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Teradiant: Not Dead Yet

Light Reading
News Analysis
Light Reading
8/19/2004

The network processor landscape is sometimes like the "Bring out your dead" scene in Monty Python and the Holy Grail. Every now and then, someone sits up and says, "I'm not dead yet!"

Despite rumors of its demise, Teradiant Networks Inc. is still kicking. But the company is casting a net to find an acquirer, looking to get picked up by a large company, CEO Satchit Jain says.

"The revenue generation is not what expectations were, and it's getting pushed further into the future," he says.

Part of the problem, Jain notes, is that customers are skittish about buying from startup chip firms, because there's too much risk that the company -- and the chip -- will just vanish. Larger companies might cancel new development on the chip but would have the resources to continue shipping the part.

It didn't help that Teradiant had phone problems during the past week. Vice president of marketing Subhash Bal says many callers have been getting a busy signal, the result of some San Jose construction that ruined a telecom cable in the California neighborhood.

Teradiant has developed a 10-Gbit/s traffic manager, having dropped earlier plans for a high-speed network processor (see Traffic Managers Ready for Commute). The part is sampling, but OEMs have been slow to place any volume orders, Jain says.

Traffic managers are chips that administer QOS and enforce service-level agreements inside a system, telling linecards which packets should get sent across the switch fabric first (see Data Center Power Play and Can Traffic Managers Save the World? ). But it's also being integrated into neighboring chips -- the switch fabric, in most cases -- making it tough for a startup to live on traffic managers alone. Besides Teradiant, only Azanda Network Devices has managed to stay afloat as a pure-play traffic manager company, although executives have considered expanding the portfolio (see Azanda Moves On).

Teradiant still faces the problem of landing a good suitor, as many of the big names in network processors have dropped out or halted new development (see Freescale Halts Net Processor Line). Among the public companies, Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC) already has a traffic manager. Integrated Device Technology Inc. (IDT) (Nasdaq: IDTI) has been strengthening its networking portfolio, but the company recently acquired a traffic manager with ZettaCom (see ZettaCom Finds a Home).

Intel Corp. (Nasdaq: INTC) is a possibility on paper but seems unlikely; despite the company's presence in network processors, it's never shown interest in acquiring a switch fabric or traffic manager. "Intel seems to be not wanting to get into that space," says Jag Bolaria, an analyst with The Linley Group.

Teradiant isn't considering pairing up with another startup. Should they change their minds, the pickings don't get much richer, as companies such as Bay Microsystems Inc., EZchip Technologies, and Sandburst Corp. have developed their own traffic managers.

The company's best bet might come down to an OEM. "They could go to an Extreme that wants to do its own traffic manager -- that's one option," Bolaria says.

Teradiant has also laid off five of its sales and marketing staff, leaving the company with 25 employees. Engineering has been left intact, to continue work on a next-generation product, Jain says.

— Craig Matsumoto, Senior Editor, Light Reading


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Sibylle
Sibylle
12/5/2012 | 1:21:05 AM
re: Teradiant: Not Dead Yet
Teradiant: Not Dead Yet

Duh!

You can say that of almost any communication startup formed prior to 2003. And, starting Nov 3rd, 2003/04 will be thought of as the 'good ol days' (or the 'good ol bubble').
fbgboy
fbgboy
12/5/2012 | 1:21:03 AM
re: Teradiant: Not Dead Yet
Sib,
Agree 100%. Nobody dies now as long as they have 10 bucks for a website. No phones, no offices no problem! We will ship next quarter, errr... make that the one after. This is the price we pay for technology. Oh Yeah were not dead, really! Sceptic.
chip_oracle
chip_oracle
12/5/2012 | 1:19:56 AM
re: Teradiant: Not Dead Yet
"Part of the problem, Jain notes, is that customers are skittish about buying from startup chip firms, because there's too much risk that the company -- and the chip -- will just vanish."

This is always the challenge of any startup chip company. The real problem is that all of Teradiant's potential customers (the ciscos and foundrys) already develop in-house ASICs that accomplish the same thing.

A traffic manager is an integral part of any enterprise line card, and so if there was something special about Teradiant's chip then it would be selling, even in todays climate.

It appears that Teradiant did not have any real customers driving the definition of this product and promising to buy it if they delivered. Instead, it was chip development in a vacuum, and hoping that someone will want it when it was done.

A lesson for startups...
Work very very close with your customers, esp. your first one, during the development phases.
Strike a deal early so that at the end you will at least have one very satisfied paying customer. Don't assume you know what all your potential customer's want and expect them to need it when you're done.

Don't just design a chip...design your success!

Anyways, what the hell do I know!
Good luck Teradiant!

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