Optical/IP Networks

P-Cube Nabs a $35M Series C

P-Cube Inc., a maker of network IP services devices, based in Sunnyvale, Calif., announced Monday that it has raised another $35 million in venture funding, its third round to date. The company has raised about $65 million since it was founded in May 1999 (see P-Cube Pockets $35 Million).

The startup's investors include Granite Global Ventures, Venrock Associates, Accel Partners, and ComVentures.

P-Cube's boxes identify, classify, and manipulate traffic passing through a carrier's transport devices. The SE1000 boasts the ability to work with up to Layer 7 traffic over Gigabit Ethernet, OC12, and OC48 links, supporting 100,000 subscribers and up to a million data flows. The smaller SE100 box handles over 100,000 aggregated data flows at speeds up to 155 Mbit/s.

P-Cube's pizza-box-sized devices sit in a carrier or cable network and provide access control, session control, and various custom applications. Rather than just charging for the amount of data used, P-Cube says its products allow network operators to, say, charge one price for online gaming and peer-to-peer activity and a different price for streaming video or voice-over-IP calls.

The point is that the service provider gets to tinker with several generic application protocols in P-Cube's software to decide what service it wants to offer and how it wants to charge for that service. One cable operator using P-Cube's product recently discovered that some 80 percent of its broadband data traffic was being consumed by fewer than 5 percent of its users, according to Yuval Shahar, P-Cube's founder and CEO. "Now he [can see] what transactions are taking place on his network and decide what to do about it," Shahar says.

P-Cube hasn't announced any customer wins, but it says it has been shipping products for revenue since late 2001 and will likely break even toward the middle of 2003.

Shahar maintains he's not out to replace transport boxes or routers. In fact, P-Cube's solution has no data transport capabilities -- it only classifies, meters, and tracks traffic so service providers can bill for whatever services they set up. The company's competitors include devices with VPN (virtual private network) capabilities such as those made by CoSine Communications Inc. (Nasdaq: COSN), Lucent Technologies Inc. (NYSE: LU), and Nortel Networks Corp. (NYSE/Toronto: NT), as well as edge routers and aggregation devices like those of Redback Networks Inc. (Nasdaq: RBAK), Cisco Systems Inc. (Nasdaq: CSCO), and Riverstone Networks Inc. (Nasdaq: RSTN).

There's another enemy, too: carrier indifference. "There may not be any direct competitors [to P-Cube], but there are several alternative solutions, one of which is to do nothing," says Todd Hanson, a principal analyst at Gartner/Dataquest.

In some effort to combat service provider shrugs, and to widen its distribution, P-Cube has a sales and marketing agreement in place with Ericsson AB (Nasdaq: ERICY), where the companies have added a way to classify (and charge) different subscriber groups differently.

Shahar says P-Cube will show off its products with several other vendors at Supercomm 2002.

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com For more information on Supercomm 2002, please visit: Supercomm Special

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