A venture of South Korea’s LG Group has bought a spinoff of Irvine-based networking products maker SMC Networks Inc.
EdgeCore Networks Inc., which sells switches and other networking gear to small and midsize business via resellers, split off from SMC Networks late last year and kept its headquarters in Irvine.
SMC Networks is part of Taiwan’s Accton Technology Corp., a maker of networking and communications gear for computer and telecommunications service providers that still owns a minority of EdgeCore.
After the split, EdgeCore attracted the attention of LG-Nortel Co. of South Korea, which last month took a majority stake in the company.
LG-Nortel, a venture of LG and bankrupt Nortel Networks Corp. of Canada, now owns about 60% of EdgeCore.
LG-Nortel invested in EdgeCore to break into the North American market, according to Seok Bin “S.B.” Mun, an LG veteran who’s set to be EdgeCore’s chief executive.
“LG-Nortel wanted to expand its business in the U.S. and grow in this huge market,” Mun said. “We didn’t have our own branded business here.”
EdgeCore’s ownership may be in some upheaval amid Nortel’s bankruptcy filing last year. It is unclear if Nortel will keep its stake in EdgeCore, or if LG or another investor will buy it out.
Mun said the proceedings haven’t affected EdgeCore’s business.
He’s set to start his chief executive post in April. Mun’s in the process of scouting places to live in Irvine and has plans to move his family from South Korea.
EdgeCore is being run in the interim by Keith Alexis, who’s held various posts at SMC for a dozen years and will continue as general manager.
Mun’s focus will be on getting the company money to grow.
“I’m not a technology guy,” he said. “This company has been undercapitalized. I am going to focus on making sure we have sufficient support from our shareholders and to make sure we have all resources we need to grow the company.”
EdgeCore makes and sells switches and other electronics for running Ethernet networks, the most common type of computer network.
Its distributor customers include Santa Ana’s Ingram Micro Inc., Clearwater, Fla.-based Tech Data Corp., Fremont’s Synnex Corp. and San Jose’s Bell Microproducts Inc., among others.
The switches and other gear get built into big data storage networks made by the likes of IBM Corp. and then are sold by resellers to corporations.
The investment by LG-Nortel comes against a backdrop of what’s called “convergence,” where companies are increasingly demanding a singular system that unifies telecommunications and Internet networking.
Next month, EdgeCore is set to release a product line that includes wired and wireless networking, voice over Internet and technology that allows for encrypted phone connections.
The products allow small businesses to secure their communications, such as a phone call between one worker in an office and another working from home. It also allows them to send telephone messages as texts or voice files to an e-mail program or a smartphone.
“Everyone is trying to do this converged environment,” Alexis said.
EdgeCore is targeting airports, hotels, schools, government agencies and companies with 50 to 500 workers.
Business Split
EdgeCore’s split from SMC was a long time coming.
In the past few years, SMC had somewhat of a split personality—selling networking gear to smaller businesses and products to makers of set-top boxes and wireless routers.
What became EdgeCore was called SMC’s business solutions group, which sold networking gear via distributors and resellers to small and midsize businesses.
Embedded modems from SMC for set-top boxes and routers are used by cable TV operators and Internet providers, such as Comcast Corp., Time Warner Cable Inc., Rogers Cable Inc.
“We realized a year ago, to enable both sides of the company to be successful, we needed a single brand strategy,” Alexis said. “The best way to accomplish it was to split the company in two.”
EdgeCore now has 65 workers here, mostly in sales and marketing.
SMC has about 50 workers here and shares its office with EdgeCore.
SMC’s parent, Accton, is publicly traded in Taiwan. SMC sees roughly $65 million in yearly sales. No sales figures are available for EdgeCore.
With EdgeCore in its fold, LG gets a readymade brand with an established customer base.
“All three companies are putting in resources to EdgeCore,” Alexis said.
Accton, LG-Nortel and EdgeCore are set to pool their resources for manufacturing, marketing, new business development and branding.
EdgeCore is setting itself up to compete with the big dogs in North America, including Cisco Systems Inc., Canada’s Mitel Networks Corp., Sunnyvale’s ShoreTel Inc. and Marlborough, Mass.-based 3Com Corp., which was bought last year for $2.7 billion by Hewlett-Packard Co.
