Category Archives: Venture Capital

Chinese Merchant-Silicon Vendor Joins ONF, Enters SDN Picture

Switching-silicon ODM/OEM Centec Networks last week became the latest company to join the Open Networking Foundation (ONF).

According to a press release, Centec is “committed to contributing to SDN development as a merchant silicon vendor and to pioneering in the promotion of SDN adoption in China.” From the ONF’s standpoint, the more merchant silicon on the market for OpenFlow switches, the better.  Expansion in China doubtless is a welcome prospect, too.

Established in 2005, Centec has been financed by China-Singapore Suzhou Industrial Park Venture Capital, Delta Venture Enterprise, Infinity I-China Investments (Israel), and Suzhou Rongda. A little more than a year ago, Centec announced a $10.7-million “C” round of financing, in which Delta Venture Enterprise, Infinity I-China Investments (Israel), and SuZhou Rongda participated.

Acquisition Rumor

Before that round was announced, Centec’s CEO James Sun, formerly of Cisco and of Fore Systems, told Light Reading’s Craig Matsumoto that the company aspired to become an alternative supplier to Broadcom in the Ethernet merchant-silicon market. As a Chinese company, Centec not surprisingly has cultivated relationships with Chinese carriers and network-gear vendors. In his Light Reading article, in fact, Matsumoto cited a rumor that Centec had declined an acquisition offer from HiSilicon Technologies Co. Ltd., the semiconductor subsidiary of Huawei Technologies, China’s largest network-equipment vendor.

Huawei has been working not only to bolster its enterprise-networking presence, but also to figure out how best to utilize SDN and OpenFlow (and OpenStack, too).  Like Centec, Huawei is a member of the ONF, and it also has been active in IETF and IRTF discourse relating to SDN. What’s more, Huawei has been hiring SDN-savvy engineers in China and in the U.S.

As for Centec, the company made its debut on the SDN stage early this year at the Ethernet Technology Summit, where CEO James Sun gave a silicon vendor’s perspective on OpenFlow and spoke about the company’s plans to release a reference design based on Centec’s TransWarp switching silicon and an SDK with support for Open vSwitch 1.2. That reference design subsequently was showcased at the Open Networking Summit in April.

It will be interesting to see how Centec develops, both in competitive relation to Broadcom and within the context of the SDN ecosystem.

Network-Virtualization Startup PLUMgrid Announces Funding, Reveals Little

Admit it, you thought I’d lost interest in software-defined networking (SDN), didn’t you?

But you know that couldn’t be true. I’m still interested in SDN and how it facilitates network virtualization, network programmability, and what the empire-building folks at EMC/VMware are billing as the software-defined data center, which obviously encompasses more than just networking.

Game On

Apparently I’m not the only one who retains an abiding interest in SDN. In the immediate wake of VMware’s headline-grabbing acquisition of network-virtualization startup Nicira Networks, entrepreneurs and venture capitalists want us to know that the game has just begun.

Last week, for example, we learned that PLUMgrid, a network-virtualization startup in the irritatingly opaque state of development known as stealth mode, has raised $10.7 million in first-round funding led by moneybags VCs U.S. Venture Partners (USVP) and Hummer Winblad Venture Partners. USVP’s Chris Rust and Hummer Winblad’s Lars Leckie have joined PLUMgrid’s board of directors. You can learn more about the individual board members and the company’s executive team, which includes former Cisco employees who were involved in the networking giant’s early dalliance with OpenFlow a few years ago, by perusing the biographies on the PLUMgrid website.

Looking for Clues 

But don’t expect the website to provide a helpful description of the products and technologies that PLUMgrid is developing, apparently in consultation with prospective early customers. We’ll have to wait until the end of this year, or early next year, for PLUMgrid to disclose and discuss its products.

For now, what we get is a game of technology charades, in which PLUMgrid executives, including CEO Awais Nemat, drop hints about what the company might be doing and their media interlocutors then guess at what it all means. It’s amusing at times, but it’s not illuminating.

At SDNCentral, Matt Palmer surmises that PLUMgrid might be playing in “the service orchestration arena for both physical and virtual networks.” In an article written by Jim Duffy at Network World, we learn that PLUMgrid sees its technology as having applicability beyond the parameters of network virtualization. In the same article, PLUMgrid’s Nemat expresses reservations about OpenFlow. To wit:

 “It is a great concept (of decoupling the control plane for the data plane) but it is a demonstration of a concept. Is OpenFlow the right architecture for that separation? That remains to be seen.”

More to Come

That observation is somewhat reminiscent of what Scott Schenker, Nicira co-founder and chief scientist and a professor in the Electrical Engineering and Computer Science Department at the University of California at Berkeley, had to say about OpenFlow last year. (Shenker also is a co-founder and officer of the Open Networking Foundation, a champion and leading proponent of OpenFlow.)

What we know for certain about PLUMgrid is that it is based in Sunnyvale, Calif., and plans to sell its network-virtualization software to businesses that manage physical, virtual, and cloud data centers. In a few months, perhaps before the end of the year, we’ll know more.

Xsigo: Hardware Play for Oracle, Not SDN

When I wrote about Xsigo earlier this year, I noted that many saw Oracle as a potential acquirer of the I/O virtualization vendor. Yesterday morning, Oracle made those observers look prescient, pulling the trigger on a transaction of undisclosed value.

Chris Mellor at The Register calculates that Oracle might have paid about $800 million for Xsigo, but we don’t know. What we do know is that Xsigo’s financial backers were looking for an exit. We also know that Oracle was willing to accommodate it.

For the Love of InfiniBand, It’s Not SDN

Some think Oracle bought a software-defined networking (SDN) company. I was shocked at how many journalists and pundits repeated the mantra that Oracle had moved into SDN with its Xsigo acquisition. That is not right, folks, and knowledgeable observers have tried to rectify that misconception.

I’ve gotten over a killer flu, and I have a residual sinus headache that sours my usually sunny disposition, so I’m no mood to deliver a remedial primer on the fundamentals of SDN. Suffice it to say, readers of this forum and those familiar with the pronouncements of the ONF will understand that what Xsigo does, namely I/O virtualization, is not SDN.  That is not to say that what Xsigo does is not valuable, perhaps especially to Oracle. Nonetheless, it is not SDN.

Incidentally, I have seen a few commentators throwing stones at the Oracle marketing department for depicting Xsigo as an SDN player, comparing it to Nicira Networks, which VMware is in the process of acquiring for a princely sum of $1.26 billion. It’s probably true that Oracle’s marketing mavens are trying to gild their new lily by covering it with splashes of SDN gold, but, truth be told, the marketing team at Xsigo began dressing their company in SDN garb earlier this year, when it became increasingly clear that SDN was a lot more than an ephemeral science project involving OpenFlow and boffins in lab coats.

