Xylan Corporation

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

~ the eulogy ~

Steve Y. Kim and Yuri Pikover had already done this once. Kim founded Fibermux and ran it as chief executive; Pikover was a regional sales manager there. In July 1993 the two of them incorporated Xylan Corporation in California and set up on West Agoura Road in Calabasas, north of Los Angeles, to sell into a problem that has since disappeared so completely it is hard to explain. A large building in 1993 did not have one network. It had Ethernet in one department and Token Ring in another, with nothing in between that could switch traffic across the gap at full speed.

The answer was a chassis called the OmniSwitch that you filled with cards, and the sales line was any-to-any translation at the MAC layer. It worked. Revenue for 1994 was $443,000. The following year it was $29.7 million, then $128.5 million in 1996, then $210.8 million in 1997, then $347.6 million in 1998. The stock began trading on Nasdaq under XYLN on 12 March 1996, and for the rest of that quarter the lowest it ever closed was $51.25. By the end of 1998 the company had 1,044 employees and about a hundred sales offices around the world.

Alcatel came calling in January 1999. Two of its executives met Kim and Pikover between the 26th and the 28th, and on 15 February Olivier Houssin telephoned Kim with the number. The tender offer went out at $37.00 a share in cash and ran until the final minute of Friday 2 April, New York time. On Monday 5 April, Alcatel announced it held roughly 97 percent of the stock through a subsidiary named Zeus Acquisition Corp, having spent about $1.7 billion out of working capital to get there. The whole transaction was valued around $2.0 billion. Xylan filed the form that ended its reporting obligations on 27 April, three weeks later.

~ the dossier ~

~ the pizzaswitch years ~

The product that gave the company its best year was not the flagship. In March 1996 Xylan shipped something called the PizzaSwitch, a flat box named after the thing it was shaped like, and within a single quarter it accounted for ten percent of revenue. It peaked at $19.5 million in 1997 and then fell to $7.0 million in 1998 as the OmniSwitch line absorbed the demand it had created. A cheap product usually loses that argument inside a company that would rather sell you the expensive one.

Europe mattered more to Xylan than the headquarters address suggests. Of the $347.6 million it booked in 1998, $112.6 million came from Europe against $173.7 million from North America. Where any individual box landed is not in the filings, so whether one of these chassis ever sat in a Turkish bank or a Turkish university in 1998 is a question the record cannot answer. That is the usual condition for this kind of hardware. It was bought by facilities departments and installed by contractors, and nobody who depended on it ever saw it.

~ what alcatel bought ~

$2 billion in 1999 was an enormous price for a company not yet six years old, and Alcatel was not buying revenue alone. It was buying a route into American enterprise networking, a market where it had almost nothing and where Cisco was taking everything. Xylan had the switches and it had the OEM relationships that produced $120.1 million of its 1998 revenue, a customer base Alcatel could not have assembled on its own in a decade.

There was also a lawsuit in the package, already settled by then. Ascom Timeplex had sued over a virtual-LAN patent and named Steve Kim personally in the complaint, along with Xylan's vice president of development. The two sides signed a memorandum of understanding and swapped royalty-free licenses, which is how patent fights between networking companies usually finished in that decade.

~ after the sign came down ~

Alcatel folded the business into a unit it called Alcatel Internetworking and the Xylan name was gone within a couple of years. Twenty-seven years after the tender offer closed, Alcatel-Lucent Enterprise still lists sixteen OmniSwitch models for sale, from a small managed switch for branch offices up to campus and data center gear. The product line has now outlasted both the company that designed it and the company that bought it.

xylan.com today answers with a 114-byte placeholder. There is no redirect to Alcatel and no archived product page behind it. A brand that carried a two-billion-dollar transaction on a Monday morning in April 1999 now resolves to less text than this paragraph.

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