Broadcom Raids SATA Startup

The marriage of chipmaker Broadcom Corp. (Nasdaq: BRCM) and RAID controller startup RaidCore Inc. (Nasdaq: BRCM) is expected to produce the obvious offspring -- RAID-on-a-chip.

The idea of providing RAID-on-a-chip (ROC) and RAID-on-a-motherboard (ROM) products prompted Broadcom to spend $16.5 million on the Nashua, N.H.-based company. RaidCores 14 employees will remain in Nashua and become part of the storage section of Broadcom’s Enterprise Computing Group (see Broadcom Acquires RAIDCore).

For the current quarter, which ends March 31, Broadcom will pay approximately $10 million in various costs related to the acquisition. The company hasn’t set a timetable for paying the final $6.5 million.

While Broadcom makes some storage components, incorporating RaidCore's RAID software will give it more options to compete against other server chip vendors with storage capabilities. Broadcom expects the combination of its own technology with RaidCore’s to lead to new server I/O chipsets; broadband processors, PCI-X and PCI-Express-based Serial ATA I and II controllers and multiplexers, and even Gigabit Ethernet controllers.

Big plans, but Broadcom sees RaidCore’s Serial ATA (SATA) product and management software first in new server storage products. Tom Lagatta, Broadcom's head of Enterprise Computing, says he expects Broadcom to have ROC and ROM products for midrange and entry-level OEM configurations next year.“It’s really a market expansion play for us,” he says. “We have storage controllers on our one- and two-processor server products. Now we’re starting to see designers put a lot of storage controllers on the motherboard. We have a fairly good hardware organization here. The next logical step was to add storage management software.”

Broadcom is only the latest of many companies to jump into the SATA controller fray. Adaptec Inc. (Nasdaq: ADPT -- message board), Promise Technology Inc., 3ware Inc., and VIA Technologies Inc. have recently released SATA controllers; and Ario Data Networks Monday announced SATA controller boards with chips and software emulation built in (see SATA Suppliers Ready for Onslaught and Ario Hops SATA Train).

The acquisition was sudden for RaidCore, which only announced its first VC funding of $5 million in November and rolled out its first product in December. Lagatta says RaidCore is already generating revenue from its family of SATA RAID controllers.

But management seems happy to hitch its wagon to Broadcom's star. “Broadcom is the ideal complement for RaidCore’s growing reach into the storage segment,” RaidCore CEO Tom Marmen said in a release.

Lagatta says Broadcom is also interested in RaidCore’s storage expertise. Marmen has 25 years in the tech industry, including time at Adaptec and Quantum Corp. (NYSE: DSS), and President Chris Franklin also worked at Adaptec.But if Broadcom really liked the RaidCore crew, wouldn’t they move them from frigid Nashua to sunny Irvine, Calif.? “They didn’t want to move out here,” Lagatta says, “even with all the beautiful weather they’re having out there.”

Broadcom's stock price was down $0.14 (0.35%) to $39.45 at mid-afternoon.

— Dave Raffo, Senior Editor, Byte and Switch