Malachite Plans to Light Up SANs

Malachite Technologies Inc. hasnt officially announced anything yet. But this optical storage startup sounds so hot, we couldn’t resist spilling the beans.

The Methuen, Massachusetts-based company, around for a year already, won’t be formally launching until the fall, so the folks over there were reluctant to tell us much, but here’s what we know:

For starters, the management team is an optical Who’s Who list. Half of the founders hail from the advanced network group at the MIT Lincoln Laboratory, which claims numerous firsts for development of optical fiber amplification and wave generation techniques. (So they know their solitons, basically.)

The other half of the team comprises former Cabletron Systems Inc. (NYSE: CS) engineers who are big on ASICs (application-specific integrated circuits) and enterprise switches. Put the two halves of the team together and it’s fair to say Malachite is probably building a data-center switch able to connect storage across optical networks. The product is expected to go into beta early in 2002.

Sources close to Malachite say it's about to land a major round of funding from a tier one, east coast VC, most likely to be Bessemer Venture Partners. Goldman Sachs & Co. is also said to be interested. Mike Welts, director of marketing, confirmed he’s talking to both firms.Malachite has already received seed and first-round funding of around $10 million from Oak Hill Venture Partners and Fluid Ventures.

So why all the attention? Surely there are enough switch makers out there building next-generation hardware and software products for the data center?

“No there aren’t, and not like this,” says Welts. “The data center has been pretty much ignored from a storage networking perspective…storage has been purpose-built, proprietary, and for specific applications only, and the Layer 2/3 switch makers have yet to even notice it.” He says Malachite’s switch will connect real-time applications, multimedia, Oracle Corp. (Nasdaq: ORCL) databases... whatever you care to plug into it, to provide disaster recovery and backup solutions across an optical network.

However, Malachite’s not the first to recognize the potential for connecting data centers and storage backup systems via optical networks -- a market Infonetics Research Inc. predicts will be worth $14.8 billion by 2007.

Nortel Networks Corp. (NYSE/Toronto: NT) also has its eye on this market (see Nortel Lights Up Storage Networks) as does McData Corp.

(see McData Goes for GiantLoop), Entrada Networks (Nasdaq: ESAN), ADVA AG Optical Networking (Neuer Markt: ADV), Storage Computer Inc. (Nasdaq: SOS), and a number of others.Even so, Welts believes there is plenty of room for one more. “We will fill a very large gaping hole in Nortel’s optical business,” he says. “And the others have been around forever and still aren’t doing it.”

More specifically on the personnel front, John Simmons, CEO and president of Malachite, worked with Lucent Technologies Inc. (NYSE: LU), Marconi Communications PLC (Nasdaq/London: MONI), and Nortel as a management consultant with Pittiglio Rabin Todd & McGrath (PRTM) .

Malachite’s VP of optical engineering, Dr. Stephen R. Chinn; Doug Marquis, CTO; and John D Moores, chief scientist, were all at MIT Lincoln Laboratory’s advanced network group.

The Cabletron exiles include Bill Proulx, VP of electronic engineering, who led Cabletron’s development of ASIC chipsets for Layer 3 switching; and Paul Marichal, VP of software engineering, who led Cabletron’s software team.

Malachite’s sales and marketing teams also hail from Cabletron, namely Mike Welts, who was director of marketing there but most recently worked for

Ellacoya Networks Inc.. Well known for his grand marketing schemes, Welts also launched Unisphere Networks Inc. (Nasdaq: UNSP) to much fanfare, so expect a big bang when Malachite eventually emerges.— Jo Maitland, Senior Editor, Byte and Switch http://www.byteandswitch.com