Why Confuse? It’ll be Obvious Soon Enough

At Network Computing, Howard Marks tries to get everybody onside. I encourage you to read his piece in its entirety, because it provides some helpful background and context, but his superbly understated money quote is this one: “I’ve long been intrigued by the concept of I/O virtualization, but I think calling it software-defined networking is a stretch.”

In this industry, words are stretched and twisted like origami until we can no longer recognize their meaning. The result, more often than not, is befuddlement and confusion, as we witnessed yesterday, an outcome that really doesn’t help anybody. In fact, I would argue that Oracle and Xsigo have done themselves a disservice by playing the SDN card.

As Marks points out, “Xsigo’s use of InfiniBand is a good fit with Oracle’s Exadata and other clustered solutions.” What’s more, Matt Palmer, who notes that Xsigo is “not really an SDN acquisition,” also writes that “Oracle is the perfect home for Xsigo.” Palmer makes the salient point that Xsigo is essentially a hardware play for Oracle, one that aligns with Oracle’s hardware-centric approaches to compute and storage.

Oracle: More Like Cisco Than Like VMWare

Oracle could have explained its strategy and detailed the synergies between Xsigo and its family of hardware-engineered “Exasystems” (Exadata and Exalogic) —  and, to be fair, it provided some elucidation (see slide 11 for a concise summary) — but it muddied the waters with SDN misdirection, confusing some and antagonizing others.

Perhaps my analysis is too crude, but I see a sharp divergence between the strategic direction VMware is heading with its acquisition of Nicira and the path Oracle is taking with its Exasystems and Xsigo. Remember, Oracle, after the Sun acquisition, became a proprietary hardware vendor. Its focus is on embedding proprietary hooks and competitive differentiation into its hardware, much like Cisco Systems and the other converged-infrastructure players.

VMware’s conception of a software-defined data center is a completely different proposition. Both offer virtualization, both offer programmability, but VMware treats the underlying abstracted hardware as an undifferentiated resource pool. Conversely, Oracle and Cisco want their engineered hardware to play integral roles in data-center virtualization. Engineered hardware is what they do and who they are.

Taking the Malocchio in New Directions

In that vein, I expect Oracle to look increasingly like Cisco, at least on the infrastructure side of the house. Does that mean Oracle soon will acquire a storage player, such as NetApp, or perhaps another networking company to fill out its data-center portfolio? Maybe the latter first, because Xsigo, whatever its merits, is an I/O virtualization vendor, not a switching or routing vendor. Oracle still has a networking gap.

For reasons already belabored, Oracle is an improbable SDN player. I don’t see it as the likeliest buyer of, say, Big Switch Networks. IBM is more likely to take that path, and I might even get around to explaining why in a subsequent post. Instead, I could foresee Oracle taking out somebody like Brocade, presuming the price is right, or perhaps Extreme Networks. Both vendors have been on and off the auction block, and though Oracle’s Larry Ellison once disavowed acquisitive interest in Brocade, circumstances and Oracle’s disposition have changed markedly since then.

Oracle, which has entertained so many bitter adversaries over the years — IBM, SAP, Microsoft, SalesForce, and HP among them — now appears ready to cast its “evil eye” toward Cisco.

Some Thoughts on VMware’s Strategic Acquisition of Nicira

If you were a regular or occasional reader of Nicira Networks CTO Martin Casado’s blog, Network Heresy, you’ll know that his penultimate post dealt with network virtualization, a topic of obvious interest to him and his company. He had written about network virtualization many times, and though Casado would not describe the posts as such, they must have looked like compelling sales pitches to the strategic thinkers at VMware.

Yesterday, as probably everyone reading this post knows, VMware announced its acquisition of Nicira for $1.26 billion. VMware will pay $1.05 billion in cash and $210 million in unvested equity awards.  The ubiquitous Frank Quattrone and his Quatalyst Partners, which reportedly had been hired previously to shop Brocade Communications, served as Nicira’s adviser.

Strategic Buy

VMware should have surprised no one when it emphasized that its acquisition of Nicira was a strategic move, likely to pay off in years to come, rather than one that will produce appreciable near-term revenue. As Reuters and the New York Times noted, VMware’s buy price for Nicira was 25 times the amount ($50 million) invested in the company by its financial backers, which include venture-capital firms Andreessen Horowitz, Lightspeed,and NEA. Diane Greene, co-founder and former CEO of VMware — replaced four years ago by Paul Maritz — had an “angel” stake in Nicira, as did as Andy Rachleff, a former general partner at Benchmark Capital.

Despite its acquisition of Nicira, VMware says it’s not “at war” with Cisco. Technically, that’s correct. VMware and its parent company, EMC, will continue to do business with Cisco as they add meat to the bones of their data-center virtualization strategy. But the die was cast, and  Cisco should have known it. There were intimations previously that the relationship between Cisco and EMC had been infected by mutual suspicion, and VMware’s acquisition of Nicira adds to the fear and loathing. Will Cisco, as rumored, move into storage? How will Insieme, helmed by Cisco’s aging switching gods, deliver a rebuttal to VMware’s networking aspirations? It won’t be too long before the answers trickle out.

Still, for now, Cisco, EMC, and VMware will protest that it’s business as usual. In some ways, that will be true, but it will also be a type of strategic misdirection. The relationship between EMC and Cisco will not be the same as it was before yesterday’s news hit the wires. When these partners get together for meetings, candor could be conspicuous by its absence.

Acquisitive Roads Not Traveled

Some have posited that Cisco might have acquired Nicira if VMware had not beaten it to the punch. I don’t know about that. Perhaps Cisco might have bought Nicira if the asking price were low, enabling Cisco to effectively kill the startup and be done with it. But Cisco would not have paid $1.26 billion for a company whose approach to networking directly contradicts Cisco’s hardware-based business model and market dominance. One typically doesn’t pay that much to spike a company, though I suppose if the prospective buyer were concerned enough about a strategic technology shift and a major market inflection, it might do so. In this case, though, I suspect Cisco was blindsided by VMware. It just didn’t see this coming — at least not now, not at such an early state of Nicira’s development.

Similarly, I didn’t see Microsoft or Citrix as buyers of Nicira. Microsoft is distracted by its cloud-service provider aspirations, and the $1.26 billion would have been too rich for Citrix.

