ReefEdge Lays Off Staff

By Ed Sutherland

November 24, 2004

The longtime player in the WLAN space is refocusing for the future, hoping to stay afloat in the ever-competitive industry.

In an effort to stay afloat in the cutthroat and constantly-evolving WLAN market, wireless security and management company ReefEdge Networks is slashing its workforce while seeking to refocus its goals.

ReefEdge CEO David Goretski "is emphatic they aren't shutting down," says Craig Mathias, principal with the Farpoint Group. Goretski called Mathias to refute rumors the Fort Lee, N.J., company was closing its doors.

"This is a dynamic industry," Mathias explains. "Don't read much into this yet."

The company has suffered a round of boardroom bloodletting, along with seeing features once offered exclusively by ReefEdge incorporated into competitors' WLAN products.

ReefEdge, founded in 2000 by former AT&T and IBM executives, has retooled itself from a WLAN gateway vendor to a Wi-Fi switch company, and now sees itself as a wireless multi-site company.

Rumors became rife just before Thanksgiving that ReefEdge had closed its doors and was shopping around its intellectual property.

As part of their effort to survive, ReefEdge is cutting employees, searching for a new focus, and entertaining the possibility of a merger or acquisition, according to press reports. WLAN industry leader Cisco denies it will acquire the company. The two have worked together on multi-site network security in the past. "There is little surprise here; change is the name of the game as WLANs continue to evolve at their usual breakneck pace," says Mathias.

Goretski, brought in from Dictaphone as ReefEdge's two co-founders —Inder Gopal and Sandeep Singhal—left the company, refused to specify how many jobs will be lost, but said the losses did not touch "core engineering resources," according to searchnetworking.com.

Along with a vice president for sales, ReefEdge lost an engineering vice president.

Goretski says the layoffs are part of a process of ReefEdge re-evaluating the direction the company takes.

While ReefEdge's focus of late has been on increasing WLAN security, those software services are also being added to the hardware offered by companies such as Airespace, Chantry Networks and Aruba. Mathias already sees ReefEdge taking more note of other areas.

Reefedge is making big pushes into data collection and network management, areas not so crowded by competitors, according to Mathias.

Although Gorestski refused to lay out any strategy change or a timeframe for the company to change its focus when speaking with Mathias, he believes the company will succeed if it continues concentrating on specific industries and avoiding being something it is not.

Mathias is hopeful he will learn more in early December.

ReefEdge's troubles follow those of several other companies which this year crashed on the shoals of an unforgiving WLAN marketplace.

In October, there was a trifecta of Wi-Fi shutdowns. Burlington, Mass.-based Legra Systems and Sunnyvale, CA-based AirFlow Networks turned out the lights in the offices. Those two switchmakers followed the closing of Bermai on the eve of the Palo Alto, Calif., company announcing the availability of an 802.11a chipset targeted at the television, DVD and media center PC.

At the time, Phil Solis, analyst with ABI Research, said for companies to survive an increasingly competitive WLAN market, revenue, partnerships and differentiation are needed.

"You need it all," said Solis.



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