Voltaire: Providing data centers with better connections

The InfiniBand architecture reached Voltaire just in time to rescue the company from its previous business model. Now the company has $7 million in the bank and the investors are waiting in line.

Seven of the worlds largest computer firms (Intel, IBM, Microsoft, Hewlett-Packard, Dell, Compaq, and Sun Microsystems) joined forces six months ago to solve the problem of server farm overloading around the world. They are doing it by developing a new standard the InfiniBand architecture.

InfiniBand allows much more effective connectivity between servers and peripheral units and their Internet links. A new generation of server architecture, which will constitute the internal backbone connecting the computer components with external units, is being utilized. It is hoped that the new architecture will provide a solution for the rapidly growing demand for data center services by making more effective use of current technology.

229 technology companies, located all over the world, are members of The InfiniBand Trade Association. One of these companies is Israeli start-up Voltaire, founded in 1997 by Erez Diamant and VP Business Development Amir Prescher. The company initially attempted to construct data center security systems. At the end of last year, Voltaire realized that it is difficult to compete in the security market, and the company had a hard time meeting its business targets. Voltaire decided to use its basic technology to develop network connectivity using the InfiniBand architecture.

The change in the business model made it easier for the company shareholders and new funds to invest $7.3 million in Voltaire, in a financing round that was completed a few months ago. Shrem Fudim Kelner Technologies (SFKT) led the round with a $2.75 million investment. Other investors included the Tamir Fishman Ventures investment bank ($2 million) and the existing shareholders: the Polaris, Challenge, Concord, Technoplus Ventures, and Virgotech funds. The round was held at a company value of $11.5 million, before money.

Were in the process of recruiting a large strategic investor in the field, says Voltaire chairman of the board Ronnie Kenneth. Well probably take advantage of the momentum to raise more money, because were being approached by many investors, although our current financing will easily suffice for the next nine months.

Kenneth says that Voltaire has become attractive to companies building InifiniBand-based products. People are enthusiastic about the structure of our solutions. Several market leaders are discussing cooperation with us.

Voltaire is still in the data center field, but now focuses on the storage aspects of the field. The investments in this area are still relatively high, since the quantity of data to be stored doubles every few months and storage solutions solve a real problem. Voltaire can connect the various components of the data center, such as hard disks, the other server components, and the Internet.

General manager for Israel Koby Segal, who joined Voltaire last month after 14 years at Avaya (formerly part of Lucent Technologies and AT&T), explains Voltaires solution with an analogy to water: In order to solve the water flow problem, they set up the National Water Carrier (a backbone), improved the pipes, and so forth. The problem was that a bottleneck was created at the pumps operating in the reservoirs. In other words, we still had the problem of loads and the speed of transmitting the data stored on the Internet server farms.

Kenneth: We surprised this community by showing them what they could achieve with this technology. The entire InfiniBand Trade Association has existed for eighteen months, and we have been there from the beginning. We were quicker than others in using the standard in our products.

CTO Yaron Haviv, the man who led Voltaires transition to the new business model, says that the InfiniBand architecture will enable a large number of computer components to be linked together into one system. If you want to add new disks, you dont have to add a new computer; you only have to add a new disk. Our system takes this system to the Internet and makes it a single entity, just like a regular computer.

Globes: Is the InfiniBand architecture in essence just an advanced development of existing, load-balancing technology?

Haviv: Load-balancing is part of the architecture. The tendency was to build several computers and present them as a single computer, together with load-balancing, which distributes loads between the servers. But a web site with hundreds of computers still requires a large room to store them. We replace each computer with a circuitboard and put them all in one box. The InfiniBand load-balancing technology presents the system to the network as a single entity. The internal communications infrastructure connecting all the component units turns them into a single entity.

What is the industrys attitude towards the InfiniBand architecture? Is it seen as just another promised, Bluetooth-like revolution, which will not fulfill the great expectations?

Segal: One thing we have learned is that nothing is certain, because something else can always crop up. In contrast to Bluetooth, however, there are no alternatives to InfiniBand. It seems improbable to me that something else will replace InfiniBand, which has undergone a long process of definition at such an early stage. You can take issue with the needs that Bluetooth meets. The problems with bandwidth already exist, and no new problems have to be invented.

Why havent we been deluged with products based on the InfiniBand architecture?

Haviv: When we developed security technologies in the past, we developed a technology base very similar to InfiniBand. We identified the need and saw that no company was providing a network hookup. We understood there was a great business opportunity here.

The major companies can permit themselves to gamble on this technology at a later stage, when the architecture gathers momentum. Voltaire and the other start-ups that began to develop products with this technology at a relatively early stage are taking the biggest chance.

Kenneth: Were definitely taking a risk on the timing. A major company can permit itself to come in later; but the start-ups must always take the greater risk. Today, I believe our risk is smaller, because of our terrific team. I think we can be ahead of everyone else in the market, before the gorillas enter, and conquer the data centers."

Voltaire will need OEM agreements with those gorillas.

Thats our aim. We want to rely on the giants marketing channels. Theyll have their hands full integrating our product.

But having a product is not enough. The market has to be ready to accept the new architecture.

We cant precede the market. Well have to ride the wave. The moment it happens, a real problem will be created, which will require a solution like ours. That's the idea behind the OEM agreements. The major companies will penetrate InfiniBand, and well be with them when the market grows.

Is the technology so expensive that it will deter the data centers?

Haviv: The data centers had their first conference on this issue a week ago. They all agreed the risk of not trying a new technology is much greater than the risk of the new technology failing. One of the standards assumptions is that the technology must not be more expensive than the currently existing technology. The investment return will be very high.

Are there competing technologies?

Theres a technology called Fiber Channel, which is a storage infrastructure technology. Its considered expensive.

When will you launch a product?

Kenneth: Well begin beta installation in the first quarter of next year. The product will be completed in the second quarter.

Business Card

Name: Voltaire

Entrepreneurs: Erez Diamant, Amir Prescher

Founded: End of 1997

Product: A connectivity technology using the InfiBand standard

Employees: 40

Competition: None known at present

Owners: Entrepreneurs, Polaris, Concord, SFKT, Tamir Fishman, Challenge, Technoplus, private investors

Previous financing round: $1.4 million, $4 million, $7.3 million in second quarter of 2001

web site: www.voltaire.com

Published by Israel's Business Arena on July 10, 2001

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