InfiniBand Offers Rewards, But Not Without the Risks
By BOB SECHLER
Dow Jones Newswires
AUSTIN, Texas -- The venture capital industry has been in need of a hot new buzzword since "dot-com" lost its cachet. "InfiniBand" may be it.
The term, which stands for infinite bandwidth, is a broad label for the technology behind a new kind of computer interconnection to enable high-speed, simultaneous data exchange among multiple servers and peripherals.
Its backers, including heavyweights in the server industry such as International Business Machines Corp., Sun Microsystems Inc. and Intel Corp., are attempting to position it as the next-generation standard.
They've been having success. More than 40 start-ups -- from software companies to chip firms -- are working on products and services needed to support the emerging InfiniBand computer architecture. Estimates of the venture capital money already poured into it range from $150 million to $300 million, almost all of which has come over the past year. Those estimates don't include internal corporate research-and-development efforts.
"We are keenly interested in the InfiniBand space right now," said TL Ventures Managing Director Bob Fabbio, whose firm recently led a $20 million investment round in start-up InfiniBand software company Vieo Inc. (www.vieo.com) "It could dramatically change the way computing is done."
At its core, InfiniBand is simply a replacement for the existing industry standard for server interconnection, the Peripheral Component Interconnect, or PCI, bus. The PCI bus is a shared, general-purpose interconnect for transmitting data, whereas InfiniBand is a "switched-fabric" connection that would be able to juggle many messages simultaneously and transmit each as if full resources were devoted to it.
InfiniBand advocates say it will eliminate the potential bottleneck of the PCI bus and allow Internet data centers to take maximum advantage of the new era of high-speed networks. They also say InfiniBand is extremely scaleable, allowing multiple servers to be hooked together and work seamlessly as one.
For corporations, the benefit would be more computing capacity from identical resources, or the same with less, because of a reduction in data-traffic congestion among hardware devices, which saps system efficiency. Individual computer users, meanwhile, would see significantly less falloff in responsiveness at times of high Internet traffic, all other things being equal, on an InfiniBand-enabled network.
Those kinds of promises, combined with an A-list roster of corporate advocates, have been generating significant hype for the InfiniBand standard, a buzz that's growing as the venture capital dollars mount.
"The industry in general believes that this is going to be an important technology," said Jim Pappas, director of platform initiatives at Intel.
Mr. Pappas declined to put a monetary estimate on the amount of internal Intel resources being devoted to InfiniBand. However, he called it "a major initiative" for the company and said more than 200 people within his division alone are working on InfiniBand-related projects.
An industry consortium to establish and promote the standard -- the InfiniBand Trade Association, which was formed in late 1999 and has a steering committee comprised of Intel, IBM, Sun, Compaq Computer Corp., Dell Computer Corp., Hewlett-Packard Co. and Microsoft Corp. -- has swelled to more than 200 members, and the group is planning its first "Plugfest" product demonstration conference in June.
Such trade associations to foster cooperation around potential new technology standards have become commonplace in the industry as a means of heading off compatibility issues and reducing the risk of being out front on innovation. A trade group is working now, for instance, to promote the so-called "Bluetooth" wireless standard, and a group once existed to promote the PCI bus as an interconnect standard.
Most observers say the InfiniBand juggernaut is notable for the extent to which the industry has bought into the concept, as well as for the perceived lack of a major competing next-generation server standard.
"It's not an if, it's a when," said Alisa Nessler, chief executive of Lane15 Software, an InfiniBand start-up backed by the corporate venture arms of both Compaq and Dell, among others.
Industry analysts generally agree. But the last part of Nessler's assessment -- the "when" -- still holds major risks for the growing contingent of InfiniBand start-ups and their VC backers, the analysts say.
"It looks to me that this is the way [server interconnection] is going to be done in the future, but the difficult thing is to find out when that is going to happen," said James Opfer, an analyst with market research firm Gartner Dataquest.
"It's the timing that makes it risky," he said.
Vernon Turner, an analyst at rival research firm IDC, concurred.
"The [information-technology] industry has to be convinced that we need another interconnect," Mr. Turner said. "That's going to be the tough part."
Mr. Turner thinks it will happen, however. IDC pegs the number of InfiniBand-capable servers to be shipped in 2002 at 168,000, a figure the firm predicts will climb to about 1.2 million in 2003 and then swell over four million in 2004.
Gartner Dataquest, meanwhile, hasn't made any InfiniBand forecasts. Opfer calls it "treacherous territory" to predict a market that will require a significant technological shift to develop, although he also thinks InfiniBand will eventually take root.
As things stand, most InfiniBand-related start-ups have no sales, and early versions of products to support the technology are only now becoming available.
In addition, some observers say a full rollout of the technology probably has been pushed back by up to two quarters already because of the economic downturn and the overall slowdown in corporate spending.
InfiniBand start-ups and their VC backers acknowledge that the timing of InfiniBand demand presents a risk. But they prefer to view the evolving landscape for the technology as a classic venture opportunity.
"This is a fundamental technology shift in terms of computing architecture," said Mr. Nessler, of Lane15 Software. "Over and over again, people have made a lot of money when that occurs. This is an opportunity to seed and fund and build the next big company."
Write to Bob Sechler at bob.sechler@dowjones.com |
