Can Madge change its spots?

Convergence will undoubtedly be one of the major buzzwords at Networks Telecoms 99, the show that takes over the Birmingham NEC next week.

The latest company to jump on this particular bandwagon is Madge Networks. But is the company, which made its name in the Token Ring market, taking a gamble with this strategy?

One major problem it may face is the lack of real end user commitment. A recent survey of 100 IT and network staff in large corporates, carried out by reseller, Black Box, showed that 95 per cent have yet to complete any integration whatsoever.

On offer is 'Madge net' - a network managed by Madge, spanning 30 countries, with guaranteed service levels for Internet protocol (IP)-based operations. But Madge has its work cut out trying to succeed in a fledgling market where it's perceived as a virgin.

Paul Trowbridge, director of marketing for Enterprise Solutions in Europe for Nortel Networks, says: "Madge is not associated in any way, shape or form within this market. Think Madge and you think Token Ring."

The company isn't seen as a groundbreaker when it comes to adopting new technologies, according to Trowbridge. "I don't believe it can change its profile quick enough to become a major managed service provider," he says.

But given that demand for this sort of service may have been overstated by vendors in search of a new source of hype, maybe this isn't a major problem - at least not yet. However, there's not much money to be made from Madge's existing market either, according to some observers.

Describing the company as "champions of Token Ring", Mark Dykes, principal analyst at Dataquest, explains that the technology does have loyal followers - but it's a minority community. "Accounting for around 2 per cent of switching ports, Token Ring networks are being maintained while users wait to move to another, longer term strategy," he says.

However, unlike Trowbridge, he does believe that Madge can establish itself in this emerging market: "Madge needs to make this move, and it does have a good chance of doing well."

In a video interview with Silicon.com last month, Madge CEO and founder, Robert Madge outlined his belief that users want to migrate slowly to new technologies, and that his company can help them do so at the speed they want.

Madge sees the integration of voice, video and data on one pipe as non-critical at the moment, pointing to figures from market research outfit Dell'Oro, which show that the global switched Token Ring market grew 87 per cent between Q1 1998 and Q1 1999.

But what is critical to customers is creating a business process which is future-proofed to take advantage of the move towards Internet and IP as and when it's appropriate.

What Madge has got is an established Token Ring user base which isn't moving to new technologies yet - but needs to look at this new range of network requirements. End users have to build relationships with providers of the latest technology to do this research - and Madge is trying to position itself as a company to supply this advice now, and the technology itself somewhere down the line.

Andy Mulholland, technology market director at Cap Gemini, said: "Madge has always had a good service operation and they have the knowledge of the products working around their own. So it seems pretty logical to come up with the "Madge net" idea. It's not the leap it looks, but is a well thought-out move."

So Madge appears to have taken a pragmatic approach: it's continuing to support its existing customer base, while stressing its ability to cater for their needs going forward. But its strong association with Token Ring may be a hindrance to attracting new customers, who may be seduced by the flashy hype - and big marketing bucks - flourished by some of the networking industry heavyweights.