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Is Woven Systems Coming Unraveled?

It may be curtains if the 10Gig switch vendor can't secure another round of funding soon

Craig Matsumoto

May 21, 2009

3 Min Read
Is Woven Systems Coming Unraveled?

Now that Force10 Networks Inc. has found its exit -- merging with Turin Networks Inc. -- what's in the cards for 10-Gbit/s Ethernet rival Woven Systems Inc. ?

The world might find out soon. One source tells Light Reading that Woven is in a do-or-die hunt for funding and that it could shut down quickly if no deal emerges. Another source, close to the company, says Woven has informed its employees they will only be on the payroll until Friday.

Woven CEO Jeff Thermond declined to comment when contacted by Light Reading yesterday.

Aside from the obvious money pressures (you know, that whole recession thing), Woven is facing increased competition from the other vendors in the Ethernet camp. Force10, for example, is preparing a higher-density push with its ExaScale product line, announced in March. (See Force10 Thinks 'Exa'.)

Life's no picnic for Force10, either. Anyone shipping data center switches has to contend with Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (NYSE: JNPR), which are pitching architectures that, respectively, put the Nexus and the mysterious "Stratus" at the data center core. (See Cisco Intros Unified Service Delivery, Cisco Dreams of Data Center Unity, Juniper Strikes at the Data Center, and Juniper Storms Into Ethernet Switching.)

Other competitors include Brocade Communications Systems Inc. (Nasdaq: BRCD), now that it has acquired Foundry Networks, and Extreme Networks Inc. (Nasdaq: EXTR). (See Brocade Takes Aim at Cisco (& Juniper).)

Even Nortel Networks Ltd. is upping its data center game, with the Virtual Services Platform (VSP) 9000 announced yesterday, although it won't ship until next year.

Woven, founded in 2003, had raised $35 million as of 2007, from investors including Goldman Sachs & Co. , Palomar Ventures , and Mohr Davidow Ventures .

By contrast, Force10 -- which grew up in a more extravagant era for tech startups -- raised at least $400 million. After years of IPO speculation, the company announced the Turin deal in January. (See Force10 Networks Inc. and Force10, Turin Play Convergence Card.)

Woven's EFX 1000 came out in 2007, sporting 144 nonblocking 10-Gbit/s Ethernet ports in a box 10 rack-units high. Multiple chassis can be meshed together to form an even bigger fabric. (See Woven Weaves 10-Gig.)

Woven talks a good technology story, but with companies like Cisco trying to absorb more of the data center, it's difficult for a relative newcomer to get a spot in the network, says Ray Mota, an analyst with Synergy Research Group Inc. (Mota, by the way, was just commenting on market conditions; he had heard nothing about Woven being in trouble.)

"If I was them, I would be looking for an IBM Corp. (NYSE: IBM) or an Electronic Data Systems Corp. (EDS) (NYSE: EDS)" as a business partner, and a large company like Alcatel-Lucent (NYSE: ALU) as a technology partner, Mota says. "You've got to get the army out." Mota expects the larger, established players to have the upper hand when it comes to big data centers. Woven might be better suited pursuing small to mid-sized jobs, he says -- "but I think they want to compete with the big guys."

— Craig Matsumoto, West Coast Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

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