SATA Startup Ario Nets $17M

Startup Ario Data Networks, which was an early adopter of SATA and stands in a crowded field of suppliers preparing SATA II and Serial Attached SCSI (SAS) controllers, today completed a $17 million funding round led by Mellon Ventures (see Ario Pockets $17M).

Ario earlier this month announced its first family of SATA II and SAS controllers, which are expected to show up in systems around the middle of next year (see Ario Extends Controllers). SATA II will double maximum throughput to 3 Gbit/s, and SATA vendors hope the better performance will make SATA II more suitable for primary storage (see Two SATA Specs Completed). So far, most system vendors target SATA drives for disk backup and seldom-accessed storage.

Ario announced its first SATA controller boards in February, and the SATA space has taken off since then (see Ario Hops SATA Train). Indeed, with the announcement today that Hitachi Data Systems (HDS)

is offering a SATA option for its Thunder 9500 V systems, all the major SAN system players now offer SATA (see SATA Saturates SANs and Hitachi Launches SATA ).

Ario claims OEM deals with eight vendors, including two unnamed "Tier 1 OEM" subsystem companies.

One analyst says Ario is an appealing option for OEMs because it builds the controller chip into the board so it can offer versions for Fibre Channel, iSCSI, and SAS connectivity. Ario’s in one of the leadership positions among SATA controller vendors,” says Arun Taneja of the Taneja Group. ”Not many vendors have already developed Fibre Channel-to-SATA, or SAS-to-SATA connectivity. Now, how many other players will come along remains to be seen, but Ario is among the leaders now.”Ario will rely on its early start and connectivity advantages as competition grows fiercer. Two of Ario’s early competitors were gobbled up by larger chip makers over the past four months. Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC) paid $150 million for 3Ware in March, and Broadcom Corp. (Nasdaq: BRCM) bought RAIDCore for $16.5 million in February (see AMCC Buys More Storage and Broadcom Raids SATA Startup). That leaves Ario with bigger companies to compete with.

Other controller chip companies include Adaptec Inc. (Nasdaq: ADPT), LSI Logic Corp. (NYSE: LSI), PMC-Sierra Inc. (Nasdaq: PMCS), and Vitesse Semiconductor Corp. (Nasdaq: VTSS). Ario also faces fellow startups Promise Technology Inc. and VIA Technologies Inc. Like Ario, most of these vendors have already announced SATA II and SAS plans (see Vitesse Talks Some SAS).

Eric Herzog, Ario’s VP of marketing and business development, hopes there’s enough business to go around. “Everybody is doing well in this space,” Herzog says. Ario will use the funding to add sales and engineering help, he maintains, and current headcount of 72 should increase by at least 15 by mid-2005. He says Ario executives expect this will be their last funding round.

With the round, Mellon VP Mark Patton received a seat on Ario’s six-man board of directors. Another new investor, Anthem Venture Partners, joined the startup’s original investors Clearstone Venture Partners, Partech International, Evercore Ventures, and Sunsino Funds in the round. Ario has now raised $34.3 million over four rounds.

— Dave Raffo, Senior Editor, Byte and Switch0