IBM’s Moves and Cisco’s Overseas Cash Horde

One company I had envisioned as a potential (though less likely) acquirer of Nicira was IBM, which already has a vSwitch. IBM might now settle for the SDN-controller technology available from Big Switch Networks. The two have been working together on IBM’s Open Data Center Interoperable Network (ODIN), and Big Switch’s technology fits well with IBM’s PureSystems and its top-down model of having application workloads command and control  virtualized infrastructure. As the second network-virtualization domino to fall, Big Switch likely will go for a lower price than did Nicira.

On Twitter, Dell’s Brad Hedlund asked whether Cisco would use its vast cash horde to strike back with a bold acquisition of its own. Cisco has two problems here. First, I don’t see an acquisition that would effectively blunt VMware’s move. Second, about 90 percent of Cisco’s cash (more than $42 billion) is offshore, and CEO John Chambers doesn’t want to take a tax hit on its repatriation. He had been hoping for a “tax holiday” from the U.S. government, but that’s not going to happen in the middle of an election campaign, during a macroeconomic slump in which plenty of working Americans are struggling to make ends meet. That means a significant U.S.-based acquisition likely is off the table, unless the target company is very small or is willing to take Cisco stock instead of cash.

Cisco’s Innovator’s Dilemma

Oh, and there’s a third problem for Cisco, mentioned earlier in this prolix post. Cisco doesn’t want to embrace this SDN stuff. Cisco would rather resist it. The Cisco ONE announcement really was about Cisco’s take on network programmability, not about SDN-type virtualization in which overlay networks run atop an underyling physical network.

Cisco is caught in a classic innovator’s dilemma, held captive by the success it has enjoyed selling prodigious amounts of networking gear to its customers, and I don’t think it can extricate itself. It’s built a huge and massively successful business selling a hardware-based value proposition predicated on switches and routers. It has software, but it’s not really a software company.

For Cisco, the customer value, the proprietary hooks, are in its boxes. Its whole business model — which, again, has been tremendously successful — is based around that premise. The entire company is based around that business model.  Cisco eventually will have to reinvent itself, like IBM did after it failed to adapt to client-server computing, but the day of reckoning hasn’t arrived.

On the Defensive

Expect Cisco to continue to talk about the northbound interface (which can provide intelligence from the switch) and about network programmability, but don’t expect networking’s big leopard to change its spots. Cisco will try to portray the situation differently, but it’s defending rather than attacking, trying to hold off the software-based marauders of infrastructure virtualization as long as possible. The doomsday clock on when they’ll arrive in Cisco data centers just moved up a few ticks with VMware’s acquisition of Nicira.

What about the other networking players? Sadly, HP hasn’t figured out what to about SDN, even though OpenFlow is available on its former ProCurve switches. HP has a toe dipped in the SDN pool, but it doesn’t seeming willing to take the initiative. Juniper, which previously displayed ingenuity in bringing forward QFabric, is scrambling for an answer. Brocade is pragmatically embracing hybrid control planes to maintain account presence and margins in the near- to intermediate-term.

Arista Networks, for its part, might be better positioned to compete on networking’s new playing field. Arista Networks’ CEO Jayshree Ullal had the following to say about yesterday’s news:

“It’s exciting to see the return of innovative networking companies and the appreciation for great talent/technology. Software Defined Networking (SDN) is indeed disrupting legacy vendors. As a key partner of VMware and co-innovator in VXLANs, we welcome the interoperability of Nicira and VMWare controllers with Arista EOS.”

Arista’s Options

What’s interesting here is that Arista, which invariably presents its Extensible OS (EOS) as “controller friendly,” earlier this year demonstrated interoperability with controllers from VMware, Big Switch Networks, and Nebula, which has built a cloud controller for OpenStack.

One of Nebula’s investors is Andy Bechtolsheim, whom knowledgeable observers will recognize as the chief development officer (CDO) of, and major investor in, Arista Networks.  It is possible that Bechtolsheim sees a potential fit between the two companies — one building a cloud controller and one delivering cloud networking. To add fuel to this particular fire, which may or may not emit smoke, note that the Nebula cloud controller already features Arista technology, and that Nebula is hiring a senior network engineer, who ideally would have “experience with cloud infrastructure (OpenStack, AWS, etc. . . .  and familiarity with OpenFlow and Open vSwitch.”

 Open or Closed?

Speaking of Open vSwitch, Matt Palmer at SDN Centralwill feel some vindication now that VMware has purchased a company whose engineering team has made significant contributions to the OVS code. Palmer doubtless will cast a wary eye on VMware’s intentions toward OVS, but both Steve Herrod, VMware’s CTO, and Martin Casado, Nicira’s CTO, have provided written assurances that their companies, now combining, will not retreat from commitments to OVS and to Open Flow and Quantum, the OpenStack networking  project.

Meanwhile, GigaOm’s Derrick Harris thinks it would be bad business for VMware to jilt the open-source community, particularly in relation to hypervisors, which “have to be treated as the workers that merely carry out the management layer’s commands. If all they’re there to do is create virtual machines that are part of a resource pool, the hypervisor shouldn’t really matter.”

This seems about right. In this brave new world of virtualized infrastructure, the ultimate value will reside in an intelligent management layer.

PS: I wrote this post under a slight fever and a throbbing headache, so I would not be surprised to discover belatedly that it contains at least a couple typographical errors. Please accept my apologies in advance.

Addressing SDN Burnout

In the universe of staccato text bursts that is Twitter, I have diagnosed a recent exhaustion of interest in software defined networking (SDN).

To a certain degree, the burnout is understandable. It is a relatively nascent space, generating more in the way of passionate sound and fury than in commercial substance. Some Twitter denizens with a networking bent have even questioned whether an SDN market — involving buyers as well as sellers — actually exists.

On that score, the pointed skepticism has been refuted. SDN vendors, including Nicira Networks and Big Switch Networks, increasingly are reporting sales and customer traction. What’s more, market-research firms have detected signs of commercial life. International Data Corporation (IDC), for example, has said the SDN market will be worth a modest $50 million this  year,  but that it will grow to $200 million in 2013 and to $2 billion by 2016. MarketsandMarkets estimates that the global SDN market will expand from $198 million in 2012 to $2.10 billion in 2017, representing a compound annual growth rate (CAGR) of 60.43% during that span.  I’m sure other market measurers will make their projections soon enough.

But just what are they counting? SDN isn’t a specific product category, like a switch; it’s an architectural model. In IDC’s case, the numbers include SDN-specific switching and routing as well as services and software (presumably including controllers and the applications that run on them). MarketsandMarkets is counting  SDN “switching, controllers, cloud virtualization applications, and network virtualization security solutions.”

