SANchips Vows to Lower Switch Prices

Startup SANchips is banking on being able to deliver a Fibre Channel switch-on-a-chip that would lower the cost of SAN switches to below $100 per port.

Can it be done? Certainly there are doubters. One consultant says SANchips might be able to fit its ASIC on a chip for that price... but what about the print, board, chassis, and other pieces?

We’ve figured all that in,” insists Tony Schehtman, who heads SANChips’ worldwide sales. “You can hold us to it.”

Potential partners and investors will do just that. Schehtman says SANchips is close to signing deals with low-end SAN vendors, pending beta testing of its first chip product, expected about mid-July. He expects testing to take around two months and hopes to have product shipping in systems by the end of the year.

SANchips executives are also trying to round up funding. The startup received $600,000 last year, led by StageOne Venture Partners, and CEO Avi Shillo is counting on raising at least $5 million more to take the company through the next two years.Shillo is telling potential partners and investors the same story: that his company will reduce cost and time-to-market for Fibre Channel switches. He also hopes to reduce the barrier to entry for companies looking to become switch players.

“We want to provide a standard, integrated chip that will enable existing and new players to make much cheaper and simpler Fibre Channel switches,” Shillo says. “We want to let new vendors get in without having to pay the high R&D price Cisco had to pay to get in.”

SANchips hopes to accomplish this through better engineering. “ASICs of Fibre Channel chips are far more complex than they should be,” Shillo says. He claims SANChips reduces the footprint of the switch’s ASIC by 50 percent, to substantially reduce manufacturing costs. Shillo asserts that SANchips can reduce the retail price of a switch to $95 per port, substantially below the $5,000 price Hewlett-Packard Co. (NYSE: HPQ) has placed on Brocade Communications Systems Inc.’s (Nasdaq: BRCD) new, low-end, eight-port switch (see HP Aims to Dazzle SMBs).

SANchips, based in Israel, has a tentative product roadmap to release an eight-port, 2-Gbit/s switch chip later this year with basic functionality, followed by a 4-Gbit/s, 16-port switch chip in the third quarter of 2005 with support for trunking and IP base management, and a 20-port switch chip in mid-year 2006 with virtualization capabilities.

Too late, says one industry insider who points to recent low-end switches from Brocade and McData Corp. (Nasdaq: MCDTA), which will beat gear based on SANchips' wares to the punch in terms of configuration -- albeit a higher price per port (see SAN Snacks From SNW).Still, SANchips has its supporters. Storage Technology Corp. (StorageTek) (NYSE: STK) validated an alpha version of SANchips’s first product last month after testing it in storage arrays and a tape library (see StorageTek Validates New SANchips).

“Aggressively lowering FC port costs will open the floodgates of innovation," says Brad O'Neill, senior analyst with the Taneja Group. “This is a welcome development.”

OK, but who'll be rolling out that welcome mat? Shillo says even the established switch makers might be interested as a way to further drive down costs for low-end switches. He also targets host bus adapter (HBA) and chip makers who might want to enter the switch fray. He indicates that SANchips' first customers will probably be low-end SAN OEM vendors, bringing to mind Dot Hill Systems Corp. (Nasdaq: HILL), LSI Logic Storage Systems Inc., or XIOtech Corp. -- if SANchips can deliver on performance and price.

— Dave Raffo, Senior Editor, Byte and Switch