Silverback Cuts a Sliver

News of a minor layoff has revealed new activity in the iSCSI chip market. Silverback Systems Inc., which claims to have the fastest iSCSI acceleration chip on the market, has confirmed that it cut six of its approximately 50 employees last week.

Silverback marketing VP Ron Kroesen attributed the layoffs to a consolidation of the testing team for Silverback's second-generation iSnap product, which the company plans to announce next week.

Kroesen says product testing was split between the companys Campbell, Calif., headquarters and its regional office in Rochester, Minn. He says three employees from each site were cut. Testing has been relocated permanently to Campbell, and some test personnel were moved into customer support in anticipation of the product release.

Silverback is in a high-stakes battle among iSCSI accelerator startups looking to cash in on the emergence of IP networking. Its products so far comprise a so-called TCP/IP offload engine designed to handle protocol processing in storage networks. This helps boost overall system performance and reduces bottlenecks, enabling iSCSI chips to function faster.

A market for iSCSI accelerators should develop this year, but analysts also foresee a consolidation of the market (see Report: Fibre Channel's Outbound). Other startups in the field include Alacritech Inc., Astute Networks Inc., iReady Corp., iStor Networks Inc., and iVivity Inc.All these newbies are in competition with established players such as Adaptec Inc. (Nasdaq: ADPT), QLogic Corp. (Nasdaq: QLGC), LSI Logic Corp. (NYSE: LSI),and Intel Corp. (Nasdaq: INTC), which all have accelerator chips of their own.

One of Silverback’s startup competitors, Trebia, bit the dust in August. (see Trebia Croaks). Before Trebia’s demise, it argued with Silverback over who had the fastest accelerator (see Trebia Trumpets iSCSI Test and Silverback Makes iSCSI Howl). Silverback claims its first-generation iSNAP acceleration chip delivers 220,000 I/O operations per second (IOPS) through a dual-channel gigabit Ethernet port (see Silverback Ships iSCSI Processor).

Silverback could use a new product announcement to help prove itself. Founded in July 2000, the company has raised $32.3 million worth of funding, including $15 million in a series C round in March (see Silverback Lands $15M Third Round). A company spokesman says Silverback has "a trickle of revenue" but hasn't announced customers yet.

— Dave Raffo, Senior Editor, Byte and Switch