Hyperchip Has a Hiccup

Hyperchip Inc., one of the startup survivors in the core routing space, took some lumps last month as it cut its staff in half and waved goodbye to its CEO, Brian Barry. Barry was hired by the startup back in April 2001 (see Hyperchip Hires Ericsson's Barry as CEO).

The company hasn't replaced its CEO yet, but Dominic DeVeaux, a senior partner of the DeVeaux Brault & Associated management consultancy, has been installed as the company's new president, sources close to the company say.

About half the staff was cut, leaving about 65 employees, according to one source close to Hyperchip.

With its product completed through two releases, the company may have felt it was time to pare its development staff and concentrate on sales, while stretching its cash. The company has raised about $140 million in venture financing to date, according to its Website. Its last big funding round came in January 2002 (see Hyperchip Lands $43M in Financing).

Sources say the company has a lot going for it, technically. It has one router running live traffic in a customer network, and its second product release is in early trials with carriers. But the lack of investment in the sector is putting the pressure on the startup to bag a contract or head for the exits.

In the short term, the hype around Cisco Systems Inc.'s (Nasdaq: CSCO) CRS-1 actually benefits companies in Hyperchip's shoes. Some carriers were said to be holding back core-routing RFPs and buying decisions until they saw what Cisco would release. In the long run, though, more direct competition from Cisco doesn't bode well for a startup, unless it has a marquee customer, a big partner, and some iron-stomached investors.

It's not that no one's funding core router projects. Axiowave Networks Inc., for instance, has raised more than $120 million to date, with its most recent round closing last year (see Axiowave Queues in the Core).

But startup life ain't easy. So far, Hyperchip has outlasted Allegro Networks, Charlotte's Web Networks, IronBridge Networks, and Pluris, and cherry-picked the remains of IPOptical. But it still faces competition from Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7), Chiaro Networks Inc., Procket Networks Inc., Juniper Networks Inc. (Nasdaq: JNPR), and Cisco, to name a few.

It isn't the only core routing player to lose its head recently. Caspian Networks Inc. founder Larry Roberts recently stepped away from his day-to-day responsibilities to start up another company (see Larry Has Left the Building).

Calls to Hyperchip had not been returned by press time.

Hyperchip is slated to occupy Booth 22924 in the South Hall (Hall A), at Supercomm.

— Phil Harvey, News Editor, Light Reading

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captain kennedy 12/5/2012 | 1:37:46 AM
re: Hyperchip Has a Hiccup Hyperchip needs a handkerchief
coreghost 12/5/2012 | 1:37:45 AM
re: Hyperchip Has a Hiccup Hyperchip, a weak startup in the core routing
space, gave up and pared the company down for
a technology sale as their only remaining option.

The company has nothing going for it technically
or otherwise. It has no customer, no real trials
and long ago cut back to a point where nobody
believes that their half-finished product is
viable or that they are a viable company.

The only news from Hyperchip for the past couple
years has come right before supercomm. They
seem to issue a press release every year to
justify wasting money on a booth.

The company has almost no money left. No
private investors had any confidence in it in
2002 and its main role has been as a placeholder
to keep engineers in Quebec until the sector
turns around.

Caspian has given up even trying to sell core
routers. Thats why Larry left.

Axiowave is a scam run by the same people who
brought you nexabit. They could not manage to
build something that worked then and anyone
who thinks they can do so now is out of their
mind. And there is no Lucent around to bail
them out this time.

HD 12/5/2012 | 1:37:33 AM
re: Hyperchip Has a Hiccup Ex-Hyperchiper I am... Pretty decent place to work. I was not laid off but rather moved on to greener pastures. Few points (my own personal opnions of course):

- Hyperchip architecture is as solid as it gets (the scalability story is 100% true)
- HW team is pretty decent but lack product dev experience
- SW (protocols/CLI) team is no better (actually worse)
- Upper Management is kinda a joke (Directors up)
- Sales and marketing (what sales and marketing???)
- VA team was a bust.. Few managers thought they knew what they were doing... didn't!!!

- One bright spot for the company WAS and STILL IS the Platform Team (glue between HW and SW). These were the guys that know what's going on and the guys in the lab trying to prove that it is the HW or the SW that is crapping out. Kudos to these guys for many all nighters and many.. Many all-weekend long to meet some fictitious "musts", for the past 4 years... Should have put these guys in charge of protocols/CLI then the products would have been more stable... uh well.

- When everything is working the PBR performance is supperb!!!! QoS core router (the one and ONLY!)
Blah blah...

Show me a company that does not have problems! When it comes down to success it is a matter of luck, timing and execution. None of these factors were there for Hyperchip (as a core router company). Right now is not the time for a start-up especially the "core" market (show me a company with significant sales of core routers). In the end, the company with the deepest pocket survive... I wouldn't be surprise if Hyperchip survive doing what it does best: hyper-CHIP ...
Good luck Hyperchip and 3-1/2 VA guys!
reoptic 12/5/2012 | 1:37:33 AM
re: Hyperchip Has a Hiccup How many castastrophic cases of core companies carcasses will it take for VC community (and LR) to get the fact the core routing market is a death trap. The funeral dirge just keeps growing with Hyperchip and Caspian about to round up to ten the deceased list of Pluris, Ironbridge, Netcore, Nexabit, Packetstar, Optera, Versalar, Argonne. You would think with 10 implosions VCs would get that this is not a good place to make a buck, but Axiowave's and Procket's backers prove their is always a greater fool out there. Ultimately that will make a dirty dozen of dead ducks. Chambers has to be smiling.
arch_1 12/5/2012 | 1:37:28 AM
re: Hyperchip Has a Hiccup You forgot IPOptical and Charlotte's {Web|Networks}, bringing the body count up to 10 already. That puts Caspian and Hyperchip in a close race for eleventh and twelfth places.

Then we have Chiaro and Axiowave still among the living. What is their funding status?

signmeup 12/5/2012 | 1:37:28 AM
re: Hyperchip Has a Hiccup How are we going to define success? Or are we just concerned with the living vs. dead at this point..

My personal opinion is that there is no room in this market for a new core player, period. There isn't enough justification any of them can offer to make customers move from Juniper or Cisco.

Perhaps we should add another category - Dead, Acquired, & Still Breathing (for now)..

rare_reader 12/5/2012 | 1:37:27 AM
re: Hyperchip Has a Hiccup Finally it has got to LR. It's been so long since the layoff happened. Even hints and facts were given at different forums, it still did not make it to the news until now. I think LR is a bit slow here.

Probably there isn't enough interest in news about Hyper anymore. Would anyone agree?

rare reader
echo2 12/5/2012 | 1:37:27 AM
re: Hyperchip Has a Hiccup >My personal opinion is that there is no room in >this market for a new core player, period. There >isn't enough justification any of them can offer >to make customers move from Juniper or Cisco.


I am surprised to hear you say that. What about Procket?
uguess 12/5/2012 | 1:37:26 AM
re: Hyperchip Has a Hiccup >I am surprised to hear you say that. What about Procket?

Procket will be acquired. The technology is too good to die.

signmeup 12/5/2012 | 1:37:26 AM
re: Hyperchip Has a Hiccup While I do like Procket's technology, I still don't believe there is enough differentiation over what the competition has to offer. The market isn't big enough to sustain the type of growth necessary for a core router startup to succeed.

There is a reason Caspian and Axiowave are trying to distance themselves from the more traditional core router startups. They know that space is not sustainable, so they are trying to convince VCs that they provide something in addition worth dumping more capital into..


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