Penguin Gets $9M for Clustering

Enrico Pesatori of Penguin Computing says 50 percent of his company's revenue comes from sales of Linux clusters, and 10 percent from accompanying storage. But the CEO is aiming to make those figures closer to 75 percent and 20 percent, respectively -- and so are the VCs who have just invested $9 million in Penguin. (See Penguin Closes $9M Series B.)

The Series 2 financing, announced today, was led by vSpring Capital, with input from San Francisco Equity Partners, Weber Capital, and Convergence Partners. It brings Penguin's total funding to roughly $34 million since its founding in 1998.

The money will go largely to ongoing development and marketing of Scyld Clusterware, the software Penguin acquired with the 2003 purchase of Scyld Computing. Pesatori (ex-BlueArc) says enhancements will include scaleability, added support for specific vertical market customers, and other features. (See Ex-BlueArc Exec Joins Penguin.)

Scyld and clustering will take precedence over the Linux servers on which Penguin established its business. "Linux HPC or our main focus... and the sweet spot in the market is small clusters," Pesatori says. "That's the fastest-growing segment."

Figure 1: Enrico Pesatori, CEO, Penguin Computing

By small, Pesatori means smaller than the big government labs like Lawrence Livermore National Laboratory or Sandia National Laboratories, both of which are Penguin customers; or enterprises like Cisco and a variety of bio and life science firms, government agencies, manufacturers, and oil and gas firms. (See Sandia Blasts Off Blade Cluster.)

Right now, Penguin has an estimated 1,000 customers, but Pesatori thinks a groundswell of interest in "midmarket computing clusters," particularly the Linux ones Penguin sells, will create an increase in sales making the 70-employee Penguin profitable sometime this year.

The key priority will be attracting customer deployments in the $50,000 to $1 million range, a sizeable step below the typical spending in big HPC environments. Penguin's strategy will be to offer midrange companies with heavy data processing needs turnkey systems comprising 12 nodes to over 1,000 nodes, with all hardware, software, and storage included.

The push is on in storage, too. Penguin has OEM deals for storage with NAS vendor Montilio and with Xyratex, and the vendor is exploring other ones to "compliment" these partners. By expanding its roster of options, the vendor hopes to double its storage sales.

The vendor's VCs are behind these strategies. "We view HPC clustering as a rapidly growing segment, one where there's still a lot of opportunity," says Ed Ekstrom, managing director at vSpring, who's joined Penguin's board. "We like Scyld... you can deploy software with less human resources, and I believe their platform will lower the cost entry point to HPC... and make the acquisition of clustering more affordable."Penguin's scheme sounds great, but the company faces fierce competition. Microsoft is improving its clusters and plans further inroads into virtualization. HP and IBM have stakes in HPC as well. A growing roster of companies like Linux Networx, Red Hat, and Scali offer solutions. Startups are entering the market. (See Terascala Scores $3M.)

Penguin seems to have been able to keep its hat in the Linux server ring so far. The test will come as it tries to narrow its focus on the chosen segment.

Mary Jander, Site Editor, Byte and Switch