Still, established networking vendors will argue that the SDN hype is out of proportion with on-the-ground reality. In that respect, they can cite recent numbers from Infonetics Research that estimate global revenue derived from sales of data-center network equipment — the market segment SDN is likely to make most headway during the next several years — was worth $2.2 billion in the first quarter of 2012. Those numbers include sales of Ethernet switches, application delivery controllers (ADCs), and WAN-optimization appliances.

This is where things get difficult and admittedly subjective. If we’re considering where the industry and customers stand today, then there’s no question that SDN gets more attention than it warrants. Most of us, including enterprise IT staff, do not wish to live in the past and don’t have the luxury of looking too far into the future.

That said, some people have the job of looking ahead and trying to figure out how the future will be different from the present. In the context of SDN, those constituencies would include the aforementioned market researchers as well as venture capitalists, strategic planners, and technology visionaries. I would also include in this class industry executives at established and emerging vendors, both those directly involved in networking technologies and those that interact with networking infrastructure in areas such as virtualization and data-center management and orchestration.

For these individuals, SDN is more than a sensationalized will-o’-the-wisp.  It’s coming. The only question is when, and getting that timing right will be tremendously important.

I suppose my point here is that some can afford to be dismissive of SDN, but others definitely cannot and should not. Is interest in SDN overdone? That’s subjective, and therefore it’s your call. I, for one, will continue to pay close attention to developments in a realm that is proving refreshingly dynamic, both technologically and as an emerging market.

VCs Weigh SDN’s Risks and Rewards

I’ve been thinking about a month-old post that Matthew Palmer wrote on the SDNCentral website.

In his post, Palmer considers that Arista, Insieme, and Vyatta were not financed by traditional venture capitalists. He further questions to what extent venture capitalists will plow money into the SDN space. He comes to the conclusion that it is “hard to believe there will be a large number of SDN startups being funded” by VCs.

My objective here is not to challenge Palmer’s conclusion, which seem about right. Instead, I want to examine his assumptions to see whether I can add anything to the discussion.

Slow-Growth Dead Zone

For a long time, VCs have eschewed the networking market. In recent years, Arista Networks emerged as the only new Ethernet-switching vendor to crash the established vendors’ party. Arista, as Palmer points out, was funded by its founders, not by VCs, who generally perceived networking, especially the enterprise variant, as a slow-growth dead zone controlled and dominated by Cisco Systems.

Meanwhile, the VCs had unfortunate experiences in the network-access control (NAC) market, where they sought to make bets in an area that was seen as peripheral to the big vendors’ wheelhouses.

As for SDN today, Palmer thinks most of the major VCs have done their bidding, and he believes Sequoia and Kleiner Perkins will fill out the field shortly. Beyond that, he doesn’t see much action.

Freeze Frame

He comes to that conclusion partly because of Cisco’s longstanding domination of the networking market. Writing that “Cisco learned a long time ago how to freeze markets and make markets look unattractive to competitors and investors,” Palmer believes the networking giant has put “everyone on notice” with its Insieme spin-in venture.  He believes Insieme, and whatever else Cisco does in SDN, will shut the door on SDN startups that aren’t already on the market with credible products and technologies that solve customer problems.

Perhaps VCs, as they have done in the recent past, will refrain from betting against the industry giant. That said, there already has been more VC activity in SDN than we’ve seen in network infrastructure for quite some time. In that respect, SDN demonstrably is different from the networking developments that have preceded it.

It’s different in others ways, too. I know I’ve hammered the same nail repeatedly in the past, but, at the risk of obsessive redundancy, I will do so again: The Open Networking Foundation (ONF) represents a powerful customer-driven dynamic that effectively challenges the vendor-led hegemony that has typified most networking markets and associated standards bodies. The ONF is run by and for service providers. Vendors are excluded from its board of directors, and their contributions are carefully circumscribed to conform with the dictates of the board.

Formidable Power

The catch is that the ONF is all about the needs and requirements of cloud service providers. The enterprise isn’t a primary consideration, though the development of enterprise-market demand for SDN products and technologies could further the strategic interests (economies of scale, innovation, vendor support, etc.) of the service-provider community.

Cisco is a formidable power, but it can’t impose its will on the ONF. In that respect, at least in the service-provider space, SDN is different from preceding network markets, such as Ethernet switching, which were basically incremental advancements in an established market model.

Call me crazy, but I believe that market and financial analysts should begin modeling scenarios in which the growth of SDN cuts into the service-provider revenues and margins of Cisco and Juniper. This will be particularly true in the cloud-service provider (IaaS) space initially, but it is likely to grow into other areas over time.

Enterprise Bulwark

The enterprise? That’s a tougher nut for SDN, for the reason I’ve cited earlier (ONF’s lack of an enterprise mandate), and for others as well. For starters, most enterprises don’t have the resources or the motivation (business case) to move away from networking models and relationships that have served them well.  As SDN evolves over time, that situation could change. For now, though, SDN is more a curiosity for enterprises than something they are considering for wholesale adoption.

Cisco and the other established networking vendors know the enterprise is safer ground for whatever SDN strategy or counterstrategy they present. In this respect, what Palmer terms “Insieme FUD” and other similar tactics are likely to be effective in the near term (the next two years.)

I really can’t quibble with Palmer’s conclusion — as I wrote above, it feels about right — but I think the VC investments we’ve seen heretofore in SDN already suggest that it is perceived differently from the linear networking markets that have preceded it.   I also believe there’s reason to think that SDN will lead to significant disruptions to the provision of networking solutions in the service-provider space.

How far can it go in the enterprise? For now, prospects are murky, but the game is in the early stages, and much will depend on how the SDN ecosystem evolves as well as on how effective Cisco and others are at leveraging the advantages of incumbency.

LineRate’s L4-7 Pitch Tailored to Cloud

I’ve written previously about the growing separation between how large cloud service providers see their networks and how enterprises perceive theirs. The chasm seems to get wider by the day, with the major cloud shops adopting innovative approaches to reduce network-related costs and to increase service agility, while their enterprise brethren seem to be  assuming the role of conservative traditionalists — not that there’s anything inherently or necessarily wrong with that.

The truth is, the characteristics and requirements of those networks and the applications that ride on them have diverged, though ultimately a cloud-driven reconvergence is destined to occur.  For now, though, the cloudy service providers are going one way, and the enterprises — and most definitely the networking professionals within them — are standing firm on familiar ground.

