Candera Cans SAN Hands

A month after shipping its first product, intelligent SAN controller startup Candera Inc. laid off one-third of its staff, with the engineering team hit the hardest.

Candera CEO Sundi Sundaresh confirmed today that the company reduced its headcount to 50, from 75, about a month ago. Candera, a three-year-old company originally named Confluence Networks, in late September shipped its first product -- the SCE 510 Cluster system -- an appliance with 16 Fibre Channel ports per cluster, designed to let users centralize SAN storage into a single SAN with a common management interface (see Candera Swears It's Beyond Compare).

Sundaresh says Candera is still planning to develop more products, but the cuts to the engineering team suggest it will concentrate more on marketing the SCE 510. Sundaresh would not say how many engineers remain.

"You always want to align your business plan with your capital," he tells Byte and Switch. "It became clear that focusing on fewer products would get us more bang for the buck. We're putting all our efforts on two things: market expansion and development of our networking storage controller and beyond."

The Milpitas, Calif.-based startup has only one paying customer -- which executives are still unable to name -- but Sundaresh says Candera is building a pipeline, and he expects to have revenue for this quarter.He also expects to secure a third round of funding by the end of the year. To date, Candera has received $47.5 million in funding from investors that include AsiaTech Management LLC , Comcast Interactive (Nasdaq: CMCSA, CMCSK), Dali Hook Partners, Hotung Capital Management, New Enterprise Associates (NEA), Redpoint Ventures, Seagate Technology Inc. (NYSE: STX), and Venture Strategy Partners (see Can Candera Compete? and Confluence Scoops Up $28M).

"We're very much on track [for funding]," Sundaresh says. "We've received a good response from investors, and I still expect to close funding by the end of the quarter."

Candera makes the SCE 510 Cluster available in dual-node, high-availability pairs, with list pricing starting at $120,000. Unfortunately for the startup, it competes with storage virtualization products from huge hardware vendors, including Cisco Systems Inc. (Nasdaq: CSCO), Hewlett-Packard Co. (NYSE: HPQ), and IBM Corp. (NYSE: IBM) (see IBM Plays With Self (Virtually) and Veritas Finally Delivers on Cisco).

Dave Raffo, Senior Editor, Byte and Switch