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Sun Sharpens Edge Strategy with Acquisition

Sun Microsystems Tuesday bolstered its networking vision, saying it has plans to acquire data center switch maker Nauticus Networks.

Santa Clara, Calif.-based Sun said it would purchase the privately held firm for an undisclosed amount of cash that it will pull from its $5.2 billion in reserves. The company said it expects the deal to close sometime in the next three months after going through the regular rigmarole of shareholder and federal scrutiny. This is the first time the two companies have had anything to do with each other, according to a Sun spokesperson.

After the acquisition finalizes, Sun said Nauticus would become a part of its Volume Systems Products (VSP) organization under the watchful eye of company executive vice president Neil Knox. VSP consists of such products as Sun's line of entry-level servers and blade servers including its SunFire 280R, V210, V240, and V880 models.

Framingham, Mass.-based Nauticus is best known for its data center switches such as its Nauticus N2000. The company also specializes in technologies that function beyond the normal realm of switching, including SSL, security, load balancing and virtualization.

But don't expect Sun to get into direct competition with networking manufacturers such as Cisco Systems.

"We would not be in direct competition with Cisco," Sun Volume System Products Marketing Manager Kathy Pries told internetnews.com. "At this point, our engineers are evaluating their technologies. Most likely it will be integrated into all of our Volume Systems Products. We see this as a good way as the Internet is maturing with edge services to better handle load balancing, firewalls and caching and help us architect at the front end of the data."

While Pries said the Nauticus deal does add to the overall picture of what Sun wants to do with its network edge strategy, it is only a small piece compared to Sun's recently announced chip making partnership with AMD.

"This is a small piece to a bigger puzzle in that it is a component to the services that we can offer in the data center," Pries said.

Nauticus' future at Sun does, however, bode well for the company's N1 plans. N1 is the company's services platform that helps data center operators manage server and computing resources independent of vendor or platform. Sun is battling with other top-tier vendors like IBM , Hewlett-Packard and Dell for customer contracts in this area.

"Initially, Nauticus will not tap into N1, but as we move along further it might in the whole management vision of the data center," Pries said.

Currently, Sun is in what it calls Phase 2 of its four-year N1 strategy. This year, Sun said it will develop its hardware and software to address the needs of administrators to specify the business service definition for a service, such as electronic banking. In the final phase, Policy-Automation, slated for 2004-2005, application service level objectives will be automatically maintained by N1. For example, the e-banking service set-up in Phase 2 can be set to give priority access to "VIP" clients.

For Nauticus, the company had spent the last two years involved with funding its business, gaining $6 million from Advent International. In total, the company banked more than $38 million in venture capital since its founding in October 2000.

Previous backers include Charles River Ventures, Matrix Partners and North Bridge Venture Partners. Nauticus' first round came in early 2001 at a time when telecommunications gear makers were hot among investors.