Not too long ago, I thought of an idea for a decent story: Go around to the "hot" Austin startups and find out how things are going.

Trouble is, the "A" company on my list, Alchemy Semiconductor, was snatched up by Advanced Micro Devices at a fire sale price. Banderacom Inc. was next on the list, but its target market-Infiniband-has sputtered like one of those firecrackers that you have to relight a couple of times at the neighborhood driveway gathering on the Fourth of July.

After B comes C, and Austin does have a startup success in Cygnal Integrated Products, a company that shows that, even in today's crummy business environment, a startup can gain traction.

Cygnal was founded in 1999 around the idea of taking a fast 8051 processor core and surrounding it with mixed-signal circuits that would rival what the top-tier analog companies provide. Flash cores from foundry TSMC are the third leg of Cygnal's product strategy.

The 64-person company has created 36 variants on its central theme. Some of Cygnal's system-on-chip devices are flyspeck-sized: a 25-Mips processor, an A/D converter, SRAM, a temperature sensor, parallel and serial ports, all fit on a chip measuring 3 mm2.

While some companies, like Banderacom, are vulnerable because they need to gain traction in one application, or with a few major customers, Cygnal has more than 1,000 customers, ranging across the whole gamut of electronics systems.

How does a small company with only six field application engineers attract, and keep track of, so many customers?

The short answer: the Internet, which marketing vice president Don Alfano calls "the engineer's best friend." Customers can download Cygnal's own development tools, order parts and so on, online. Nothing too unusual there.

Cygnal also has an internal customer-tracking tool that allows the sales reps to funnel customer information back to Cygnal over the Web. This self-developed knowledge management system gives Cygnal an ability to sort customers by volume, provides order fulfillment data and drives new-product design strategies.

Cygnal remains private, and it is hard to tell just how well it is doing. The company recently raised $20.5 million, and revenue is said to be growing each quarter.

Still, "customers are a lot more cautious now than they would be in a normal business environment. The overall business sentiment is not as bad as last year, but we are still not in a steady-state economy," Alfano said.

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