Intel Reels In Smart Switch Maker For $500 Million

Intel today said it plans to buy IPivot, a privately held maker of Internet traffic management devices, for about $500 million in cash.

Through the acquisition, Intel continues to expand its networking offerings upward: IPivot's high-performance products are aimed at service providers and large enterprise customers who need to load-balance traffic among multiple servers, or who need to offload processing of encrypted traffic from Web servers.

IPivot's products fit into the fast-growing Internet switch market, which has seen intense interest from Wall Street recently. Foundry Networks, for example, last week launched an initial public offering (IPO) that valued the company at more than $7 billion.

Before the announcement of its acquisition by Intel, IPivot also was planning an IPO. A spokesman for IPivot last week said the company was considering an IPO for March 2000.

IPivot sells two main product lines: One is a switch that helps distribute high volumes of Internet traffic, and the other is a dedicated encryption-processing server that can process thousands of e-commerce transactions simultaneously, decreasing the burden on a site's Web servers.

Intel had already announced its intent to enter the "smart switch" market. Last month Intel announced the Intel 6000, a 32-port Gigabit Ethernet switch, and said it would add server load-balancing capability in the early part of next year. Intel could potentially integrate the IPivot technology with its Gigabit Ethernet switch family.

Intel said it will sell IPivot's products directly to other equipment manufacturers - IPivot already has such an agreement in place with Nortel Networks - and through its Internet service provider channel program.

IPivot will become part of Intel's network systems division, and IPivot Chief Executive Brett Helm will become general manager of the Commerce Equipment Operation.