MaXXan Morphs Into CipherMax

Storage startup MaXXan has morphed into CipherMax and will announce $10 million in Series B funding today as it refocuses its efforts on the security market. (See MaXXan Offers Encryption and MaXXan Switches to Encryption.)

MaXXan, which started life as a switch vendor about six years ago, shifted gears to attack the security market in 2005, touting its CipherMax encryption hardware as a way for firms to lock down their data. (See MaXXan Switches to Encryption, Startups Roll Heads, Reorganize, MaXXan Grows in Europe, and MaXXan Completes Testing.)

With the profile of data security rising, CEO Ray Kao felt that a change of image was needed, hence the decision to rename the firm. "We're focusing on delivering storage security," he explains, adding that the funding will be used to grow the firm's workforce from 55 to around 100 over the next twelve months, largely in sales, marketing and R&D.

The Series B, which was co-led by U.S. Venture Partners, Venrock Associates, and Scale Venture Partners, brings the firm's total funding to around $120 million, more than $100 million of which was received during its MaXXan days.

The CipherMax CEO also told Byte & Switch that the vendor is looking to add partners. "We're in discussions with OEMs currently," he says, adding only that "the usual suspects" are involved.At the RSA conference in San Francisco earlier this month, a study by security and privacy research firm Ponemon Institute LLC found that about two thirds of large U.S. businesses currently have some sort of encryption strategy in place. (See Encryption Set to Go Mainstream.)

CipherMax has also got its eye on smaller firms. Today the vendor unveiled a set of low-end encryption devices for SMBs. The CM110T can connect to up to four tape drives, with the CM140T and the CM180T linking to 16 and 32 drives respectively. CipherMax's previous low-end offering, the CM250, connects up to 128 drives.

The vendor today also took the wraps off a disk-based product, the CM180D. Like the other CipherMax offerings, the one rack-unit high device uses 256-bit AES encryption.

Pricing for the entry-level CM110T, which, like the CM180D, is available now, starts at around $30,000. The CM140T and the CM180T will be available in Q2.

CipherMax faces some stiff competition in this space. The San Jose, Calif.-based firm is up against software vendors such as Symantec as well as hardware vendors Decru, which is now part of NetApp, and NeoScale. (See Mark Lewis, CDO, EMC, Symantec, HP Certify NeoScale, Tempest in a Tape Encryptor, NetApp Acquires Decru for $272M, and NeoScale Teams With RSA.)CipherMax execs claim to offer a cheaper proposition than Decru. Although the starting price for Decru's low-end DataFort devices is also around $30,000, CipherMax touts a built-in switch for aggregating Fiber Channel traffic, which it claims reduces the need for additional hardware.

At least one analyst feels that this approach makes sense. "There's clearly some initial capital expenditure savings there," says Steve Norall, senior analyst at the Taneja Group. "This is a hot market and there will be room for different approaches."

Decru's DataFort does indeed require an external switch for aggregating traffic from different hosts, although Michele Borovac, the vendor's director of marketing says that this is not an issue for most firms. "The majority of customers that we're talking to have already got their fabric [switch] in place -- they are looking to add security after the fact," she says.

Decru does have the edge on CipherMax in terms of customers. Although Decru does not break out these numbers any more, the firm had already racked up over 100 customers prior to the NetApp acquisition in 2005.

Last month Regulus Group, the largest bill processing company in the U.S., deployed DataFort devices, and Decru has also clinched deals with real estate firm CNL Financial Group and the BECU credit union.CipherMax, in contrast, says that it has a couple of customers for the CM100 family and "several" for the CM250, although it would not name its customers.

James Rogers, Senior Editor Byte and Switch