Riverstone turns on high-speed data flow

The Santa Clara, Calif.-based company said Monday its new XGS family of switches, which transfer digital information at 10 gigabits per second, will debut in June. Desktop computers, when put together in an office network, generally connect at one gigabit per second.

The XGS switches will battle for customers alongside high-speed products from Cisco Systems, Force10 Networks and Foundry Networks, which have either begun selling or intend to sell 10-gigabit switches.

"We think this is where the market is right now," Riverstone CEO Romulus Pereira said. Only about 30 percent of all offices have these high-speed connections, he added.

The Yankee Group analyst firm predicts that by 2006, the market for 10-gigabit Ethernet switches will be $4 billion, up from about $120 million last year.

The XGS family of switches includes two models of different sizes--the XGS 9008 and the XGS 9016--both targeted at medium-to-large businesses. They are expected to cost about $10,000--half the price of their nearest competitor, according to Pereira. The lower-priced equipment could spark price cuts from competitors such as Cisco, which has a Catalyst 6500 switch that costs about $28,000, Pereira said.

Switches are at the core of any digital network, from the Internet itself to an office phone system. Switches and routers work in tandem to ferry digital information from one place to the next. For instance, a phone call to an office usually first encounters a router, which attaches instructions to direct the call. The switch finishes the job.

Cisco dominates the markets for switches and routers, but more so for switches. While other companies have made inroads into Cisco's router market share, Cisco continues to sell about 70 percent of the world's switches, the major part of a market that generated $12 billion in 2002. The sale of switches represented nearly half, about 42 percent, of all of Cisco's revenue last year.