Vendor lineage
Cabletron Systems and Enterasys
Sold cable assemblies out of a garage, grew into Cisco's most serious rival, then dismantled itself on purpose.
Robert Levine and Craig Benson founded Cabletron Systems in Rochester, New Hampshire in March 1983, working out of Levine's garage and selling cable assemblies. It became one of the largest networking companies in the world, and for a period in the early 1990s it was the credible alternative to Cisco in the enterprise.
The product that made it was the MMAC hub, and later the SmartSwitch line, sold with an operating philosophy that was unusual for the era: Cabletron ran its own field service organisation rather than pushing everything through resellers, which is why it had a reputation for showing up.
It bought aggressively through the 1990s, and the acquisitions matter more than the revenue figures, because they are what the company eventually broke apart into.
In 2000 Cabletron announced it would split itself into four independent companies rather than be broken up by anyone else. Enterasys took the enterprise switching business, Riverstone took the carrier and metro routing business built on Yago, Aprisma took network management with the Spectrum platform, and GlobalNetwork Technology Services took professional services. It is one of the few examples of a large networking company choosing dissolution as a strategy.
Enterasys carried the enterprise name for a decade, weathering an accounting scandal that led to executive convictions, before being taken private and then acquired by Extreme Networks in 2013 for $180M. So the enterprise line that began in a New Hampshire garage in 1983 now ships as Extreme.
The through-line worth noticing is that four separate entries on this timeline - Enterasys, Riverstone, Aprisma and eventually Extreme - all trace to the same 1983 garage, and two of them appear here as chapters of a career as well as companies.
Founding stories
Cabletron Systems
In March 1983 a customer asked 25-year-old cable salesman Robert Levine for 1,000 feet of specialized network cable - and his supplier refused to cut less than 10,000. Levine and 28-year-old Craig Benson, a materials specialist from LAN pioneer Interlan, started cutting cable themselves in Levine's garage. They moved to New Hampshire in 1985 for the taxes, the cheap factory space, and the engineers shed by Route 128's fading minicomputer giants, and went public in 1989. Levine ran sales meetings in combat fatigues swinging a machete; Benson later became the 79th Governor of New Hampshire. At the peak: 6,600 employees and revenue past US$1.8 billion.
The timeline
- Founded in a garage
March 1983: Levine and Benson start cutting Ethernet cable no supplier would sell in small lots. Within two years they are installing networks and designing their own equipment in Rochester, New Hampshire.
- The MMAC era begins
Cabletron's first hit products - the ST-500, the first Ethernet transceiver with diagnostic LEDs, and the LAN-MD field test set - lead to the MMAC modular hubs. High-density 10BASE-T modules (24 or 48 ports per slot) and the Prism element manager make the MMAC-8 the wiring closet of the early 1990s.
Product history per Wikipedia's Cabletron article; the MMAC family dates from the late 1980s as 10BASE-T standardized.
- IPO and the climb
Cabletron goes public. Revenue passes $418 million by 1993 and US$1 billion in 1996 - one of networking's 'big four' alongside Cisco, Bay, and 3Com, famous for a sales culture as aggressive as its engineering. Early on it even co-developed a Cisco router module for the MMAC-8, before building routing of its own.
- The acquisition spree opens: Network Express
Cabletron buys ISDN switched-access maker Network Express to fold dial-up remote access into its platforms - the first of a string of deals meant to buy what Rochester had not built.
Network Express SEC 8-K, 1996.
- My chapter opensMy chapter
1996 to 2000 at Cabletron Systems in Brazil - the first job of a career that begins in the thick of the hub wars - and a second tour, 2005 to 2007, at Enterasys, inside the same lineage after the split.
- Leadership breaks; the DEC deal
On September 1, 1997 Levine resigns as president and CEO and Benson steps back to chairman. Cabletron agrees to acquire Digital Equipment Corporation's Network Products Business for about $430 million - a channel of distributors, the GIGAswitch heritage, and a reseller pact with Digital running to mid-2001, operated as the Digital Network Products Group.
Cabletron SEC S-4 FY1998; $430M per Forbes, Oct 1998.
- Yago Systems: the best thing Cabletron ever bought
March 17, 1998: already holding about 25 percent of the startup, Cabletron acquires wire-speed router maker Yago Systems for roughly $165.7 million in stock - 6.0 million shares up front, 5.2 million more issued in September 1999 under the deal's $35-per-share guarantee, with $150 million written off as in-process R&D. Yago's SmartSwitch Router promised 100 times the performance of software routers; an analyst later called Yago 'the best thing Cabletron ever bought into.' The same year brings Fast Ethernet switch maker NetVantage and DSL makers Ariel and FlowPoint.
Cabletron 10-Q/A and Riverstone 424B4 SEC filings; Forbes, Oct 1998; Computerworld, Feb 2001.
