Virtual Router For Real Private Networks

Virtual private networks are touted as the killer app for the enterprise this year, but how about using IP-based networks to build real private networks?

Virtual private networks are touted as the killer app for the enterprise this year, but how about using IP-based networks to build real private networks?

Allegro Networks is touting the concept of a "virtual router" that could be individually assigned to a customer at costs "a tier above" VPNs. David House, former president of Nortel Networks and ex-CEO of Bay Networks, is heading the crusade as Allegros CEO.

At this point, the San Jose startup is selling just the concept of its technology, not the product itself. The company got $24 million in venture funding from Bessemer Venture Partners, Columbia Capital and Infinity Capital. The first beta tests of Allegro products are expected to begin in the first half of 2002.

"When the founders of the company looked back at where the routing industry was, they realized there was no existing router that provided physical partitioning of traffic," said David Ginsburg, Allegro vice president of product management and marketing. "This is a totally new architecture, so we are going into carriers with a very different value proposition than any of the virtual private network vendors."

Market observers are already excited.

"Allegro has developed a new class of networking equipment that significantly reduces the expense of infrastructure build-out. This new architecture consists of multiple autonomous routers operating within a single platform. It resides at a single point at the edge of the network connecting carriers and customers," Gartner analysts Todd Hanson and Jennifer Liscom wrote in their report on Allegro and what they called an "emerging router colocation market."

The report also takes a stab at establishing this new markets size. The assumption is that products like Allegros would be sold by businesses engaged in wholesale, VPN, service delivery and colocation businesses. Gartner lumped together previous estimates for these industry segments to establish a baseline market value of $2.64 billion in 2000.

While it is not clear how much of this number actually accounts for gear sales, it is clear that Allegro hopes to position its line of products as a disruption technology, chipping away at sales of routers both at the network core and on the customer premises.

The attraction of having several virtual routers in one chassis is understandable. In a VPN scenario, individual customers could be offered a dedicated router to establish secure point-to-point connections. In a peering scenario, various carriers could be peering inside one machine at wire speeds. And in colocation scenario, multiple customers could share one access platform without each investing in border routers.

"Two main applications for this technology would be router outsourcing and real private networks," Ginsburg said. Router outsourcing would be a service designed by carriers carriers, offering to deploy routers at a flip of a switch for other network operators.