Comms chips

Power X Powers Down

Switch fabric vendor Power X Networks Ltd. ran out of money today. And with no potential buyers or investors in sight, the company has been put on life support.

Nearly all Power X's 122 staff were given their marching orders this morning, according to several sources. Only five or six engineers are still on the payroll, their job being to take care of the company's intellectual property in the hope that a buyer can still be found for it.

Power X's story doesn't appear to be one of a company starting out with overinflated, overoptimistic ideas -- far from it. Founded in 1996 by a group of executives from ICL, a subsidiary of Fujitsu Ltd. (KLS: FUJI.KL), Power X was one of the first vendors to develop off-the-shelf chips that support packet processing. Its product, which started shipping in volume last year, was an intelligent switch fabric (see Power X Intros Chip Suite).

Power X was also one of the founders of the Common Switch Interface (CSIX) consortium, now the Network Processing Forum (NPF).

Estimated figures from RHK Inc. put Power X's revenues at around $350,000 in the first half of last year, and it's likely that its revenues were greater in the second half of the year, after general availability of its product was announced (see RHK Reports Packet Silicon Revenues). But it takes more than that to reach profitability, so Power X was trying -- unsuccessfully, it seems -- to raise a third round of funding.

This goes to show that meeting milestones and shipping product are not necessarily enough to satisfy investors anymore. And that's a worrying thought for a lot of startups.

Power X's announcements this week -- of its next-generation switch fabric architecture and of support for Intel's new IXP network processors -- also didn't sound like the kind of thing to come out of a dying company (see Power X Shows Off Next-Gen Architecture). But reportedly, those press releases were finalized just days before the administrators were called in.

Backruptcy advisors BDO Stoy Hayward were called in on February 1 to try to sort things out (see Power X Restructuring). BDO didn't return our call, and one ex-employee says that the administrators kept everyone in the company in the dark. It was reported in the trade press that BDO had talked to potential buyers but that there were no really hot prospects.

Despite BDO's stated intention that it would try and keep the company together as a unit, it now looks too late for that. "I think the IP will find a home, but the company won't," says one U.K. analyst familiar with Power X's situation. However, he does wonder if there are buyers waiting in the wings, hoping to get the company at a knockdown price.

Power X was funded by Intel Capital.

— Pauline Rigby, Senior Editor, Light Reading
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lightbulb0 12/4/2012 | 10:51:42 PM
re: Power X Powers Down If you take a look of all those fabric company's solutions, you don't see much difference. What they bet on was selling them to some box startups when they try to beat the clock by cramming out junky solutions. If the startup get bought, it will be a real design-in of big companies. That is not happening, box startup are fading away because of no differentiation and weak market. It may reach the level of attention for a couple of years.

Speaking of physical layer and framer. Those had never been the core competency of the system companies and they are not interested in owning them. Those problems alone are enough to make a business case.

Switch Fabric is the exact mirroring of .COM in networking industry. Little technology and big hypes.
OneMoreByte 12/4/2012 | 10:51:38 PM
re: Power X Powers Down > The Semi's game is volume and they learn it
> well. It only take 1-2 engineers to develop a
> switch fabric. How much you can save for that?

Yeah, I couldn't understand why it took Power-X 4+ years and 30+ people to produce a 16xOC-48 fabric chipset. I know a company where they cranked out a similar chipset (for internal use) in just over a year with only four people. In general, no startup's product should take more than two years to bring to market.
gea 12/4/2012 | 10:51:36 PM
re: Power X Powers Down That Toonces thing was one of the most hilarious things I ever saw. In the skits the characters always thought it was so great and amazing that Toonces could drive, but he SUCKED and he'd always wreck the car (killing everybody inside). The Toonces puppet was also wacky...right before another car wreck its mouth would open up in shock. The skit never made a hell of a lot of sense, and there was no punchline per se, but it never got old. (Oh yeah, I think I remember Toonces running over some bouncing dog puppet in jealousy).
dietaryfiber 12/4/2012 | 10:51:29 PM
re: Power X Powers Down The problem with this and we shall see how the NP business plays out as well is that as stated Switch Fabric design has allowed for competition on architecture cost and features.

ASICs have traditionally cost an order of magnitude less than off the shelf switch fabrics. They also contain the elements that the architecture requires. Thus, the platform cost and feature set is tuned to the switch fabric design.

On the NP front, its not clear to me that any of the successful mainstream designs (i.e. Juniper and Cisco) use NPs and if they do in what volume. I think that the jury is still out here, especially as IP technology pushes deeper toward the network edge (Tandem Offices and ISP POPs are hardly the edge).

dietary fiber
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