AUSTIN, Texas Banderacom Inc., which was once one of the most-promising semiconductor startups, plans to lay off as many as two-thirds of its 65 employees. The upcoming move is the latest painful evidence that new technologies, in this case Infiniband, are slow to gain traction in today's economic environment.
Greg Dahl, director of marketing at Banderacom, confirmed Thursday (Aug. 22) that the company was planning a layoff this month, but declined to provide details until employees could be contacted. Several sources said the cuts would be deep, and one said as many as 45 of the 65 employees at the company would be let go.
Chief executive officer Les Crudele, who joined Banderacom last year after working at Compaq Computer Corp. and Motorola Inc. in senior management positions, was expected to leave Banderacom as well, a company staffer said. Crudele did not return a phone call Thursday (Aug. 22).
Banderacom was burning cash at the rate of $1 million per month, and has only about $10 million left in its coffers, one source said. More importantly for its venture-capital backers is the slow adoption of the Infiniband interconnect technology, which is competing against 10-Gigabit Ethernet, iSCSI, Fibre Channel and PCI Express for the chassis interconnect market.
Though Banderacom is sampling two of its chip products to Infiniband systems vendors, it is unclear if the company will proceed to move those products to the commercial production stage, or spin new silicon. Dahl said, "We have road maps that we have communicated to our customers that will help them meet their production schedules," but declined to be more specific about plans for commercial production of the company's target channel and switch IC products.
Another source said Banderacom had sent a letter to its customers telling them that Banderacom was putting one or more of its products on the shelf, and would reposition the company to a broader focus than strictly Infiniband. Dahl denied that such a letter had been sent, saying that the company was talking to its customers directly about the implications of the downsizing.
One customer supported Dahl's view. "People are hitting significant speed bumps, but the Infiniband ecosystem is OK," said Todd Matters, chief technology officer for Infinicon Systems (King of Prussia, Pa.), a startup demonstrating a first-generation Infiniband 1x data center switch.
Infinicon will upgrade the design to 4x (10-gigabit/second) Infiniband in the fall using 4x Infiniband switches from Banderacom and 4x host bus adapters with silicon from Mellanox Technologies and IBM Corp. Despite the layoffs at some of those silicon suppliers, Matters said he remained confident in the companies as suppliers.
Banderacom has sampled its iBandit target channel adapter silicon to several storage vendors, largely to connect Fibre Channel storage systems with Infiniband servers.
Banderacom was started in 1999 by five co-founders who had profited from the sale of Jato Technologies, a developer of Gigabit Ethernet technology. Backed by Intel Capital, Austin Ventures and several other venture-capital firms, Banderacom rode the early buzz around Infiniband, a next-generation interconnect between servers, storage devices and networking systems.
Intel Corp., IBM and other industry heavyweights formed the Infiniband Trade Association in the midst of the technology boom, and all systems seemed go. Austin, Texas, which is also home to Infiniband software vendors Lane15 Software Inc. and Vieo Inc., fashioned itself as an Infiniband center of excellence.
Infiniband expectations were downsized, however, as it became apparent that development of the various layers of Infiniband control software would take time. Hopes were further dampened by a series of recent announcements. Israel-based Mellanox, the earliest vendor of Infiniband silicon, recently laid off about half of its work force of 180 people in Israel.
Intel said in June that it had stopped development of its 1x (2.5-Gbit/second) Infiniband silicon, saying the market had moved on to 4x (10-Gbit/s) channels. Early this month, Microsoft Corp. said it would not provide native Infiniband support in its .NET Server operating system for the next two years or so. Microsoft argued that Gigabit Ethernet technologies, while somewhat slower than Infiniband, required little new software on the part of the server vendors.
While Ethernet presents a serious long-term challenge, several sources said Infiniband is far from finished.
"1x Infiniband is dead, and 4x is coming. A new market level set on Infiniband is being taken," said Greg Schultz, director of storage networking for Inrange Technologies, a Fibre Channel switch maker that expects to eventually support Infiniband and iSCSI in future products.
"Infiniband is in the same position Fibre Channel was six or seven years ago. It's in an incubation stage," Schultz said.
Too many people expected Infiniband to take off as quickly as USB did in the personal computer space, said Phil Hester, president and chief executive officer of Newisys Inc., which is developing servers based on AMD's Opteron processors.
"There were two sets of people talking about the take-up rate for Infiniband. There were people experienced with the server part of the industry, who know how long these things tend to take, and there were the people from the PC side of the industry," Hester said. "The majority of my customers do not find Infiniband very interesting right now, but that may change. At this stage of its development, Infiniband is about where I expected it to be," he said.
Dell Computer is now shipping all of its servers with Gigabit Ethernet on the motherboard, said Bill Leasure, marketing vice president at Cicada Semiconductor (Austin), which is developing Gigabit Ethernet physical-layer devices. "Maybe I am prejudiced because I've been working with Ethernet technologies since the 1980s, but it seems like the MIS managers already have to support Fibre Channel for storage connections on the high end, and Ethernet, so they don't really want another level of software complexity to deal with. That leaves the question: 'Where does Infiniband fit in?' "
Additional reporting by Rick Merritt