It’s no surprise, then, to see LineRate Systems, which is bringing a software-on-commodity-box approach to L4-7 network services, target big cloud shops with its new all-software LineRate Proxy.

Targeting Cloud Shops

LineRate says its eponymous Proxy delivers a broad range of full-proxy Layer 4-7 network services, including load balancing, content switching, content filtering, SSL termination and origination, ACL/IP filtering, TCP optimization, DDoS blocking, application- performance visibility, server-health monitoring, and an IPv4/v6 translation gateway. The product has snared a customer — the online photo- and video-sharing service Photobucket — willing to sing its praises, and the company apparently has two other customers onboard.

As a hook to get those customers and others to adopt its product, LineRate offers pay-for-capacity subscription licensing and a performance guarantee that it says eliminates upfront capital expenditures and does away with the risks associated with capacity planning and the costs of over-provisioning. It’s a great way to overcome, or at least mitigate, the new-tech jitters that prospective customers might experience when approached by a startup.

I’ll touch on the company’s “secret sauce” shortly, but let’s first explain how LineRate got to where it is now. As CEO Steve Georgis explained in an interview late last week, LineRate has been around since 2008. It is a VC-backed company, based in Boulder, Colorado, which grew from research conducted at the University of Colorado by John Giacomoni, now LineRate’s chief technology officer (CTO), and by Manish Vachharajani, LineRate’s chief software architect.

Replacing L4-7 Hardware Appliances 

As reported by the Boulder County Business Report, LineRate closed a $4.75 million Series A round in April 2011, in which Boulder Ventures was the lead investor. Including seed investments, LineRate has raised about $5.4 million in aggregate, and it is reportedly raising a Series B round.

LineRate calls what it does “software defined network services” (SDNS) and company CEO Georgis says the overall SDN market comprises three layers: the Layer 2-3 network fabric, the Layer 4-7 network services, and the applications and web services that run above everything else. LineRate, obviously, plays in the middle, a neighborhood it shares with Embrane, among others.

LineRate contends that software is the new data path. As such, its raison d’être is to eliminate the need for specialized Layer 4-7 hardware appliances by replacing them with software, which it provides, running on industry-standard hardware, which can be and are provided by ODMs and OEMs alike.

LineRate’s Secret Sauce

The company’s software, and its aforementioned secret sauce, is called the LineRate Operating System (LROS). As mentioned above, it was developed from research work that Giacomoni and Vachharajani completed in high-performance computing (HPC), where their focus was on optimizing resource utilization of off-the-shelf hardware.

Based on FreeBSD but augmented with LineRate’s own TCP stack, LROS has been optimized to squeeze maximum performance from the x86 architecture. As a result, Georgis says, LROS can provide 5-10x more network-performance than can a general-purpose operating system, such as Linux or BSD. LineRate claims its software delivers sufficiently impressive performance — 20 to 40 Gbps network processing on a commodity x86 server, with what the company describes as “high session scalability” — to obviate the need for specialized L4-7 hardware appliances.

This sort of story is one that service providers are likely to find intriguing. We have seen variations on this theme at the big cloud shops, first with virtualized servers, then with switches and routers, and now — if LineRate has its way — with L4-7 appliances.

LineRate says it can back up its bluster with the ability to support hundreds of thousands of full-proxy L7 connections per second, amounting to two million concurrent active flows. As such, LineRate claims LROS’s ability to support scale-out high availability and its inherent multi-tenancy make well qualified for the needs of cloud-service providers.  The LineRate Proxy uses a REST API-based architecture, which the company says allows it to integrate with any cloud orchestration or data-center management framework.

Wondering About Service Reach?

At Photobucket.com, which has 23 million users that upload about four million photos and videos per day, the LineRate Proxy has been employed as a L7 HTTP load balancer and intelligent-content switch in a 10-Gbps network. The LineRate software runs on a pair of low-cost, high-availability x86 servers, doing away with the need to do a forklift upgrade on a legacy hardware solution that Georgis said included products from “a market-leading load-balancing vendor and a vendor that was once a market leader in the space.”

LineRate claims its scalable subscription model also paid off for Photobucket, by eliminating the need for long-term capacity planning and up-front capital expenditures. It says Photobucket benefits from its “guaranteed performance,” and that on-demand scaling has eliminated risks associated with under- or over-provisioning. On the whole, LineRate says its solution offered an entry cost 70 percent lower than that of a competing hardware-appliance purchase.

When the company first emerged, the founders indicated that load balancing would be the first L4-7 network service that it would target. It will be interesting to see whether its other early-adopter customers also are using the LineRate Proxy for load balancing. Will the product prove more specialized than the L4-7 Ginsu knife the company is positioning?

It’s too early to say. The answer will be provided by future deployments.

The estimable Ivan Pepelnjak offers his perspective, including astute commentary on how and where the LineRate Proxy is likely to find favor.

Not Just a Marketing Overlay

Ivan pokes gentle fun at LineRate’s espousal of SDNS, and his wariness is understandable. Even the least likely of networking vendors seem to be cloaking themselves in SDN garb these days, both to draw the fickle attention of trend-chasing venture capitalists and to catch the preoccupied eyes of the service providers that actually employ SDN technologies.

Nonetheless, there are aspects to what LineRate does that undeniably have a lot in common with what I will call an SDN ethos (sorry to be so effete). One of the key value propositions that LineRate promotes — in addition to its comparatively low cost of entry, its service-based pricing, and its performance guarantee — is the simple scale-out approach it offers to service providers.

As Ivan points out, “ . . . whenever you need more bandwidth, you can take another server from your compute pool and repurpose it as a networking appliance.” That’s definitely a page from the SDN playbook that the big cloud-service providers, such as those who run the Open Networking Foundation (ONF), are following. Ideally, they’d like to use virtualization and SDN to run everything on commodity boxes, perhaps sourced directly from ODMs, and then reallocate hardware dynamically as circumstances dictate.

In a comment on Ivan’s post, Brad Hedlund, formerly of Cisco and now of Dell, offers another potential SDN connection for the LineRate Proxy. Hedlund writes that it “would be really cool if they ran the Open vSwitch on the southbound interfaces, and partnered with Nicira and/or Big Switch, so that the appliance could be used as a gateway in overlay-based clouds such as, um, Rackspace.”

He might have something there. So, maybe, in the final analysis, the SDNS terminology is more than a marketing overlay.

Cheriton Sees Opportunity in Infrastructure

When I wrote my first post on this blog, way back in 2006, I assumed that technology infrastructure largely was a spent force. I expected incremental enhancements, gradual advances, but I didn’t anticipate another major boom or a significant disruption of the established order in what once had been a vibrant technology space.

