I did not know that. Seems like something that Compaq could have
exploited.
--
Giganet wants to connect
the dot-coms
By Matthew A. DeBellis
Redherring.com
December 4, 1999
With Christmas looming and its abysmal track record
of crashes, eBay (Nasdaq: EBAY) strategists may
want to consider talking to Giganet officials. The
startup, which just landed $19 million in venture
funding, is part of a little-known breed of companies
that use an alternative technology called interconnect
to speed up data transmission.
Interconnect technology helps
transmit data between two or
more servers more efficiently than
Ethernet connections, proponents
say. It is used to connect multiple
servers into a cluster that is more
powerful and stable. Server
clusters fit the needs of
fast-growing Internet and
technology companies, whose
Web sites must handle
increasingly large numbers of hits
without crashing, says Giganet CEO Cornelius Ferris.
The Concord, Massachusetts, company this week
nailed down its third round of venture funding. H&Q
Venture Associates led the round, and W.R.
Hambrecht, Merrill Lynch (NYSE: MER), NTT
Leasing, and telecom management software maker
Telsoft chipped in. Before these latest investments,
Giganet netted $16 million in venture funding from
investors such as Innocal and Mariposa Investment
Holding during the past two years.
Interconnect technology can do a
lot to improve the performance of
e-commerce Web sites and thus
can increase the number of online
transactions, according to a
November report by market
researcher IDC.
BIG BUSINESS
Although e-commerce companies
are known to employ interconnect
technology, it's most widely used
by organizations that complete
massive computational projects
such as financial, academic, and government
institutions. "Most startups wouldn't use [the
technology] off the bat," says Greg Weiss, a research
analyst at D.H. Brown Associates. "This is a Fortune
500 kind of thing."
Dell Computer (Nasdaq: DELL) and Unisys (NYSE:
UIS) are among the companies that use Giganet's
product, a combination of hardware and software.
Still, the lion's share of the company's success comes
from large institutions. It just installed a $250,000
64-computer cluster at Cornell University, where
academics do gene-splicing analysis. Two weeks ago,
Giganet received a request for a 512-computer cluster
contract from what Mr. Ferris would only say is an
organization that does highly technical computations.
Giganet recorded just under $2 million in revenue for
fiscal year 1999 ended September 30. The company
projects that it will match that figure within the first four
months of this fiscal year. Giganet has six patents
pending related to interconnect technology.
INTERCONNECTIONS
Despite its ingenuity, three-year-old Giganet isn't alone
in the market. For example, Compaq Computer
(NYSE: CPQ) acquired interconnect technology
called ServerNet through its acquisition of Tandem.
A small, 40-person outfit in Arcadia, California, called
Myricom has been making interconnect products since
1994. The largest implementation of its technology is a
1,168-computer system at Sandia National
Laboratory in Albuquerque, New Mexico, where
scientists perform massive computations on nuclear
safety. "Business is booming," says Charles Seitz,
Myricom's president, CEO, and one of eight company
founders. "We're seeing people's appetites [for
clusters] go up."
While Giganet just closed its third round of VC, it took
Myricom 11 months to become profitable after it
received a smidgen of seed money from a few angel
investors. Its revenues have doubled every year since
inception.
FASTER, INTERNET!
Such technologies are merely add-ons that may
provide only nominal relief for Internet companies,
since Web sites will always experience some periods
of slower response time because of spikes in traffic,
says Nelson Carbonell, president and CEO of Cysive
(Nasdaq: CYSV), an Internet services firm.
That hasn't stopped the demand, however. Both
Giganet and Myricom say they may go public next
year. If they do, investors likely will be eager to get a
piece of the IPOs, much as they were to buy in to
other technologies that promise faster transmission of
data over computer networks and the Internet.
Foundry Networks (Nasdaq: FDRY), which makes
switches and switch routers that improve network
performance, went public in September at an offering
price of $25 per share and closed at $235.44 per
share on Friday. Sycamore Networks (Nasdaq:
SCMR), which makes optical networking products
that let network service providers offer more
bandwidth, went public in October at a staggering
offering price of $38 per share; the stock closed at
$247.38 per share on Friday. And Gadzoox
Networks (Nasdaq: ZOOX), which makes hardware
and software that lets enterprise computing systems
more efficiently handle data, went out in July offered at
$21 a share; it closed Friday at $79.75. |
