. One of its acquisitions, in 2002, was the ORiNOCO Wi-Fi product line from Agere Systems, which itself came from Lucent Technologies. Terrill says Proxim/Terabeam/YDI will be challenged to get much market share for WLAN products inside an enterprise, but that it has an opportunity to grow with outdoor products as a kind of backhaul solution on campuses.
"Both the enterprise and some of the carriers are interested in backhaul for mesh networks," he says.
Malhotra points out that Proxim also is heavily involved in WiMAX, with equipment now going through the certification process. Proxim is the only WiMAX manufacturer with a deal to use Intel's chips in both WiMAX base stations and customer premises equipment, he says.
Malhotra says Proxim's financial difficulties didn't harm the quality of its products or the relationships with distributors worldwide. "We'll continue those things that were strong about Proxim and demonstrate to our channel partners and others in the industry that the Proxim they knew and responded will continue," he says.
As evidence of that, he points to the recent launch of Proxim's municipal Wi-Fi networking products, the ORiNOCO AP-4000m and AP-4900M for use with 4.9 GHz public safety spectrum. The 4900M has dual radios for 4.9 GHz and Wi-Fi uses.
Proxim also was one of the first vendors to deliver WiMAX equipment to Cetecom Labs in Spain for conformance and interoperability testing. Malhotra says Proxim/Terabeam/YDI now has a full range of products covering everything from Wi-Fi to gigabit wireless, the latter through its GigaLink line.
Now, while the company will continue to sell products that came out of the YDI and Terabeam expertise, Proxim and its wares will attract the most notice.