While the technology industry as a whole can suffer from blinkered, willful optimism, perhaps I was afflicted by a different condition entirely. I might have been too pessimistic, too gloomy, dispirited by the technology downturn of the early 2000s and the lack of a meaningful, sustained recovery in the years that immediately followed.

By the way, when I refer to technology, I’m not talking about social networking such as Facebook. I understand that there’s a lot of technology behind the scenes at Facebook, but the customer-facing “social” phenomenon leaves me cold. I never did see the point of Facebook from a user’s perspective, though I understood how it could serve as an unprecedented data-mining machine for advertisers.

Opportunity Renewed

Fortunately, though, I was wrong about the decline and fall of infrastructure. It took a while, but a new era of infrastructure has arisen, based on virtualization, orchestration, and automation. Technological possibilities that we could only dream about more than a decade ago are now possible. In the networking realm, software-defined networking (SDN) is enabling comparatively outmoded network infrastructure to catch up with compute and, to a lesser degree, storage infrastructure as the promise of an application-driven, programmable data center comes into clearer view.

Suddenly, at long last, there’s new opportunity in infrastructure.

You don’t have to take my word for it, either. There are people who’ve designed and developed industry-leading technologies who espouse the same opinion. Some of these people are billionaires, and they’re backed their convictions with substantial sums of money, investing in technologies and companies with clear mandates to remake IT infrastructure.

Outrageously Wealthy Canuck

One of those people is David Cheriton, a billionaire who wears many hats. He is Professor of Computer Science and Electrical Engineering at Stanford University, where he researches networking and distributed systems, and he also serves as a co-founder and chief scientist at Arista Networks. He’s also an investor in startup companies. Back in 1998, one early-stage company in which he invested, along with Arista co-founder Andy Bechtolsheim, was Google.  The duo made a similar early investment in VMware, so they’ve done okay.

Born in Vancouver, raised in Edmonton, Alberta, and ranked 37th on a Wikipedia list of “richest Canadians”** — Forbes ranks him 21st among outrageously wealthy Canucks  — Cheriton recently spoke about innovation and entrepreneurship at a Churchill Club event in Silicon Valley. The event was co-hosted and organized by the Hua Yuan Science and Technology Association and also featured Ken Xie, who founded NetScreen (acquired by Juniper Networks in 2004) and is now president and CEO of unified-threat-management/firewall vendor Fortinet, a company he also founded.

In addition to his apparent knack as an investor, Cheriton has considerable firsthand experience as an entrepreneur and an innovator. Before he and Bechtolsheim combined forces at Arista Networks,  they founded Granite Systems, a Gigabit-Ethernet switching concern that was acquired by Cisco in 1996 for about $220 million in stock, back when shares of Cisco were continuously on the rise.  Subsequently, after the Google investment, Bechtolsheim and Cheriton combined forces again to found Kealia, which specialized in server technology based on AMD’s Opteron microprocessor.  That company was acquired by Sun Microsystems in 2004, providing technology included in the Sun Fire X4500 storage product.

Room for Improvement

In 2005, Cheriton and Bechtolsheiim followed up with Arista, then called Arastra, and its 10-GbE switching technology, which brings us to the approximate present and back to something Cheriton said at the Churchill Club event late last month. Noting that people tend to become preoccupied with the latest developments in social networking and mobility, Cheriton expressed his enthusiasm for infrastructure, as an investment vehicle as well as an area in which he has an abiding technical interest. As quoted in a BusinessWeek article, Cheriton said: “I think there is an opportunity to go back and say, ‘Gee, I think there’s lot of room for improvement in the infrastructure.’ ”

Reinforcing that point, he noted that technology infrastructure today is predicated on ideas that are about 30 years old. The network was the place to start the infrastructure refurbishment, Cheriton believed, and Arista Networks grew from that conviction.

But Cheriton hasn’t stopped there. He also founded a company called Optumsoft, about which not much is known. On its website, Optumsoft is described as an early-stage startup company “taking distributed computing and distributed software development mainstream.” Quoting from the website:

Recent advancements in multi-core computing systems, coupled with the ever increasing functional and performance requirements of software has created an exciting market opportunity for addressing the programmatic and architectural issues involved in modern software development. Optumsoft is addressing this growing market with a novel technology approach that is transparent, scalable, and portable, resulting in significant improvement to the development and maintenance of distributed/parallel structured software systems. Early production usage by commercial clients has validated the technology and value proposition.

Last fall, an anonymous source suggested on Quora that what Optumsoft was building related to “how to structure object-oriented RPC in a way that makes it easy to build robust systems.  The technology behind Arista’s EOS is based on some of these ideas, as was software structure at a previous startup, Kealia.  The technology includes an IDL and a C++ runtime, similar to what you’d get using CORBA.”

Nebula and Tintri

On the investment side, Cheriton and Bechtolsheim have put money into Nebula, which has venture-capital backing from Kleiner Perkins Caulfield & Byers and Highland Capital Partners. Built on OpenStack, the Nebula Enterprise Cloud Appliance is designed to provision and configure flexible, scalable cloud-computing infrastructure. Although it doesn’t say so on the Nebula website, previous reports indicated that Arista’s networking technology is included in the Nebula appliance.

According to the BusinessWeek article,  Cheriton also has a stake in Tintri, co-founded by Kieran Harty and Mark Gritter. Harty was EVP of R&D at VMware for seven years, and Gritter was one of the first of Cheriton’s employees at Kealia. They’ve assembled a PhD-laden engineering team that has developed a virtual-machine-aware storage appliance designed for virtualized environments, which the company says have been underserved by older storage technology that apparently contributes to “VM stall.”

Another early-stage investment that Cheriton made was in Aster Data Systems, a purveyor of a massively parallel DBMS that runs on clustered commodity servers. Already a minority owner of Aster, Teradata bought the 89% of the company it didn’t own for $263 million last year.

Cheriton has made bets on infrastructure, and he’ll likely make others. It’s an encouraging sign for those of us who gravitate to that part of the industry.

(**No, I am not on the list, but thanks for asking.)

Update on Arista’s Road to IPO

From the search terms for this blog, I know many of you have a strong interest in learning about Arista Networks’ plans for an IPO.

I intended to touch on the company’s IPO plans within a larger post on its strategy for software-defined networking (SDN), but I’ve decided that the two threads should be addressed separately.

So, where does Arista Networks stand with its IPO plans? I believe the company is still very much on track for an IPO, though forecasting a specific date for such an event is not something I’ll do here. I would say that an IPO remains Arista’s preferred exit strategy. I don’t see the company selling to Cisco or to anybody else before a public offering. Sources say that Arista already has been approached by potential acquirers, but that it wasn’t interested in pursuing that option.

