Hammerhead Heads for the Edge
There’s a new multiservice edge player in town, and its name is Hammerhead Systems Inc.
The Silicon Valley startup took its first step out of stealth mode this week as it launched the company’s Website, including details about its newly formed management team and its $18 million first round of funding.
While management is more than happy to talk about themselves and their venture backers, they’re less willing to divulge any details about what the company is actually working on. Of course, Light Reading couldn’t let them get away without dishing the dirt. So we did a little digging.
First the basics: The company was founded in January 2002 by Rob Keil and John Yu, both of whom worked at optical access startup Zaffire (see Zaffire Zaps Marketing VP and Centerpoint Scoops Up Zaffire). Hammerhead closed its first round, worth $18 million, last year. Foundation Capital led the round, with Enterprise Partners Venture Capital, and Mayfield participating; the company also received some debt funding from Lighthouse Capital Partners.
So what kind of product is this 50-person startup building? In the beginning, Hammerhead was focused on building a highly dense, next-generation Frame Relay edge switch, say several sources in Silicon Valley.
“The company had a real contrarian view of how it was going to do things,” says one source. “Instead of chasing after IP/MPLS like everyone else, they felt carriers would be much happier with a more sophisticated Frame Relay box.”
Many in the industry believe the company has added MPLS uplinks. This will enable carriers to continue offering Frame Relay for access, while also allowing them to migrate their backbones to MPLS. The product, which is still in development, is also expected to support Ethernet-based services such as virtual private LAN service (VPLS), for multipoint connectivity.
Hammerhead’s focus on a Frame Relay/MPLS hybrid product is likely a smart move. Frame Relay networks are still growing, and more importantly, according to a recent report by Probe Research Inc., they are profitable (see Legacy Services Live). Carriers are looking for products that protect this investment, while also migrating to IP and MPLS.
If the strategy sounds familiar, it should. WaveSmith Networks also went after the installed base of customers with a denser, cheaper ATM switch with a long-term migration path toward MPLS and IP. And Hammerhead will likely face competition from the multiservice products of Équipe Communications Corp. and what used to be TiMetra Networks and Vivace Networks.
So far these companies haven’t done too badly for themselves. Three of the five startups listed above have already been acquired by larger incumbent players.
TiMetra was bought by Alcatel SA (NYSE: ALA; Paris: CGEP:PA) in May for $150 million (see Alcatel & TiMetra Seal the Deal); WaveSmith was bought by Ciena Corp. (Nasdaq: CIEN) in April for $158 million (see Ciena Nabs WaveSmith); and Vivace, which also received funding from Foundation Capital, was bought by Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) in May for $135 million (see Tellabs Snags Vivace for $135M).
Hammerhead is at least two years behind the competition: It isn’t expected to have a product ready for several months. But it has already begun building a sales organization. Earlier this year the company hired Joe Sigrist as CEO. Sigrist had been president of the edge access systems unit at Lucent Technologies Inc. (NYSE: LU) before joining Hammerhead. While at Lucent, Sigrist built this division to over $1.5 billion in revenues at its peak. Prior to Lucent, Sigrist was vice president of product management for Ascend’s remote access business.
In June, the company hired Cornee Yountz as vice president of North American sales. Yountz had been VP of sales at metro optical access startup Coriolis Networks Inc., and regional sales director with Tellabs, responsible for selling its integrated IP and ATM data-networking platform. Prior to Tellabs, Yountz was a regional sales director for Cascade Communications.
— Marguerite Reardon, Senior Editor, Light Reading