Experts Peering Ahead to 2001 See Israel Still Strong in Infrastructure

[ISRAEL] If there are any lessons to be learned from 2000 when
making predictions for the coming high-tech year, it is that there are no
sure-fire prophets in this business. All the “Best Startup” awards in the world
don’t help when the money begins to run out and its time to downsize,
perhaps down to size zero.

All we could do, then, is talk to those watching the industry and select a few
companies that they, and we, think look interesting. We have focused on
those with technologies that appear to fill the gaps between today’s Internet
and tomorrow’s world of always-on, movies-to-your-cellphone connectivity.

“Voice over IP is very hot,” said Joshua Segal, investment bank WR
Hambrecht and Co’s Israel-based representative. “The broadband
infrastructure field will continue to be a hot field, but in terms of content, it

really too early for interactive television and the like.”

Despite the recent “shakeout” in the field, Segal highlights optical networking
as an area to watch in 2001. As for peer-to-peer networking:

“The industry needs a successful profitable model before it can justify the
hype,” said Segal.

Hype is an essential part of the lifecycle of a new industry sector, said Daniel
Meron, technology analyst at Israeli investment bank Nessuah Zannex.

“Mobile Internet is somewhere between hype and actually doing it,” said
Meron. “Six months ago, WAP was the biggest thing, but now you need to
develop something people really need. Broadband access was really hyped a
year and a half ago and now we see things happening, but a lot of broadband
access companies are going down.”

He agrees that Internet telephony is coming into its own.

“I think that it is going to get stronger, because a lot of the hurdles such as
the standards and the technologies are now behind us,” he said. “Voice over
IP is an example of something is going to get bigger and bigger and usage is
going to increase.”

Meron said the strongest part of Israeli knowledge is in infrastructure. This
mainly concerns communications but also security software, software testing
and imaging, he said.

In a year’s time, when we are older and wiser, we may look back at this list
and laugh, but meanwhile here are’s “Ten to Watch” in the
coming 12 months, in purely alphabetical order. Whether you agree or
disagree, or have your own suggestions, tell us what you think.

  1. Actelis Networks
    While everyone is talking fiber, Actelis Networks, established in 1998, is
    aiming to squeeze out optical fiber-grade performance from existing copper
    lines, saving the expense of laying new networks. The company has among
    its investors New Enterprise Associates, US Venture Partners and Vertex

  2. Atrica
    In contrast, Atrica is pinning its hopes on a fiber-filled future. Founded in 2000
    by ex-3Com employees and with $16 million in funding from 3Com, Accel
    Partners, Benchmark Capital and others, Atrica is developing optical Ethernet
    platforms for next generation metropolitan area networks (MAN).

  3. eZaro
    As the pipes grow, so will load on the server. Seven-month old eZaro is
    developing a software platform to distribute the load by exploiting unused
    network resources. The company, with founders from Gilat Satellite and a
    research manager who also heads the Israel Internet 2 project, received $2
    million from STI Ventures in September.

  4. M@inNet
    Focusing on another kind of pipe, M@inNet sends data and voice over power
    lines and aims to reach speeds of 10 megabits a second early next year. The
    company, whose investors include Noga Investments, recently partnered with
    U.S. energy company PowerTrust to break into the North American market.
    Field trials will begin in 2001.

  5. P-Cube

    Back to content. Founded in 1999 by executives from VocalTec, Indigo and
    PentaCom, P-Cube’s platform is designed to facilitate the move to a world
    where we receive – and pay for – the content and services that we want. Accel
    Partners, Communication Ventures and Evergreen participated in P-Cube’s
    $20 million second round in October.

  6. Redux
    When broadband gets to multiple devices in the home, the challenge will be to
    deliver enough bandwidth to each. This is what Redux’s content-aware routing
    chip does from the broadband access box. Founded in 1999 by employees
    from RAD Data Communications, the company raised $5 million in July from
    Genesis Partners and Giza Group.

  7. Tundo

    While broadband is coming, IP telephony is here. Founded in 1998, Tundo
    develops open network telephony systems and recently partnered with
    Siemens to combine its technology with Siemens’ IP telephone. The company
    raised $30 million in April from investors including Goldman Sachs,
    Comverse, Singapore Telecom and the Cedar Fund.

  8. WebCollage

    Partnerships are the theme of WebCollage’s business model. Founded in
    1999, WebCollage allows a company to package part of its website into an
    “e-service,” such as selling airline tickets, which can be slotted into other
    websites. The company received $16 million in November from Sierra
    Ventures, Gilde IT Fund, Cedar Fund and other investors.

  9. WhiteCell

    Mobile Internet can’t be ignored, but while startups are rushing to develop
    applications, few are thinking about the security implications. WhiteCell,
    established in 1999, is developing products for mobile data security and
    management for SMS, WAP and other cellular networks. Investors include
    Giza Group.

  10. XOsoft

    Also thinking about data, XOsoft is focusing on how to cache dynamic
    content for fast delivery. Established in 1999 by an ex-NASA scientist,
    XOsoft recently appointed Lance Boxer, formerly of Lucent, as president and
    chief executive. Goldman Sachs, Draper Fisher Jurvetson Gotham and
    Neurone Venture Capital took part in XOsoft’s recent $16 million C round of

Many predictions for the year ahead simply end up forgotten shortly afterward,
but we promise to check back on our predictions within six months to see how
they are doing.

If you have your own suggestions for the year’s Top Ten, let us know. Click here to send us your Top Ten list. We’ll publish the
best ones.

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