Looking for CFO

In that context, remember that Arista is not a VC-funded company. It has been financed by its principals, and it controls its own destiny. As such, Arista is not under external pressure to consider or reconsider buyout propositions.

At the moment, Arista does not have a chief financial officer (CFO). Last fall, at the same time the company announced the addition of two independent board members, Steffan Tomlinson joined Arista as its chief financial officer.  He left the company after just a few months, however, and is now CFO at network-security player Palo Alto Networks. Previously, Tomlinson served as CFO at Aruba Networks when it went public in 2007.

Nobody is saying much about the circumstances of Tomlinson’s departure from Arista. Sources say that the parting of the ways had nothing to do with Arista’s financial performance. As noted above, all reports suggest the company remains on track for an IPO. Before long, we should see an announcement regarding the hiring of a new CFO.

All of you who have been seeking an update on Arista’s IPO plans — and I know there are many of you — now have one.

Embrane Emerges from Stealth, Brings Heleos to Light

I had planned to write about something else today — and I still might get around to it — but then Embrane came out of stealth mode. I feel compelled to comment, partly because I have written about the company previously, but also because what Embrane is doing deserves notice.

Embrane’s Heleos

With regard to aforementioned previous post, which dealt with Dell acquisition candidates in Layer 4-7 network services, I am now persuaded that Dell is more likely to pull the trigger on a deal for an A10 Networks, let’s say, than it is to take a more forward-looking leap at venture-funded Embrane. That’s because I now know about Embrane’s technology, product positioning, and strategic direction, and also because I strongly suspect that Dell is looking for a purchase that will provide more immediate payback within its installed base and current strategic orientation.

Still, let’s put Dell aside for now and focus exclusively on Embrane.

The company’s founders, former Andiamo-Cisco lads Dante Malagrinò and Marco Di Benedetto, have taken their company out of the shadows and into the light with their announcement of Heleos, which Embrane calls “the industry’s first distributed software platform for virtualizing layer 4-7 network services.” What that means, according to Embrane, is that cloud service providers (CSPs) and enterprises can use Heleos to build more agile networks to deliver cloud-based infrastructure as a service (IaaS). I can perhaps see the qualified utility of Heleos for the former, but I think the applicability and value for the latter constituency is more tenuous.

Three Wise Men

But I am getting ahead of myself, putting the proverbial cart before the horse. So let’s take a step back and consult some learned minds (including  an”ethereal” one) on what Heleos is, how it works, what it does, and where and how it might confer value.

Since the Embrane announcement hit the newswires, I have read expositions on the company and its new product from The 451 Group’s Eric Hanselman, from rock-climbing Ivan Pepelnjak (technical director at NIL Data Communications), and from EtherealMind’s Greg Ferro.  Each has provided valuable insight and analysis. If you’re interested in learning about Embrane and Heleos, I encourage you to read what they’ve written on the subject. (Only one of Hanselman’s two The 451 Group pieces is available publicly online at no charge).

Pepelnjak provides an exemplary technical description and overview of Heleos. He sets out the problem it’s trying to solve, considers the pros and cons of the alternative solutions (hardware appliances and virtual appliances), expertly explores Embrane’s architecture, examines use cases, and concludes with a tidy summary. He ultimately takes a positive view of Heleos, depicting Embrane’s architecture as “one of the best proposed solutions” he’s seen hitherto for scalable virtual appliances in public and private cloud environments.

Limited Upside

Ferro reaches a different conclusion, but not before setting the context and providing a compelling description of what Embrane does. After considering Heleos, Ferro ascertains that its management of IP flows equates to “flow balancing as a form of load balancing.” From all that I’ve read and heard, it seems an apt classification. He also notes that Embrane, while using flow management, is not an “OpenFlow/SDN business. Although I see conceptual similarities between what Embrane is doing and what OpenFlow does, I agree with Ferro, if only because, as I understand it, OpenFlow reaches no higher than the network layer. I suppose the same is true for SDN, but this is where ambiguity enters the frame.

Even as I wrote this piece, there was a kerfuffle on Twitter as to whether or to what extent Embrane’s Heleos can be categorized as the latest manifestation of SDN. (Hours later, at post time, this vigorous exchange of views continues.)

That’s an interesting debate — and I’m sure it will continue — but I’m most intrigued by the business and market implications of what Embrane has delivered. On that score, Ferro sees Embrane’s platform play as having limited upside, restricted to large cloud-service providers with commensurately large data centers. He concludes there’s not much here for enterprises, a view with which I concur.

Competitive Considerations

Hanselman covers some of the same ground that Ferro and Pepelnjak traverse, but he also expends some effort examining the competitive landscape that Embrane is entering. In that Embrane is delivering a virtualization platform for network services, that it will be up against Layer 4-7 stalwarts such as F5 Networks, A10 Networks, Riverbed/Zeus, Radware, Brocade, Citrix, Cisco, among others. F5, the market leader, already recognizes and is acting upon some of the market and technology drivers that doubtless inspired the team that brought Heleos to fruition.

With that in mind, I wish to consider Embrane’s business prospects.

Embrane closed a Series B round of $18 million in August. It was lead by New Enterprise Associates and included the involvement of Lightspeed Venture Partners and North Bridge Venture Partners, both of whom participated in a $9-million series A round in March 2010.

To determine whether Embrane is a good horse to back (hmm, what’s with the horse metaphors today?), one has to consider the applicability of its technology to its addressable market — very large cloud-service providers — and then also project its likelihood of providing a solution that is preferable and superior to alternative approaches and competitors.

Counting the Caveats

While I tend to agree with those who believe Embrane will find favor with at least some large cloud-service providers, I wonder how much favor there is to find. There are three compelling caveats to Embrane’s commercial success:

  1. L4-7 network services, while vitally important cloud service providers and large enterprises, represent a much smaller market than L2-L3 networking, virtualized or otherwise. Just as a benchmark, Dell’Oro reported earlier this year that the L2-3 Ethernet Switch market would be worth approximately $25 billion in 2015, with the L4-7 application delivery controller (ADC) market expected to reach more than $1.5 billion, though the virtual-appliance segment is expected show most growth in that space. Some will say, accurately, that L4-7 network services are growing faster than L2-3 networking. Even so, the gap is size remains notable, which is why SDN and OpenFlow have been drawing so much attention in an increasingly virtualized and “cloudified” world.
  2. Embrane’s focus on large-scale cloud service providers, and not on enterprises (despite what’s stated in the press release), while rational and perfectly understandable, further circumscribes its addressable market.
  3. F5 Networks is a tough competitor, more agile and focused than a Cisco Systems, and will not easily concede customers or market share to a newcomer. Embrane might have to pick up scraps that fall to the floor rather than feasting at the head table. At this point, I don’t think F5 is concerned about Embrane, though that could change if Embrane can use NaviSite — its first customer, now owned by TimeWarner Cable — as a reference account and validator for further business among cloud service providers.

