Prospectus Summary
The following summary is qualified in its entirety by the more detailed information and the consolidated financial statements and notes appearing elsewhere in this prospectus. Unless otherwise indicated, information in this prospectus assumes that the underwriters do not exercise their over-allotment option, assumes the conversion of all of our preferred stock into common stock upon completion of this offering and reflects the 3 for 2 split of our common stock that occurred on June 28, 1999.
We are a leading provider of next generation Internet infrastructure solutions that are designed to enable e-businesses to meet the demands resulting from the rapid growth of the Internet. Our Web data center products, which include switches, server adapters and software, are optimized to meet the specific challenges of managing Web traffic and provide the high performance and availability of leading networking infrastructure solutions. We refer to this combination of capabilities as Web-working. Our solutions are designed to increase the performance, availability, scalability, manageability and control of Web servers and Web data center infrastructure. Our solutions are built on a technology core that consists of our Web operating system, or Web OS, Internet traffic management software, a distributed processing architecture and our family of custom semiconductors, which we refer to as WebICs. We provide our Web-working solutions to e-commerce companies, Web portals, content publishers, Web hosting companies, Internet service providers and enterprises. Our customers include Compaq Computer Corporation, Concentric Network Corp., Frontier GlobalCenter, Hewlett-Packard Company, IBM Corporation, Intermedia Communications Inc., NEC Corporation (Japan), Ticketmaster Online-Citysearch Inc., 3Com Corporation, UUNet Technologies Inc., WebTV Networks, Inc. and Yahoo!.
According to International Data Corporation, an industry research firm, the number of users of the Internet will increase from 97 million in 1998 to 502 million by the end of 2003. With the emergence of faster access technologies such as digital subscriber line, cable modem and wireless, the speed and flexibility with which users are accessing the Internet are also increasing. Because of the increasing capabilities and accessibility of the Internet, companies are building their business models around the Internet and developing mission-critical business applications. These e-businesses rely on the Web to communicate with customers, access and share business information, engage in marketing activities and conduct e-commerce transactions. However, existing Internet traffic management solutions, consisting of traditional switches and routers as well as single function, software-based traffic management devices, generally lack the combination of speed and intelligence required to manage Web traffic efficiently.
All of our products are designed to enhance the performance of Web data centers for e-businesses. Our products include the ACEdirector and Alteon 180 Series of Web switches, Web OS and our ACEnic server adapters, as well as our Alteon 700 Series of Web switches, which is scheduled to begin early customer testing in July 1999. The key benefits of our products include:
. High-Speed, Web Intelligent Switching. Our Web switches and Web OS combine high performance Fast Ethernet and Gigabit Ethernet connectivity and Web session switching capabilities with a broad set of Web traffic control functions. Our current Web switches offer Web session management at a rate of approximately 74,000 sessions per second on a Fast Ethernet port, which we believe is the maximum possible session switching rate, or "wire speed," for Fast Ethernet.
. Rapid and Efficient Scalability. Web OS, our distributed architecture and WebICs allow the capacity of our Web switches to be increased rapidly and efficiently simply by adding more ports.
. System-Level High Availability. Our Web switches monitor the status and performance of each server, server farm and server location and redirect traffic to alternate servers and Web data centers in the event of a system failure or server overload.
. Increased Flexibility. Our Web switches are designed to select and direct Internet traffic flexibly and transparently, enabling e-businesses to increase infrastructure efficiency.
. Enhanced Control. Our Alteon 700 Series of Web switches is designed to allow Web data center administrators to allocate and prioritize bandwidth to control resource usage.
. Cost Effectiveness. Our Web data center infrastructure solutions integrate multiple traffic management functions in a single Web switch, which is intended to allow e-businesses to reduce capital, management and training costs.
Our objective is to be the leading supplier of Web-working infrastructure solutions. The key elements of our strategy are to:
. Extend our early market leadership in the Web-working market;
. Leverage our Web-working technology leadership;
. Build our relationships with key players in the Internet marketplace;
. Increase our penetration of leading e-businesses;
. Expand our supplier relationships with leading server manufacturers; and . Enhance our customer service and support.
Our principal executive offices are located at 50 Great Oaks Boulevard, San Jose, California 95119. Our telephone number is (408) 360-5500. We were incorporated in Delaware on March 18, 1996. Our Web site address is www.alteon.com. Information contained on our Web site does not constitute part of this prospectus.