The collapse of the telecommunications equipment boom in 2001 pretty much spelled the death for the specialized interconnectivity standard Infiniband as far as
enterprise usage is concerned. Although Infiniband lingers as the input/output technology of choice in scientific computing and the FibreChannel standard remains popular in specialized storage applications, longtime industry standard Ethernet is ready to fully take over as the high-speed leader.
Ethernet, which has been the networking standard since it was first introduced in 1976, has long had
potential in high-speed computing. But when corporate buyers were going through servers like Kleenex in the late 1990s, all of the major computer and chip companies signed on to replace the standard with Infiniband. Yet the technology, while designed from the ground up to operate at high speeds, was not inteoperable with existing systems. Most of the many funded Infiniband companies had to find specialized niches, retool in the Ethernet market or perish, and high-speed developers focused their attention on fixing and turbo-charging the old standard.
This week's
$20 million funding for
Woven Systems Inc., led by MDV Mohr Davidow Ventures, is emblematic of a wave of companies formed in the post-crash environment timed to come to market as high-speed Ethernet evolves into a commoditized technology that could corral users beyond scientific and specialized markets.
Formed in 2003 and funded initially by Goldman, Sachs & Co. and Palomar Ventures, Woven has to date raised $35 million (a pittance compared to what many Infiniband companies raised back in the day) and is counting on market growth in 10 Gigabit Ethernet switch demand to help fuel its growth. Research firm Dell'Oro Group predicts that the market for such products will grow from $1 billion in 2006 to nearly $5 billion in 2011.
Four-year-old Woven took a $5 million addition last April to its initial $10 million Series A round from Goldman Sachs of New York and Palomar Ventures in December 2005, with investors offering a premium on the initial valuation to hold off new fundraising until after the company began distributing products. Woven vice president of marketing Derek Granath says the company then began immediately to go to potential new investors with the added benefit of testimonials on initial product trials. He also says the delay allowed the company to win a strong but undisclosed increase in valuation from the revised valuation of its A round.
"Current investors said we should focus on getting in beta customers and actual product trials," Granath says. "We wanted a tier one VC, and we definitely had more interest in the round after launching products." -
Clifford Carlsen
See Sept. 25 story from Tech Confidential
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