Cisco Systems Inc. (Nasdaq: CSCO) is acquiring yet another tiny technology startup. This time it is paying $12.5 million in cash for Los Altos, California-based network memory specialist Nemo Systems, which is such a young company its public Website is still under construction.

Cisco's press release says Nemo has "developed leading-edge technology in the network memory space that will offer enhanced performance on Cisco's core switching platforms and service modules."

According to Cisco, once incorporated into Cisco's products, the memory technology will allow customers to scale up the use of high-peformance networking gear more efficiently. The deal is expected to close by the end of October.

The company raised its initial investment in March 2003 from founding staff, Benchmark Capital, Mohr Davidow Ventures, and several angel investors with industry experience.

So what's the history of Nemo, which will become part of Cisco's Data Center, Switching and Security Technology Group (DSSTG)? Although Web pages set up by the company are secured against unauthorized access, the company looks to be the brainchild of Stanford University associate professor Nick McKeown, a long-time fixture in the Bay Area networking startup scene who has had prior dealings with Cisco.

According to public information about McKeown, Nemo's CEO and co-founder: "He co-founded Abrizio (acquired by PMC-Sierra Inc.), which built the first commercial terabit switch fabric and was also an architect of the Cisco Systems Inc. GSR 12000 switch fabric, which uses one of his 12 patents. Nick is a Fellow of the Institute of Electrical and Electronics Engineers Inc. (IEEE) and a Fellow of the Royal Academy of Engineering."

McKeown is also a member of the technical advisory board at one of Cisco's core router rivals, Chiaro Networks Inc.. (See Chiaro Intros IP Routing Platform.) He was also an angel investor in router startup Sahasra Networks in 2001. It was acquired by Cypress Semiconductor Corp. (NYSE: CY) in 2002.

At Stanford, McKeown heads up the High Performance Networking Group, which conducts research into "core router architectures [such as] switch scheduling, buffering, packet classification and lookup, using optics in routers, and using parallelism in routers... Novel ideas in the design of the Internet architecture, e.g. load-balancing, optimal routing, deflection routing, and combining packet and circuit switching... Congestion control protocols in the Internet."

Other members of the team include: CTO and co-founder Sundar Iyer, previously a senior systems architect at a content processor firm called Switch-on; VP of marketing and business development Morgan Littlewood, who spent 13 years at Cisco and was founding president of the Multiservice Switching Forum, which is now the MultiService Forum; VP of engineering Zubair Hussain, previously of Abrizio and Chelsio Communications Inc.; and director of ASIC design Jeff Chou, previously of McData Corp. (Nasdaq: MCDTA), Cisco, and Sun Microsystems Inc. (Nasdaq: SUNW). (See Chelsio Demos 10-Gig Technology).

Cisco has been busy buying companies this year, focusing mostly on small network security companies. Its share price stood at $17.86 at the close of the market Thursday. (See Sheer Delight for Cisco, Cisco Nets NetSift for $30M, Cisco Buys Startup for $1.2M per Employee, Finisar Manages With CA.)

— Ray Le Maistre, International News Editor, Light Reading