March 14, 2007
Solarflare Communications has its roots in January 2001 when two PairGain Technologies engineers George Zimmerman and Ben Charny founded the company in Irvine, Calif. to develop high-performance, mixed-signal semiconductor solutions for 10G Ethernet network connectivity.
Solarflare's architectural and algorithmic techniques simplify the complexity of building high-performance physical layer (PHY) transceivers. The company applied its expertise to building PHY products for running 10Gbps Ethernet over structured Unshielded Twisted Pair (UTP) copper cabling for LAN applications. The technology, called 10GBASE-T, solves bandwidth bottlenecks in data-centers and wiring-closets of enterprise LANs where gigabit Ethernet aggregation is being used for switch, server, and storage connectivity over inexpensive UTP cabling. The company's strategy was to make sure the new technology was backward compatible with the infrastructure, tools, and installation practices used by engineers for their legacy networks. Solarflare's products were designed to work on the same LANs that support 1Gbps Ethernet over UTP cabling.
Early funding for the company came from traditional VC sources. We believe that the angel round and the first VC round totaled about $12.3 million. By early 2003, the company was able to attract a second round investment of $17.5 million. Anthem Venture Partners led the round, which also included previous investors Foundation Capital and Sequoia Capital, and new investors Intel Capital, Miramar Venture Partners, and Windward Ventures.
In February 2005, Solarflare raised an additional $48 million in its third funding round. Oak Investment Partners joined with previous investors Foundation Capital, Anthem Venture Partners, Intel Capital and Miramar Ventures to complete the new financing.
At about the same time as Solarflare was getting off the ground, a Cambridge, England startup, Level 5 Networks, was being formed in 2002 by engineers from the now-defunct AT&T Labs in Cambridge. The founding team consisted of Steve Pope, Derek Roberts, David Riddoch, and David Clarke under the auspices of professor Andy Hopper, who headed the University of Cambridge's Computer Laboratory. Its charter was to develop high-speed server interconnection products that accelerated the speed of networking while remaining completely compatible with Ethernet.
Early funding in late 2003 of about $9 million was secured by Level 5 from Accel Partners,
Amadeus Capital Partners, Oak Venture Partners, and IDG Ventures. Level 5 took in a B round totaling $30 million in June 2005 from investors who participated in the first round.
The emerging 10G Ethernet market growth was stalled as the industry recovered from the tech bubble of 2000-2001. Both companies were seeking a way to create critical mass to surpass hurdles and to accelerate 10G Ethernet adoption in data centers and enterprise networks.
Bandel Carano, managing partner at Oak Investment Partners, one of the key investors and a Level 5 director and key VCs from Solarflare came to the conclusion that the merger of two equals would strengthen both companies. Eventually, the merger deal was struck in April 2006 with additional capital and the support of investors from both sides. The combined company came out of the deal with a $50 million cash hoard and boosted the head count to 100 (75 in Irvine, and 25 in Cambridge). From a technology perspective, the merger combined Solarflare's 10GBASE-T PHY chips with Level 5's 1Gb/10G Ethernet controller technology -- creating a highly credible player in the market.
Solarflare is led by president and CEO, Russell Stern, who joined the company in January 2004. He took over from Ron Cates, VP of marketing, who was also acting as interim CEO. Stern has over 25 years of experience in the electronics industry and was most recently president and CEO at JNI Corporation in San Diego, Calif., where he orchestrated a successful turnaround and sale to AMCC. Prior to JNI, he served as GM and COO at Quantum and CEO at Escrow.com. Prior to that, and for over 13 years, Stern did stints in the disc drive industry including five years at Western Digital in Irvine, Calif. where he served as co-COO. He has also been with Seagate Technology and Adaptec. He started his career at IBM.
Russell Stern, CEO
The others on the management team and founders are:
- Tim Heenan, VP of operations (formerly with AMCC, MMC Networks, Cirrus Logic)
- Scott Hughes, CFO, VP finance and administration ((formerly with Quantum, Western Digital
- Russ Krapf, VP of sales and business development (formerly with ARIO, JNI, Western Digital)
- Bradley Masters, VP of engineering (formerly with JNI, Western Digital)
- Steve Pope, co-founder and CTO (formerly with Olivetti/AT&T Labs)
- Derek Roberts, co-founder and VP of hardware architecture (formerly with AT&T Labs)
- Bruce Tolley, VP of marketing (formerly with Cisco Systems, 3M)
- George Zimmerman, co-founder and CTO (formerly with PairGain Technologies)
- Ben Charny, co-founder and director of validation (formerly with PairGain Technologies)
- David Clarke, co-founder and senior hardware engineer (formerly with AT&T Labs)
- David Riddoch, co-founder and chief software architect (formerly with AT&T Labs)
The deployment of the Solarflare's technology is helping to enable the 10G Ethernet ecosystem to take root. In September 2006, the company was the first to demonstrate a 10GBASE-T PHY chip reaching 100 meters over an IEEE 802.3an link. A year later, Solarflare conducted a demonstration of a 10GBASE-T NIC on a low-profile PCI Express card at the DesignCon show in Santa Clara, Calif. The card consists of the Solarstorm(TM) 130-nm CMOS controller chip (currently sampling to key customers) and the 3-chip 10Xpress PHY kit which is fabricated in 130- and 90-nm CMOS and SiGe processes (sampling since September 2006). The controller chip is touted to be highest-performing (8-9Gbps throughput) and lowest-power (2.2W) solution on the market. The reference design kit sells for $1500.
Solarflare is betting that the combination of the 10Xpress PHY and the Solarstorm controller will set enough milestones and lower price points to simulate the deployment of the 10G Ethernet market. The complete reference solution specs out at 16W -- well under the PCIe spec of 25W per slot. Solarstorm will help customers deliver 10GbE adapters at the price of quad-port 1GbE adapters, which range in price from $400 to $600.
Gb Ethernet Switched Ports (Fiber and Copper)
While the 10G Ethernet market is small, Solarflare and other competitors are seeing the first signs of renewed interest in the deployment of 10G Ethernet technology -- 1 GbE is just starting to go to the desktop and 10GbE is starting to be deployed in backbone and aggregation applications.
Cisco dominates the 10 GbE switch market with close to 70% market share in dollars. The number two supplier is Force10, which holds only 6%. Foundry Networks, Nortel, Extreme and HP ProCurve round out the top six vendors.
The 10G Ethernet market was small in 2005, when only about 200,000 switch ports shipped. But the new products portend increased deployment of the technology in enterprise data centers, particularly inside server blades and for short-reach copper lengths. Industry forecasts call for 10 Gigabit Ethernet port shipments to grow from about 800,000 in 2006 to almost 10 million in 2010.
Broadcom, a strong player in the Ethernet market, confirmed its interest with the acquisition of 10G Ethernet chip startup Siloquent in 2005. Intel is also watching the space and getting its strategy fine-tuned. Sun Microsystems signaled its intent to throw its hat into the ring with its own multi-port 10G Ethernet chip under development -- dubbed 'Neptune.' In Japan, Fujitsu Microelectronics is on full steam ahead for 10G Ethernet chip development. Startup competition comes from NetXen, Neteiron, Tehuti, Chelsio, Fulcrum Microsystems, Vativ Technologies, and others.
With its combined-company technology expertise and a healthy money reserve in the bank, we see Solarflare as very viable upcomer in the 10Gb Ethernet market. It has done a creditable job in executing its strategy and being influential in the development of the market.
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