Redback Networks
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RedBack Networks' business plan document outlines their mission to design and produce wideband access switches for the growing market of high-speed internet access. It describes the need for an access switch to bridge traditional telephone networks and the internet, and provides market analysis showing strong growth in access switch sales between 1997-2000 as ADSL subscriber numbers increase worldwide. RedBack Networks plans to target their first product, the WASH 101 access switch, at internet service providers and telephone companies to capitalize on this market opportunity.
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Redback Networks
- 1. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 1 RedBack Networks Inc. Business Plan December 1996RedBack Networks Inc.
- 2. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 2 Wideband Access Market is Ready How will the Internet get fast and reliable enough to support real consumer applications? New applications need higher access speed RBOCs must get data traffic off voice networks Internet Traffic is now doubling every 51 days
- 3. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 3 Company Business RedBack Networks mission is to lead in the design, development, and production of Wideband Access Switches
- 4. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 4 Why an Access Switch is Needed Telephone Access Network Internet Backbone Connection Oriented Usage Billed Homogeneous Secure Service guarantees 1000s of subscribers Connectionless Flat-rate Billed Heterogeneous Firewall Security Best Effort 1000s of networks Connection Management Address Management Traffic Prioritization Traffic Isolation Privacy / Authentication Local Servers Access Switch DSL Access Mux RouterWideband Access Switch
- 5. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 5 Central Office Access Switch in ISP POP Modem Internet Backbone ISP POP 1000s of Networks 100s of Subscribers 1000s of Subscribers DSLAM Router Wideband Access Switch Metro ATM SONET
- 6. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 6 Access Switch in Central Office Internet Backbone 1000s of Subscribers 1000s of Networks ISP POPCentral Office DSLAM DSLAM Wideband Access Switch Router Metro ATM SONET Corporate LANs Wideband Access Switch Modem
- 7. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 7 US Market Grows to $200 Million in 2000 Access Switch Volumes 1997 1998 1999 2000 Total US ADSL Subs (k) 123 613 2,263 5,963 Subscribers per Access Switch 300 400 500 600 Installed Access Switches 410 1,533 4,526 9,938 Access Switch Market 410 1,123 2,994 5,412 Access Switch ASP $25,000 $30,000 $35,000 $37,000 US Access Switch Revenues ($Millions) $10 $34 $105 $200 Source: Dataquest
- 8. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 8 Worldwide Market Grows to $334 Million in 2000 Access Switch Volumes 1997 1998 1999 2000 Total ADSL Subs (k) 280 1,230 4,145 10,395 Subscribers per Access Switch 300 400 500 600 Installed ADSL Access Switches 933 3,075 8,290 17,325 Total Access Switch Market 933 2,142 5,215 9,035 Access Switch ASP $25,000 $30,000 $35,000 $37,000 Access Switch Revenues ($Millions) $23 $64 $183 $334 Source: Dataquest
- 9. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 9 Customers Internet Service Providers National Backbone, Regional Access Feedback: “Managing virtual circuits will be our biggest problem.” Telephone Companies RBOCs, Independents Feedback: “We won’t make money until we can offer more than 500 lines in a CO.”
- 10. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 10 Marketing Approach ISP Telco ‘97 ‘98 ‘99 Develop Product Initial Sales OEM Partners Telco Market Development Initial Sales Leverage ISP Success Direct Sales ISP Market Development Expand Share Expand Share High ADSL Line Densities Wideband for the price of Narrowband
- 11. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 11 Introducing: WASH 101 RedBack Networks Inc. WASH 101 Access Concentration Connection Management IP Routing ATM Switching RedBack Networks Inc. WASH 101 Access Concentration Connection Management IP Routing ATM Switching Subscriber Interfaces Trunk/Router Interfaces Up to 8 OC-3 Interfaces
- 12. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 12 WASH 101 Highlights Supports thousands of Wideband subscribers 1 Million PPS forwarding rate Sophisticated Traffic Management Access Security features Telco class
- 13. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 13 RedBack Unfair Advantages Proprietary hardware policy engine Massively channelized DMA engine Scalable Connection Management Software Robust Routing Software
- 14. December 3, 1996 V.9 Proprietary Information RedBack Networks Inc. Market Positioning # of Users Bandwidth Cisco Cascade RedBack Ascend USR POP in a Box
