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Siemens to acquire Chantry Networks

A Chantry executive says customers will gain access to more services and that no jobs will be lost, but an analyst believes WLAN startups that aren't aligned with larger vendors could be in danger.

The wireless LAN market's volatile landscape shifted again today with Siemens AG announcing plans to acquire WLAN vendor Chantry Networks Inc. for an undisclosed sum.

Chantry, based in Waltham, Mass., is best known for its BeaconWorks and BeaconMaster WLAN switches and appliances, its line of access points, and wireless voice and data convergence offerings. Tom Racca, Chantry's vice president of marketing, said Siemens said it plans to use Chantry's technology to expand its HiPath network management product line.

The acquisition, which is expected to be finalized in early 2005, signals Siemens' desire to offer an integrated enterprise network management platform capable of handling the convergence of wired, wireless and voice systems.

In October, the company merged its wireless and wired business units in a new group called Siemens Communications. This group combined Siemens' mobile unit, which produces cell phones and carrier equipment, with the network unit that produces networking gear for both enterprises and carriers.

Racca said Siemens will manage Chantry as a separate business unit. Chantry's executives, including president and CEO Peter Vicars, are to remain with the combined company, and no layoffs are expected.

The acquisition is a good fit for both companies, according to Racca. Siemens will gain Chantry's line of access points and controllers, an area where Siemens was lacking, and Chantry will be able to leverage Siemens' resources to reach more potential customers around the world.

"Voice over wireless LAN is a key strategic initiative for Siemens, as it has been for us, and our products are strong in that area," Racca said. "As we move forward, our vision and Siemens' vision is to achieve the integration of wireless LAN and WiMax, and also GSM."

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He said customers will not see any changes immediately, but will soon be able to take advantage of the sales, support, and professional services resources offered by Siemens.

Siemens and Chantry have had close ties for some time. They have had a relationship as technology partners, and in October Chantry closed a $6 million Series B round of equity financing, which was led by Siemens Venture Capital, Siemens' investment arm.

The WLAN market has seen several significant moves lately. Chantry competitor ReefEdge Networks Inc. announced two weeks ago that it had cut staff and was reworking its strategy. Motorola Inc. recently bought into the WLAN market with the purchase of wireless networking startup MeshNetworks Inc.

Michael Disabado, senior analyst with Midvale, Utah-based research firm Burton Group, said Chantry's customers have reason to be optimistic. With the WLAN management market likely entering a consolidation phase, Siemens' backing ensures that Chantry's technology will be carried forward.

Disabato said that despite their small size, WLAN management startups are forced to compete against Cisco Systems Inc. and other big vendors, which benefit from their established relationships with customers. Eventually, he said, most of the startups will be forced to merge or partner with larger firms.

He noted that several of Chantry's competitors already have limited partnerships in place, such as Trapeze Networks Inc. with 3Com Corp., Airespace Inc. with Alcatel and Nortel Networks Ltd., and Aruba Wireless Networks Inc. with Hewlett-Packard Co.

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