Helsinki, Finland’s famous handset maker Nokia Wednesday
afternoon shelled out $421 million in stock for Fremont, Calif.’s Amber
Networks, which is widely known for its fault-tolerant routing platform.
The purchase is part of Nokia’s “FlexiGateway” strategy, whereby the
wireless specialist hopes to develop a new carrier grade routing platform
for the network edge.
The deal also comes at a time when many technology companies (particularly,
it seems, in the storage industry) are turning to IP-based solutions to
better shuttle data traffic across mobile networks. Nokia inked the deal
because it believes operators will gradually move towards IP-based networks
to provide operators the opportunity to control traffic at the edge of their
network, where volumes of important information resides to be called upon
more quickly.
Privately held Amber Networks is a blip on the networking screen compared to
giants Cisco Systems Inc. and Juniper Networks, but its fault-tolerant
routers separate it from the rest of the pack, according to Dr. J.T.
Bergqvist, senior vice president of Nokia Networks. Routers facilitates
communication between Local Area Networks, or LANs, which transmit data at
very fast rates. Fault tolerance routers come in handy in the case of device
or system failure; if a piece of software or hardware fails, fault tolerant
capability allows the network to continue to function.
“Nokia is acquiring Amber Networks for its ability to develop fault-tolerant
edge routers,” said Bergqvist. “Building on its strong market share
established in the 3rd Generation mobile networks, Nokia seeks to extend its
leadership into future Intelligent Edge technologies and in the All-IP
service integration for carrier grade high-reliability routing.”
The deal is payable partly in newly issued Nokia shares and partly in Nokia
stock options, for all the outstanding securities of Amber Networks. Amber
Networks, which employs 223 people, will integrate with the Network
Platforms division of Nokia Networks. No word yet on when the deal will
close.
Nokia could use the boost as its handset sales are down in the doldrums.
Last week, the firm posted a steep fall in second-quarter profits, which was
partly reflected in the Finnish electronics wholesalers’ association’s
report. The study found that sales in Finland, which has world-leading 80
percent mobile handset market penetration, dropped almost 22 percent
year-on-year in June to 93,714.