- 15. 11/7/96 v1.0December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 15 ISP Access POP Detail Router FR & ATM Switches HSSI Router Narrowband Access Concentrator Ethernet DS0, DS1 DS0, n x DS0 FDDI Physical Line / Channels Access Switch HSSI or OC-3 DS3, OC-3 ATM xDSL Access Network Thousands of ATM Connections Router DS1, DS3, OC-3 To Internet Backbone FR & ATM Switches Frame Relay Network DS1, DS3, Leased Lines
- 16. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 16 Functions FR/ATM Narrowband Access Wideband Access Switches Concentrators Switches - NEW ! Connection Consolidation Yes Yes Address Management Yes Yes Security Features Yes Yes Scale : Number of Users 100 End Pts 100 (‘96); 1000 (‘97) 1000 Speed per user 1-10 Mbps 64-128 Kbps > 1 Mbps Cost/User : All Access $450 $500 Cost/User : Access Switching $100-150 $50-100 Cost/User : 1 Mbps Channel $1000-1500 (limit of 150 users) $50-100 QoS Features Connection Packet, Connection, Layer QoS Stream layer QoS Packaging Telco Telco; Telco; 8 Feet High 8 Inches High Examples Cascade Ascend Max TNT, RedBack WASH Cisco-Stratacom Arris AX 1600 Fore, Sahara USR (200 users) Product/Technology Comparison
- 17. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 17 Founding Team Hardware & Systems, Gaurav Garg Technology, Asher Waldfogel Business Development, Gilles Concordel 4 Engineers from leading networking companies VP Engineering search active CEO, VP Sales searches begin in January
- 18. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 18 Schedule OEM Partners ISP test Lab ISP FCS Telco Test Lab Telco FCS First Proto Alpha Beta First Round First Revenue Second Round Profitable Business Development Engineering Financial 1997 1998 Feature Enhancement Faster Bigger Chassis
- 19. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 19 Risks & Opportunities Market Risk: ADSL Services are Delayed Access Switch works with all versions of ADSL physical layer If ADSL doesn’t happen, technology can be reapplied to Cable Modems
- 20. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 20 Business Projections US Market Forecast ('000s) 1996 1997 1998 1999 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Annual Revenue 234 7,196 30,443 Revenue - - - 234 546 1,099 2,087 3,465 4,885 6,624 8,203 10,732 Cost of Goods - 15 36 127 259 457 791 1,240 1,789 2,370 2,899 3,755 Gross Margin - - - 46% 53% 58% 62% 64% 63% 64% 65% 65% Consolidated Expenses 668 814 982 1,223 1,566 1,642 1,820 2,063 2,143 2,748 2,900 3,071 Net Profit Before Tax (668) (828) (1,018) (1,116) (1,278) (1,000) (525) 161 442 1,505 2,404 3,905 Net Cash Flow (108) (634) (802) (959) (1,297) (1,510) (1,465) (1,451) (1,051) (639) 204 1,089 3,454 Cash Balance 142 (492) (1,293) (2,252) (3,549) (5,059) (6,524) (7,975) (9,026) (9,665) (9,461) (8,373) (4,919) HeadCount 7 15 20 22 26 33 34 38 41 51 54 57 57
- 21. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 21 Deal Raised $200K for 15% in September 1996 Raising $5 Million for 33% post-money in January 1997 Sequoia Capital has committed to $2.5 Million Looking for second active VC to invest $2.5 Million Plan to raise additional $5 to $7.5 Million in January 1998
- 22. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 22 Introducing: WASH 101 RedBack Networks Inc. WASH 101 Power Module PCMCIA Slot LEDs Console1 Ethernet Alarm RelayConsole2 Power Module LEDs LEDs LEDs LEDs LEDs LEDs LEDs
- 23. December 3, 1996 V.9 Proprietary Information RedBack Networks Inc. Control Engine(s) : Intel Klamath Platform - Route Manager, Signaling, Network Mgmt., Security Shared Memory Packet Buffer Massively Channelized Stream/Packet Interconnect Context Memory Forwarding Execution Engine (MIPS) Custom Route/Policy Lookup Engine Route & Policy Table Interface Modules PCMCIA Enet Peripherals Bus WASH 101 Architecture
- 24. 11/26/96 v0.5December 3, 1996V.9 Proprietary Information Redback Networks ConfidentialRedBack Networks Inc. 24 Central Office Dial Access to ISP POP Modem Internet Backbone ISP POP 1000s of Networks 100s of Subscribers 1000s of Subscribers Voice Switch Router Dial Access Switch Metro ATM SONET
Editor's Notes
- The demand for Internet services is very strong. The number of US Internet users is over 12 Million now, growing to over 40 Million by 2000. Dial modem speeds inhibit some network uses - it’s frustrating to wait nearly 6 minutes to get a 1 Megabyte file. Modem sessions average 20 minutes while the telephone network is engineered for 3 minute calls - voice switch congestion is a serious problem that will cost over $1.5 Billion to repair. The telcos are moving quickly to offer ADSL to move net traffic off the voice switches.- the leaders in a Joint Purchasing Consortium are Pac Bell, Ameritech, Bell South, and SBC. GTE, US West, and Bell Atlantic have also announced plans.