Notwithstanding those reservations, I look forward to seeing more of Embrane as we head into 2012. The company has brought a creative approach and innovation platform architecture to market, a higher-layer counterpart and analog to what’s happening further down the stack with SDN and OpenFlow.

Amazon’s Advantageous Model for Cloud Investments

While catching up with industry developments earlier this week, I came across a Reuters piece on Amazon’s now well-established approach toward investments in startup companies. If you haven’t seen it, I recommend that you give it a read.

As its Amazon Web Services (AWS) cloud operations approach the threshold of a $1-billion business, the company once known exclusively as an online bookshop continues to search for money-making opportunities well beyond Internet retailing.

Privileged Insights

An article at GigaOM by Barb Darrow quotes Amazon CEO Jeff Bezos explaining that his company stumbled unintentionally into the cloud-services business, but the Reuters item makes clear that Amazon is putting considerably more thought into its cloud endeavors these days. In fact, Amazon’s investment methodology, which sees it invest in startup companies that are AWS customers, is an exercise in calculated risk mitigation.

That’s because, before making those investments, Amazon gains highly detailed and extremely valuable insights into startup companies’ dynamic requirements for computing infrastructure and resources. It can then draw inferences about the popularity and market appeal of the services those companies supply. All in all, it seems like an inherently logical and sound investment model, one that gives Amazon privileged insights into companies before it decides to bet on their long-term health and prosperity.

That fact has not been lost on a number of prominent venture-capital firms, which have joined with Amazon to back the likes of Yieldex, Sonian, Engine Yard, and Animoto, all of whom, at one time or another, were AWS customers.

Mutual Benefits

Now that nearly every startup is likely to begin its business life using cloud-based computing infrastructure, either from AWS or another cloud purveyor, I wonder whether Amazon’s investment model might be mimicked by others with similar insights into their business customers’ resource utilization and growth rates.

There’s no question that such investments deliver mutual benefit. The startup companies get the financial backing to accelerate its growth, establish and maintain competitive differentiation, and speed toward market leadership. Meanwhile, Amazon and its VC partners get stakes in fast-growing companies that seem destined for bigger things, including potentially lucrative exits. Amazon also gets to maintain relationships with customers that might otherwise outgrow AWS and leave the relationship behind. Last but not least, the investment program serves a promotional purpose for Amazon, demonstrating a commitment and dedication to its AWS customers that can extend well beyond operational support.

It isn’t just Amazon that can derive an investment edge from how their customers are using their cloud services. SaaS cloud providers such as Salesforce and Google also can gain useful insights into how customers and customer segments are faring during good and bad economic times, and PaaS providers would also stand to derive potentially useful knowledge about how and where customers are adopting their services.

Various Scenarios

Also on SaaS side of the ledger, in the realm of social networking — I’m thinking of Facebook, but others fit the bill — subscriber data can be mined for the benefit of advertisers seeking to deliver targeted campaigns to specific demographic segments.

In a different vein, Google’s search business could potentially give it the means to develop high-probability or weighted analytics based on the prevalence, intensity, nature, and specificity of search queries. Such data could be applied to and mined for probability markets. One application scenario might involve insiders searching online to ascertain whether prior knowledge of a transaction has been leaked to the wider world. By searching for the terms in question, they would effectively signal that an event might take place. (This would be more granular than Google Trends, and different from it in other respects, too.) There are a number of other examples and scenarios that one could envision.

Getting back to Amazon, though, what it is doing with its investment model clearly makes a lot of sense, giving it unique insights and a clear advantage as it weighs where to place its bets. As I said, it would be no surprise to see other cloud providers, even those not of the same scale as Amazon, consider similar investment models.

Mazzola’s Next Move

I’ve written previously about Mario Mazzola, Luca Cafiero, and Prem Jain, Cisco’s triumvirate of engineering maestros. My last post in which they figured prominently dealt with Cisco’s seeming retirement of its spin-in move.

Explaining the Spin-In

For those not familiar with the spin-in concept, I will now quote from my earlier post:

 “Such deals typically involve a parent company, such as Cisco, allowing a team of engineers and business managers to leave the corporate nest to create breakthrough products and technologies. These arm’s-length ventures are funded by the parent company exclusively or sometimes by the parent company and other investors, such as VCs. The parent company’s ownership ratio of the venture increases as technology milestones and business objectives are reached, until eventually the venture is spun, in its entirely, back into the mothership. Hence, the term “spin in.”

Cisco executed a number of spin-in arrangements, but its best-known examples involved storage-networking startup Andiamo Systems, which Cisco officially acquired in the summer of 2002, and Nuova Systems, which Cisco finally acquired in full in the spring of 2008.

The companies had more than their spin-in natures in common. Both were led by Mario Mazzola, Cisco’s on-again-off-again chief development officer (CDO). What’s more, the teams at both companies included many of the same players, namely Luca Cafiero, Prem Jain, and Soni Jiandani.”

Startup Rumor

I wrote that post last summer, and, while Soni Jiandani remains in a prominent executive position at Cisco, serving as senior vice president for server access and virtualization, the other three — Mazzola, Cafiero, and Jain — are the subject of rumors.

According to unconfirmed reports, Mazzola is leading another startup effort. Cafiero and Jain might be joining him. I don’t know what this alleged startup might do, but some say it initially might function as an incubator/VC operation, on its own or perhaps in league with another Silicon Valley VC outfit.

Spin-In Unlikely

It is not thought to be another Cisco spin-in. Given the substantial layoffs John Chambers is overseeing currently at Cisco, it would be difficult for him to sell investors, analysts, and — last but not least — employees on the merits of a high-priced spin-in maneuver that would make a few people richer than Croesus while  others are being escorted to the door and entire business operations within Cisco are facing extinction.

That’s not to say it won’t happen — Cisco and Chambers could argue that a particular spin-in initiative is absolutely essential to the company’s renovated strategic vision — but the odds are not in its favor.

Regardless of whether Mazzola is fronting a standalone startup or yet another Cisco spin-in venture, it will be interesting to see what he does next.