Aristos Logic Locks Onto $15M

Processor startup Aristos Logic clinched $15 million in a Series F funding round today, as the vendor plans to launch the next generation of its technology and take on chip giant Intel. (See Aristos Processes $15M.)

The round was led by a new, unnamed investor and also included existing investors Panorama Capital, TPG Ventures, Woodside Fund, and QTV Capital. The round, which tops the $12 million Series D the firm received in late 2004, brings Aristos's total funding to $80 million. (See Aristos Logic Gets $12M, Startups Tap VC Reserves, and Aristos Logic Raises $20M.)

The startup's RAID chip has been on the market since late 2002, and Aristos unveiled the second generation of its technology last year. (See Aristos Arrives, Aristos Launches Storage Chip, Aristos Releases 4-Gig Controller, and Four-Gig HBAs on Parade.)

"We're focusing on getting several OEMs to market with the product, so the money is being spent on development and support for customers," said Adam Zagorski, Aristos director of marketing. "We may be recruiting some engineers, but the support and test infrastructure is where this money is being spent."

A chunk of this latest round will also be spent developing the startup's next generation of chips, which will be released "fairly shortly" according to Zagorski. Without specifying when exactly, he confirmed that the new chip will have tighter integration with SAS and SATA than current technology.But ever since its launch nearly four years ago, Aristos Logic has just a handful of publicly annonuced OEM deals, one of which is Sun/StorageTek, which has deployed the startup's chip technology in its FlexLine disk system. (See StorageTek Targets Mainframe Disk, and Aristos Ships to StorageTek.)

According to Zagorski, the vendor is currently working with "multiple" other OEM partners, but he refused to reveal the identities of the firms involved.

Aristos Logic, however, is yet to reach profitability, which may explain why a Series F round was necessary. "This helps bridge the gap [prior to OEM revenues]," says Steve Denegri, an independent storage analyst and consultant. But the next big challenge for the firm, according to the analyst, is to start shipping chips in sufficient volumes to keep its costs down.

Looming on the horizon, however, is the vendor's main competitor, Intel, with its XScale storage processor. Zagorski, for his part, claims that the startup's approach of pre-bundling software with its chips will be a key weapon in this battle. "If you buy a chip from Intel, you still have to write that software stack yourself," he said.

Intel has not yet responded to a request for comment from Byte and Switch, although an industry source, who asked not to be named, told us that Aristos Logic has already won an OEM deal against Intel.With Intel recently announcing thousands of job cuts, however, the chip giant is not likely to be taking any prisoners in the storage space. (See Intel to Cut 10,000.) "I have heard through talking to OEMs that Intel is very aggressive," says Denegri. "They don't want to concede share at a time when it is clear that the management within are looking at which business units are performing -- and which are not."

That said, the analyst feels there is a growing demand for specialist RAID chips that can be built into storage systems. "It plays perfectly to the business model that favors outsourced R&D for RAID," he says. "The typical storage OEM does not have the resources to do it themselves."

Aristos Logic and Intel, however, are not the only vendors tackling this part of the market -- another player here is AMCC. (See AMCC Acquires Quake, AMCC Reports Q1, and AMCC RAIDS Mac Market.) "They are a partner in some ways," says Zagorski, explaining that some of his customers use AMCC's PowerPC processors for RAID management, while Aristos provides the actual RAID processor.

The exec also predicted that Aristos Logic will reach profitability sometime next year.

James Rogers, Senior Editor, Byte and Switch