- Wideband Services are Residential Internet and Telecommuting services faster than ISDN
- Security and traffic isolation dictate that every subscriber needs his own connection. This means that there is a massive connection mapping problem to map 1000s of subscriber connections to a few ISP connections. Traffic management is needed to keep all the lines busy - in both directions. Switch packets and cells very fast Map packets to connections Setup and release many connections Manage distributed subnets Allocate network resources fairly Know when to switch and when to route
- The problem is carrying traffic to the Internet Service Provider Point of Presence. For dial access today (there are over 4000 ISPs today, and about 20,000 POPS) an ISP puts a POP in each local calling area - about 20 POPs in the Bay Area for example. Subscribers dial from their modem to a modem in the ISP. For ADSL access: Subscriber modem connects to modem in DSLAM. Digital Subscriber Loop Access Multiplexer (DSLAM) attaches to hundreds of ADSL Lines and inserts an ATM connection from each subscriber into the Metro ATM SONET Network The Metro ATM SONET ring carries thousands of ATM circuits from all the metro COs to an ISP POP. Only a few of the 20 POPs from each service provider in the Bay Area need to add Wideband Switches. The Wideband Access Switch connects thousands of ATM circuits to the Internet backbone and manages subscriber level access Internet backbone carries IP traffic to exit point
- Function of the various elements: Each DSL Access Multiplexer (DSLAM) terminates hundreds of ADSL Lines and feeds ATM circuits into Access Switch Wideband Access Switch manages thousands of ATM circuits, manages subscriber level access, equal access to multiple ISPs, and corporate remote access ATM SONET rings carry thousands of ATM circuits from 10 to 100 COs to Internet Service Provider Point of Presence Wideband Access Switch maps ATM circuits to Internet backbone Internet backbone carries IP traffic to exit point Two types of traffic: Internet traffic is aggregated at the IP layer Corporate LAN traffic is preserved as an end-to-end ATM service with enhanced service quality
- Assumptions for the P&L projections: While we are planning to offer products to the worldwide market, the following numbers are based on the North American market alone. During the next two months, we will develop a Sales and Marketing plan for the rest of the world.
- These numbers were derived from a Dataquest market analysis (June 1996) Dataquest forecasts an additional 3.5 Million Cable Modem subscribers by 2000. This creates a $90 Million cable modem access switch market.
- Details under development
- Traffic Management Preserve fairness while providing high utilization for 1000’s of users Access Security Packet level Authentication Privacy Spoofing prevention Telco Class: NEBS compliance Network Management
- To Summarize: The WASH 101 is 10X faster than a MAX TNT The WASH 101 is 10X smaller in size than a MAX TNT The WASH 101 supports 1000 wideband users; The MAX TNT supports 1000 narrowband users The WASH 101 costs half as much per user as the MAX TNT The WASH 101 costs less than 1/10 per 1 Mbps port as the MAX TNT
- Development Schedule February 1997, Design Complete June 1997, First Prototype Major subsystems DS3 Interface Early Control software October 1997, Second Integration Platform Control Software OC3; HSSI or 100BT Interface December 1997, FCS Additional Software February 1998 New forwarding subsystem New ATM switching subsystem Additional Interfaces
- Problem is carrying traffic to the Internet Service Provider Point of Presence. For dial access today (there are over 4000 ISPs today, and about 20,000 POPS) an ISP puts a POP in each local calling area - about 20 POPs in the Bay Area for example. Subscribers dial from their modem to a modem in the ISP. For ADSL access: Subscriber modem connects to modem in DSLAM. Digital Subscriber Loop Access Multiplexer (DSLAM) attaches to hundreds of ADSL Lines and inserts an ATM connection from each subscriber into the Metro ATM SONET Network The Metro ATM SONET ring carries thousands of ATM circuits from all the metro COs to an ISP POP. Only a few of the 20 POPs from each service provider in the Bay Area need to add Wideband Switches. The Wideband Access Switch connects thousands of ATM circuits to the Internet backbone and manages subscriber level access Internet backbone carries IP traffic to exit point