- The four-way split
February 2000, CEO Piyush Patel - himself Yago's former chief executive - splits Cabletron into four: Riverstone Networks (Santa Clara, service providers, the Yago line, led by Romulus Pereira), Enterasys Networks (Rochester, the enterprise, led by Henry Fiallo), Aprisma Management Technologies (the Spectrum management suite, Michael Skubisz), and GNTS (professional services, Earle Humphreys). Cabletron becomes a holding company with 4,500 employees, manufacturing already sold to Flextronics.
EE Times and Computerworld, Feb 2000.
- Cabletron ceases to exist
Riverstone IPOs in February 2001 and is distributed to shareholders that summer - the only true spin-off. The holding company folds into Enterasys in August 2001, and the Cabletron name passes into history eighteen years after the garage.
- Enterasys pays for its numbers
A 2002 revenue-recognition restatement erases the first post-spin profits; the SEC investigation and shareholder suits settle in October 2003 for $50.4 million, and in December 2006 four former executives are sentenced to prison.
- Private under Gores
The Gores Group and Tennenbaum Capital take Enterasys private for about $386 million (announced November 2005, closed March 2006); in 2008 Gores pairs it with a 51 percent stake in Siemens Enterprise Communications in a $550 million transaction.
- The DNA lands at Extreme
September 12, 2013: Extreme Networks announces the acquisition of Enterasys for about $180 million in cash ($105 million from hand, $75 million borrowed), roughly doubling Extreme's revenue. The Cabletron lineage - and the customer base I served from Brazil - lives on at one of the vendors I teach today.
Network World and Network Computing, Sep 2013.
Flagship products and solutions
- ST-500 and LAN-MDThe founding products: the first Ethernet transceiver with diagnostic LEDs and the first practical field test set for 10BASE5 - tools for the era when thick-coax Ethernet was nearly undebuggable.
- MMAC modular hubsThe MMAC-8, -5 and -3 with high-density 10BASE-T modules and the Prism element manager - the structured-cabling closets of the early 1990s, and Cabletron's answer to SynOptics.
- SPECTRUMThe network management platform whose model-based intelligence outlived everything else: spun out as Aprisma in 2000, sold to Concord Communications, then to Computer Associates for $350 million - still a management lineage today.
- SmartSwitch Router (Yago)Wire-speed Layer 3/4 switching from the 1998 Yago acquisition - the product that became Riverstone's carrier line and Enterasys' enterprise routing core.
- Digital Network Products GroupThe $430 million DEC networking estate: GIGAswitch heritage, an installed base, and a reseller channel that briefly made Cabletron Digital's strategic network partner.
Key innovations
- Diagnosability as a productCabletron's first wins came from making Ethernet observable - LEDs on the transceiver, a test set in the field bag - a philosophy that matured into SPECTRUM's model-based management.
- The buy-versus-build pivotLate-1990s Cabletron tried to acquire its way into routing and WAN access - Network Express, NetVantage, Ariel, FlowPoint, the DEC estate, and above all Yago - a spree whose one unqualified success seeded two companies.
- Creative destruction as strategyThe 2000 four-way split was one of the era's boldest corporate acts: dissolving a billion-dollar brand on purpose so its parts could survive - and three of the four did.
Main markets
Cabletron was one of networking's 'big four' of the 1990s - with Cisco, Bay Networks, and 3Com - peaking past US$1.8 billion in revenue and 6,600 employees before the LAN hub market it dominated commoditized underneath it.
Every thread found a home: the enterprise line through Enterasys to Extreme Networks (2013), the Yago routing line through Riverstone to a 2006 bankruptcy sale to Lucent, and SPECTRUM through Aprisma and Concord to Computer Associates. I lived two chapters from Brazil - Cabletron 1996-2000 and Enterasys 2005-2007 - and teaches the surviving lineage at Extreme today.
Analyst standing
- Joel Conover, Current Analysis, on the 1998 deal that mattered: 'The Yago group was the best thing Cabletron ever bought into' - its technology and people powered both Enterasys and Riverstone after the split.
- The ledger of the spree, per SEC filings: Yago at $165.7 million produced two companies; the $430 million DEC estate was resold within three years as the split refocused the portfolio.
Acquisitions
1996 Network Express and ZeitNet
ISDN remote access and ATM switching, bought in the same year as the market argued about which technology would carry the enterprise backbone.
1998 Yago Systems ~$180M
Wire-speed Layer 3 switching, which became the SmartSwitch Router.
Spun out as Riverstone Networks in 2001, and an entry of its own on this timeline.
1998 Digital Equipment's network products business ~$430M
DEC's networking division, bought from Digital shortly before Compaq acquired the rest of it.
- 1957 Digital Equipment Corporation (origin, not a purchase) — DEC was founded in 1957 and defined the minicomputer era; its networking arm ended up at Cabletron and the remainder at Compaq in 1998, which HP then acquired in 2002.