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Networking - Thursday, March 17, 2005

Force10 Networks- Profile

HQ: Milpitas, CA.

Founded: 1999

Management: CEO is Marc Randall. Prior to joining Force10, he spent seven years as VP of engineering at Cisco Systems, where he led the development of Cisco's high-end routing platforms, a $2 billion business. The rest of the execs are almost all members of the Cisco alumni club. The VP of Engineering, Sachi Sambandan, has been issued 14 patents. That's hardcore!

Investors: In June 2004, closed a $74.9 million mezzanine round of funding. Crosslink Capital joined co-leads Meritech Capital Partners and Morgenthaler Ventures as new investors. Existing investors, including U.S. Venture Partners, New Enterprise Associates and Worldview Technology Partners, also participated in the round. Other investors include Pacesetter Capital Group and Amerindo Investment Advisors.

Business Model: Force10 Networks builds Gigabit and 10 Gigabit Ethernet switching and routing products. In quasi-layman's terms, these products are capable of handling butt-loads of data in an efficient manner, improving application performance, increasing network availability, and reducing operating costs for everything from high performance data centers to service provider networks. Customers include financial institutions, manufacturing organizations, research networks, media companies, search engines, telecommunication carriers, and supercomputer clusters.

Competitors: Foundry Networks, Cisco, Nortel, Asante

Dirt: We haven't thought about Gigabit Ethernet in a while (thank God), but our review of Force10 reminds us of the riches that await those who break into the networking space with a promising technology and the right management. Just think of Juniper and Sycamore. But here's one thing that doesn't add up. Force10 cites figures from the Dell’Oro Group’s Five Year Ethernet Forecast, which indicate that the 10 Gigabit Ethernet switch market will grow from $39 million in 2002, to $1.6 billion in 2007. A $1.6 billion market is nice - but not enormous. However, we're going to defer to the trade press on this one; there's alot of excitement about Force10's core technology and we imagine the addressable market for Force10, even if not totally mature, will eventually be quite large.