SANchips Switches Gears

When SANchips first surfaced last spring, executives tried pitching storage companies and investors a switch-on-a-chip that would reduce cost and time-to-market for Fibre Channel switches (see SANchips Vows to Lower Switch Prices).

After coming up short on funding and failing to land an OEM deal, SANchips re-engineered its product. Now its developing a switch aimed at SMBs that its CEO still says will lower the cost of a SAN switch to below $100 per port.

That part about SMBs is key: SANchips has lowered its sights. Instead of competing head-to-head with the major switch vendors, it's targeting the market for smaller organizations.

“After six months on the road, we realized the industry needs something different,” says CEO Avi Shillo.

Shillo said last April that he was looking for $5 million in a series A funding round. SANchips ended up with $3 million from StageOne Venture Partners -- an Israeli VC which put up $600,000 in seed money last year -- and Paris-based Convergent Technologies Partners. That’s enough to at least get its first product out the door, Shillo says.Shillo says SANchips plans to ship product to alpha customers by January. The switch (tentatively called iSwitch) will be available in 8-port and 16-port configurations at 4-Gig speeds. He hopes both could be generally available sometime next year.

Shillo says SANchips has hired five new software developers and is looking to grow the company from 15 people to 25 over the next three quarters. Although it's still chasing OEM deals with systems, disk, and component vendors, SANchips is more likely to find channel partners or integrators that sell to SMBs.

“You won’t find us in Morgan Stanley’s data center,” says Tony Schehtman, SANchips EVP of worldwide field operations.

Where will you find SANchips? The startup cedes the enterprise to Brocade Communications Systems Inc. (Nasdaq: BRCD), McData Corp. (Nasdaq: MCDTA), and Cisco Systems Inc. (Nasdaq: CSCO), but will try to compete with those companies on the low end on price. The plan is to offer the performance of Brocade’s new low-end Silkworm 3200 for less money.

While Computer Network Technology Corp. (CNT)'s (Nasdaq: CMNT) recent problems make it appear there’s no more room for high-end switch vendors, competition on the lower end is also heating up (see CNT Takes a Hit). Brocade had the SMB space to itself for a few months on low-end systems from Dell Inc. (Nasdaq: DELL), EMC Corp. (NYSE: EMC), and Hewlett-Packard Co. (NYSE: HPQ). But QLogic Corp. (Nasdaq: QLGC) is catching up there and Emulex Corp. (NYSE: ELX) this week rolled out an entry-level SAN switch and announced deals with IBM Corp. (NYSE: IBM) and Engenio Information Technologies Inc.. (See EMC, Dell Get Small With SATA, HP Aims to Dazzle SMBs, QLogic Pulls a Switch Deal, and Emulex Launches Entry-Level SAN).SANchips execs say their switches will have more software features than the competition. However, they also know their most important feature could be price. The target is less than $5,000 for a 16-port switch. “Our goal over the next six months is to get validation of our price points,” Schehtman says.

— Dave Raffo, Senior Editor, Byte and Switch