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A wide-area market leader?

Is Lotus poised to announce a new acquisition? That was last week's hot rumor, dutifully reported by PC Week's Spencer Katt. The candidate, said Spencer, was an obscure Atlanta startup called XcelleNet, whose house speciality is wide-area networking (WAN) applications.

The rumor quickly fizzled; according to XcelleNet president Dennis Crumpler, the two companies merely had been asked by a "common customer" to run a few compatibility tests between XcelleNet's WAN environment and

Lotus Notes. Crumpler also insists the idea of any merger is impractical right now: He's far too busy ramping up his company to be messing around with merger deals--though Crumpler told us he'll "do whatever is necessary to make this a $200 million business when the time comes."

Fair enough. Nevertheless, XcelleNet is likely to become the target of lots of serious acquisition feelers in the next few months. Crumpler (who once helped Mitch Kapor market Tiny Troll) seems to have spotted a huge hole in the connectivity market, and we suspect he's created a product that could become a WAN standard that plays a comparable role to Novell's position in the LAN world.

The premise behind XcelleNet is that WANs are fundamentally different from local-area networks. LANS, says Crumpler, tend to be optimized for "local" connections between PCs; they presume fairly sophisticated support resources (typically an MIS department or the equivalent). By comparison, WANs usually exist to provide data connections between remote sites--retail outlets, franchises, branch offices, and customers with EDI links to their vendors. moreover, WAN sites are especially tough for centralized MIS groups to maintain, Crumpler points out, so the ideal WAN should be easy for end users to support by themselves.

Crumpler began to work out his WAN vision back in 1986, during a year he spent talking to companies that were trying to send data to and from remote sites. Often, he found that simple communications tasks (downloading a daily sales report, or placing a batch of orders) were being handled by mainframes and dedicated telephone lines.

That's hardware overkill, Crumpler realized. The alternative his new company proposed is a PC-based WAN applications development toolkit, with simple end-user scripting, graphical on-screen forms for data entry, and automated dial-up phone links instead of leased lines (this feature alone saves users about $5,000 a year per site).

Clearly, there's a lot of common ground between XcelleNet and Lotus Notes. Both products deal with a relatively new class of problem--how to help people communicate when, for reasons of time or geography, they can't meet face to face. Both systems rely on windows as a graphical front end and OS/2 for server support. And both target larger corporate customers, at a fairly hefty total price XcelleNet's server is priced at 11,995-$16,995; individual nodes are 219).

At the same time, XcelleNet and Notes take fundamentally different approaches to communications. Notes is basically text and document-oriented; XcelleNet, while it incorporates an E-mail feature, is designed primarily to move batches of data. In many respects, the two systems complement each other nicely--though it's also possible they'll eventually evolve into quasi-competitors.

For the moment, the market is clearly spacious enough to let XcelleNet and Lotus carve out non-competitive niches. (In fact, another point of similarity is that both companies are having a hard time keeping up with demand from would-be customers.)

But in the long run is the WAN market really big enough to support the $200 million business Crumpler envisions? Probably--though, like any emerging market, the WAN arena is virtually impossible to measure. (Crumpler says many of his potential customers aren't even using mainframes to transmit data; they send disks to each other by Federal Express.) If so, XcelleNet could turn out to be one of the great dark horse startups of the coming decade.

Dennis Crumpler, president, XcelleNet Inc., 5 Concourse Parkway, Atlanta, Ga. 30328; 404/804-8100.
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Title Annotation:XcelleNet
Article Type:company profile
Date:Jan 17, 1991
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