Cisco Surges 'Round Surgient

Cisco Systems Inc. (Nasdaq: CSCO) has its eye on Surgient Networks, a clear sign that the convergence of storage devices, networking gear, and content delivery technology is gaining momentum.

Neither Surgient nor Cisco would say how much Cisco has contributed to Surgient's funding so far, but Surgient spokespeople say it was "significant."

Austin, Texas-based Surgient has just closed its second round of $18 million, securing some $85 million in funding to date, raising its valuation to approximately $200 million, according to company officials.

Other investors in the startup include Austin Ventures, Jafco Ventures, and Sternhill Ventures. Bill Joy, founder of Sun Microsystems Inc. (Nasdaq: SUNW), is also an investor.

Surgient is building a beast of a box thats part server, part router, part storage network controller, and part traffic load balancer. Surgient says it aims to collapse the functionality of all these devices into one platform in order to create a more cost-efficient system that is easier to manage than existing content delivery networking products.Did someone say god-box? (See God is Dead.)

Surgient president and CEO Nagi Rao assures us Surgient's not running the risks associated with a do-all product. “We are not saying [our platform] is a specialist for every application that’s out there, just those that are very I/O intensive,” he says.

“Surgient has expertise in many things, but the company brings it together to do one thing, which is to distribute content quickly off a disk drive and onto the network,” says Chris Kwak, senior analyst at Bear Stearns & Co. Inc. “It’s pretty impressive."

The first version of Surgient's product is the eQuilibrium 2500, which enters three beta test sites this month and is set to ship in volume in early January 2002. Eight blades on the box enable it to support thousands of streams of traffic based on applications from Real Networks Inc. (Nasdaq: REAL). Storage arrays attach to the back end of the box via a 2-Gbit/s Fibre Channel interface. Networks attach via gigabit Ethernet on the front end. The 2500 can also be configured to support Sonet for optical WANs and will eventually support iSCSI for transport of data over IP networks.

Surgient says the next generation of its product will support multiple applications simultaneously, including Microsoft Corp. (Nasdaq: MSFT) Windows Realplayer and Apple Computer Corp (Nasdaq: APPL) QuickTime. The latest round of funding will go towards R&D for this product, expected late 2002 or early 2003.The eQuilibrium 2500 is priced at $89,500. If that seems a bit steep for a box to speed up streaming media traffic, Surgient's Rao insists it's not. "Add up how much a company spends on load balancers, Web switches, servers, and storage switches for this purpose,” he advises.

Rao says that down the line the box will increase in value by supporting other applications that are I/O intensive, such as databases from Oracle Corp. (Nasdaq: ORCL). This in turn will lead to a range of new uses for the device. For example, enterprises could deploy the 2500 to perform tasks such as accounting chargeback, Rao suggests.

With 140 employees onboard, Surgient has the credentials on the engineering and management side to back up its claims. Founder and CTO Scott “Conrad” Johnson founded Thomas Conrad, a manufacturer of high speed access devices acquired by Compaq Computer Corp. (NYSE: CPQ). Two other principal engineers founded NetSpeed, acquired by Cisco. Bob Fernander, VP of sales and chief marketing officer, ran the enterprise storage group at Compaq, and CEO Nagi Rao led McKinsey & Company’s worldwide communications group before founding Telecom Technologies, which he sold to Sonus Networks Inc. (Nasdaq: SONS).

— Jo Maitland, Senior Editor, Byte and Switch
http://www.byteandswitch.com