Amdahl Polishes Network Profile

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Amdahl Polishes Network Profile

By Nick Wakeman
Staff Writer

Amdahl Corp.'s plan to beef up its intelligent network management business got a boost last week when Japanese computer and telecommunications company Fujitsu Ltd. agreed to buy the Sunnyvale, Calif.-based company.

The acquisition will raise Amdahl's networking profile and make it "a more significant player," said Richard deLuca, a consultant in Amdahl's telecom unit formed in May.

Fujitsu, which had $36 billion in revenues in 1996 compared to Amdahl's $1.6 billion, announced plans July 30 to buy all outstanding shares of the Sunnyvale, Calif.-based company for $850 million. Tokyo-based Fujitsu already owns 42 percent of Amdahl. Fujitsu said the Amdahl name and management team will remain in place.

The acquisition, which is expected to be finalized by September, will give Amdahl "more critical mass" and enable the company to expand its consulting business, deLuca said. "We'll pick up a lot of skills and market presence," deLuca said.

Fujitsu is a leading maker of computers, telecommunications equipment, semiconductors and other electronic devices. It has subsidiaries in Asia and Europe.

The push into intelligent networks is part of Amdahl's effort to refashion itself from primarily a mainframe manufacturer into a services provider.

The government and commercial intelligent network market was worth $2 billion to $6 billion in 1996, analysts said. However, the market is projected to grow at a rapid rate, hitting $19 billion by 2000, they said.

Amdahl is not alone in its pursuit of such potential riches. Other key players are Lucent Technologies, Murray Hill, N.J., Bellcore, Morristown, N.J., Digital Equipment Corp., Maynard, Mass., and Nortel, San Ramone, Calif. Because it's such a new market, no single firm has established itself as the market leader, analysts said.

Mike Orr, Amdahl vice president and general manager of the telecom group, said his unit is pursuing both commercial and government customers anxious to gain greater control of their telephone and data systems.

Intelligent networks link databases to communications systems and allow end users to offer services such as enhanced caller identification, three-way calling, call waiting and selective call acceptance.

In the government market, advanced intelligent network capabilities will allow agencies to "exploit public networks instead of building their own," Orr said.

Amdahl wants to partner with several integrators to pursue government projects, Orr said.

Amdahl is eyeing projects like the Coast Guard's proposal to rebuild the National Distress System, deLuca said. The $140 million project will link wireless and wired communications systems with global positioning systems, satellites and maritime databases.

Projects with other government agencies could include more features for emergency 911 systems, phone systems that can control who can call who and phone numbers that follow a person instead of staying with the phone, Orr said.

Two factors are driving the intelligent network market, Orr said. The technology lets users link databases and back office systems to communications systems.

Competition between telephone carriers, especially for local service, is also driving the market as phone companies offer more services to differentiate themselves and attract more business, deLuca said.

"It used to be that when you wanted to add a new service you had to buy and install equipment," said Matt Weathers, an analyst with G2 Research, Mountain View, Calif. But with intelligent networks, new services are added through programming changes and not hardware, he said.

"It is cheaper and it's faster," Weathers said. For the company selling the services, new revenues can be brought in more quickly because they do not have to buy and install new equipment.

To pursue the intelligent network market, Amdahl has launched Amdahl Inspire, a combination of software, hardware and services.

The company is focusing its efforts on both end users such as government agencies and on telecom carriers, deLuca said. Smaller carriers will need help implementing new services because they do not have the same skills in-house as larger telecom companies. End users also will need help in applying the services to their businesses and agency missions, he said.

"We are trying to differentiate ourselves by providing a complete solution," deLuca said. Part of that solution is the business management and integration consulting services that agencies and companies will need to build the business cases for the added services, he said.

"This is a rapidly growing sector," said Michael French, vice president for research for Insight, Parsippany, N.J. "But Amdahl cannot underestimate its competitors."

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