Component Startups at Crossroads

IT technology startups Aarohi Inc. and Ammasso Inc. have more in common than the letter A. Both are living out the harsh realities of startups just slightly off the curve of user demand.

Both companies are reaching a "rubber meets the road" point, where demand for their products will either materialize or fizzle. If the latter, the money could dry up in short order.

Ammasso may have reached that moment of truth. A present user of their 1-Gbit/s iWarp (Internet Wide Area RDMA Protocol) adapters, who asked not to be named, confirms that Ammasso management says they've failed to get expected funding and may be going out of business. Apparently, several other users, some at high-performance computing labs, have bought extra adapters in case Ammasso fails to make it past this year.

A second industry source says Ammasso is rumored to be exploring the sale of intellectual property as a preface to closing shop.

Ammasso execs did not return calls at press time, and a spokesman from one of their VCs, Prism Venture Partners, was not available for comment.Still, customers appear to be keen on the basic concept behind Ammasso, namely, the use of an interconnect that can perform like InfiniBand while spanning multiple sites. But they appear to be just starting to explore the subject. Further, those customers interested in iWarp for linking servers, cluster, and storage appear to want it at 10-Gbit/s rates, instead of the 1-Gbit/s Ammasso offers. (See Ohio Opts for iWarp.)

A spokesman for another player with plans in this space, Silverback Systems Inc., says his company is proceeding apace with hopes of releasing a 10-Gbit/s product in early 2006. And two other iWarp suppliers, Broadcom Corp. (Nasdaq: BRCM) and Chelsio Communications Inc., have signaled no change in their 10-Gbit/s product directions.

Aarohi also appears to be at a crucial juncture. Its intelligent storage processor will be used in the switch that McData Corp. (Nasdaq: MCDTA) plans to offer in support of the EMC Corp. (NYSE: EMC) Invista virtualization platform early next year. (See EMC Unveils Invista.)

Nonetheless, while McData continues to showcase Aarohi's technology, McData also hasn't made any bones about the fact that its earlier investment in the startup led to an operating loss. (See Aarohi Announces Funding... Again, Aarohi Powers McData, and McData Reports Q2.)

Meanwhile, sources say Aarohi CEO Ameesh Divatia has been nosing around for other partnerships and investment as well, including more input from McData, a possible strategic partnership with QLogic Corp. (Nasdaq: QLGC), and even a full-out acquisition.Like Ammasso, Aarohi's problem appears to be that it is just slightly ahead of the time when either all-out demand will occur for its wares, or a rejection will be definite. In Ammasso's case, the lack of a 10-Gbit/s strategy appears to have slowed deployment. For Aarohi, the desired market is switch virtualization, about which many users remain undecided. (See Fujitsu Tests Virtualization Waters.) But the tech market waits for no one, and for these startups, time may prove a nasty adversary.

Mary Jander, Site Editor, Byte and Switch