Widening the Web World
Leonard Kleinrock, professor of computer science at UCLA and one of the fathers of the modern Internet, has come up with a few decent ideas in his life.
Among his earliest, made when he was a graduate student at MIT in the early 1960s, was the concept of packet switching--a method of transmitting computer information that is now the basis of the Internet.
His latest idea is what he likes to call “nomadic computing,” a vision of mobile workers who have the freedom to connect to the Internet at high speeds wherever they may be around the globe.
For the last two years, Kleinrock, 66, has been building a company in Westlake Village called Nomadix Inc., which has taken on one of the messiest stumbling blocks standing in the way of nomadic computing.
The problem is that attaching to a computer network has always been a complex and time-consuming process.
Any computer that tries to attach to a new network will be viewed as a stranger, without the proper information it needs to communicate with other computers.
“It’s super-aggravating,” Kleinrock said. “There’s just a lot of problems with nomadic computing now.”
The Nomadix solution is a device, called a universal subscriber gateway, that sits between a visiting computer and an alien network. The gateway, which requires no extra equipment or software for the visiting computer, serves as an interpreter between the unfamiliar parties so that information appears to be coming from familiar sources.
Once it is tied in, a visiting computer can connect to the Internet like any other native member of the network.
Kleinrock said the Nomadix gateway will open up high-speed Internet access in all the usual haunts of road warriors--hotels, airports, office buildings and even Internet cafes.
But what may be the company’s strongest selling point is its ability to provide easy high-speed connections and a host of new services in places where mobility is not an issue.
Just as the gateway can help mobile users, it can also help connect stationary desktop computers to a local Internet service provider, opening a realm of customers, including university campuses, apartment buildings and residential neighborhoods.
Nomadix is not the only company working on the problem, and the field already has several contenders, including young companies such as Elastic Networks Inc. and Atcom Inc. (acquired last year by CAIS Internet Inc.), along with Nasdaq powerhouses such as Redback Networks Inc., Tut Systems Inc. and Cisco Systems Inc.
But Daniel Toomey, former chief financial officer of printer maker Eltron International Inc. and now Nomadix’s chief executive, said the company’s current partnerships with powerhouses such as Lucent Technologies Inc. and its position in the lower-priced end of the market has given it more than enough running room to thrive.
Nomadix, which employs 105 people, began shipping its gateway in September. Last year, it tallied a meager $300,000 in sales, but it expects to see its revenue grow to about $5 million this year.
The still-private company has been operating on $8 million in first-round funding from a group of venture capitalists, led by Newport Beach-based Roth Capital Partners. It is now closing on $17 million in second-round funding, led by Encore Venture Partners, Avalon Investments and Smart Technology Ventures.
For Kleinrock, a serial entrepreneur who has started five technology companies, Nomadix has the potential to be one of his most significant financial successes.
He has co-founded such pioneering companies as Linkabit, a networking consulting firm that spawned a series of other start-ups, including San Diego’s giant cell phone chip developer Qualcomm Inc.
Kleinrock, now chairman of Nomadix, has done well through his companies, although like many of the early Internet pioneers he never made, nor sought, the extravagant millions that modern Internet entrepreneurs routinely achieve.
Nomadix has emerged at a moment when the skyrocketing demand for high-speed Internet connections at home and work has sharpened the need for these types of network gateways.
The promise of easy high-speed connections has always dangled on the horizon, although it has remained a complex task primarily handled by specialists.
The actual connection is hampered by the strict requirements of computer networks, which depend on a specific layout of computers, with each piece--including printers, routers, servers and desktop computers--having their own unique numerical address. If the addresses get mixed up or corrupted, the network falls apart.
Every computer has to keep track of many addresses, such as those for routers--devices that direct information to its proper destination--and other specialized computers that perform functions such as filtering out unwanted outside traffic and storing e-mail messages.
Moving a computer to another network involves entering a series of new numerical addresses. It is a simple process on the surface, but one that is problem-prone, since each address has to be written perfectly and entered in exactly the right place.
To solve the problem, Kleinrock and a former graduate student of his at UCLA, Joel E. Short, now the company’s chief technology officer, created a device that essentially tricks the computer into thinking it is still on its home ground. The key to their solution is that it does not change the original settings on a visiting computer.
“We tell the computer that we are its router,” Kleinrock said. “It thinks it’s at home and the router thinks that the computer is a native.”
Nomadix has positioned itself in the smaller, low-cost end of the market, with devices that cost $2,500 to $5,000--an attractive price for providing instant access in hotels, apartment buildings and office complexes.
Their plan is to draw revenue from extra services that can be tied to high-speed Internet access.
For example, the gateway can be used to adjust users’ connection speed on the fly.
For normal Web surfing, subscribers to an Internet service could use a slow but cheap connection. But when they needed more speed for downloading a huge file or watching digital television on their computers, they could sign on to a Web page and order faster service from their Internet provider for an extra hourly fee.
Nomadix intends to share in that revenue.
“You can have complete control over your Internet experience,” said Toomey, Nomadix’s chief executive.
The gateway’s control of the stream of information opens the possibility of sharing revenue from other services, such as targeted advertising, digital television on demand, virus scanning and content filtering, which screens out inappropriate Web material.
The dark cloud on the horizon, however, is the number of competitors flocking into the evolving networking market.
“Everyone is scrapping it out now,” said Matthew Davis, a senior analyst for the Yankee Group. “They’re all converging on one space that’s absolutely critical.”
Because the market is still in its infancy, the companies have taken slightly different approaches and focused on different parts of the high-speed Internet puzzle.
Redback Networks, for example, started out with a device designed to handle thousands of high-speed Internet connections using a popular telephone line technology known as DSL.
Its systems, which range in price from $25,000 to $1 million, include some of the same features to bill and manage subscribers that Nomadix provides, except on a larger scale.
Redback has been one of the hottest stocks on Nasdaq, growing from $20 to $122 in just the last year.
Steve DeLuca, a partner in the technology hedge fund Spinner Asset Management, said Nomadix’s advantage is that it has priced itself well below the industrial-strength devices from Redback, making itself an attractive option for the lucrative apartment and office-building market.
“Obviously, you don’t want to compete head-to-head with Redback,” said DeLuca, whose firm has invested about $1 million in Nomadix.
“Pricing yourself below Redback opens a lot of doors.”
The company has already signed a key agreement with telecommunications giant Lucent Technologies to include the Nomadix gateway in a package of devices for high-speed Internet connections in apartment buildings and office complexes.
DeLuca said his biggest fear for the future is that larger companies, such as Redback or Cisco, will eventually move toward the low-cost end of the market.
But he believes that Nomadix has a sufficient head start to either succeed on its own or be acquired.
Kleinrock said the company has already received one offer to be acquired, but it was turned down.
“I do want to grow this business,” he said. “Nomadix is not just about money. The driving motive is to get this technology out there. I want to make sure we can roll out this vision of the Internet.”
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LEONARD KLEINROCK
* Born: June 13, 1934, New York City
* Education: Bachelor’s degree in electrical engineering, City College of New York; master’s and Ph.D., Massachusetts Institute of Technology; honorary doctorate in science, City College of New York.
* Occupation: Professor of computer science, UCLA; founder and chairman of Nomadix.
* Areas of research: Developed the original concept of packet switching, a method of transmitting information that forms the basis of the Internet; considered a father of the Internet. His host computer at UCLA became the first node ever to connect to the Internet in September 1969.
