Bay Networks

» see baynetworks.com as it lived, on the wayback machine

~ the eulogy ~

Bay Networks had two head offices and never picked one. Billerica, Massachusetts was where the router half sat. Santa Clara, California was where the hub half sat. The name was the compromise: Massachusetts Bay on one side of the country and San Francisco Bay on the other, so that neither building had to read the letterhead as a defeat.

Wellfleet Communications was founded in Bedford in June 1986 by Paul Severino and four others, and it built multiprotocol routers at exactly the moment the internet protocol was winning. Fortune named it the fastest growing company in the United States in 1992 and again in 1993. By that second year it had about 14 percent of the world router market, which sounds respectable until you learn Cisco had 50. SynOptics was the other shape of the same business, Santa Clara, ethernet hubs and the switches that were about to replace them.

They announced the merger on 6 July 1994 and made it effective that October, in a deal valued around $2.7 billion. The logic was clean on a slide. One company would sell you the box that moved packets between networks and the box that moved packets inside one, under a single management console. What arrived instead was two of everything, including two sales forces each explaining why the other half's product was also fine. Customers spent four years waiting for the combined product line the merger had promised.

Nortel announced the purchase on 15 June 1998 at $9.1 billion in stock. Bay's stockholders approved it on 28 August and the merger became effective on the 31st, each Bay share converting into 0.6 of a Nortel share. Nortel renamed itself Nortel Networks on the strength of what it had just bought.

The company logo in the last year carried a tagline, Where Information Flows, set next to a small blue wave. In 1998 I was fourteen, in Turkey, on a modem that had recently been upgraded to 56k, and Bay Networks equipment existed entirely on the far side of my ISP's front door. This is a company whose whole customer list was other companies' network departments, so the only way a home user ever met it was as a logo on a box in a room they had no reason to enter.

~ the dossier ~

~ two head offices ~

Keeping both coasts was presented at the time as respect for two engineering cultures. In practice it meant every decision had a time zone attached to it. The router people had spent eight years beating Cisco on protocol support and the hub people had spent eight years selling into wiring closets, and merging the price lists did not merge the instincts.

The consumer side is the part that survived. Bay launched Netgear in January 1996 as its small business and home brand, the cheap end of the catalog under a different name so it would not embarrass the enterprise one. Netgear was spun out as an independent company in September 1999, by which point its parent had been a Nortel subsidiary for a year.

~ the man from intel ~

Dave House came to Bay Networks in October 1996 as chairman and chief executive, after twenty three years of senior jobs at Intel. He inherited a $2 billion networking company that had lost the market position it merged in order to win. He is generally credited with fixing the finances, which is a different job from fixing the products, and the financial fix is what made the company sellable.

He stayed about a year past the Nortel closing and then left to run Allegro Networks, and later chaired Brocade. Two years after the deal, Network World was describing the acquisition as one that had not worked out the way it was supposed to.

~ what nortel actually bought ~

The numbers moved the wrong way almost immediately. Bay's share of the router market went from 15.7 percent in 1998 to 11.2 percent in 1999. Its routing switch share fell from 37.8 percent to 17 in the same window, on product delays. Nortel had paid $9.1 billion to stop being a telephone company, and the enterprise data business it bought to do that with shrank while the ink dried.

What was left of the Bay product line was sold to Avaya in December 2009, during the Nortel bankruptcy, eleven years after the merger and about fifteen after two companies on opposite coasts decided they were stronger together. Nortel Networks has its own grave here. The name on the letterhead outlived the name on the boxes by a decade, and then neither of them meant anything.

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