Future murky for processor maker Clearwater Networks

Future murky for processor maker Clearwater Networks
By Junko Yoshida, EE Times
January 28, 2002 (1:59 p.m. EST)
URL: http://www.eetimes.com/story/OEG20020125S0053

SAN MATEO, Calif. — Network processor startup Clearwater Networks Inc. is fighting for survival as its struggles to deliver silicon while its funding sources dry up, according to sources familiar with the company.

In the last year, the company has lost key management personnel, including founder and chief technical officer Mario Nemirovsky, as well as two chief executive officers.

The Los Gatos, Calif.-based company is now being headed by Dado Banatao, a managing partner at Tallwood Venture Capital (Palo Alto, Calif.), which funded the company. Banatao did not return phone calls from EE Times by press time.

Industry sources familiar with Clearwater said the company has solid technology for Layers 4 to 7 designed to hide memory latency while doing deep lookups in large memory tables. But the company had underestimated the time it would take to design and deliver silicon, the sources said.

"The last time I checked, Clearwat er was still struggling to get the product out," said Linley Gwennap, founder and principal analyst of the Linley Group.

The company also changed its message several times, starting out as a data-plane network processor vendor, then calling itself a network-services processor provider, and finally repositioning itself as a control plane processor provider, Gwennap said.

Clearwater's struggles are indicative of a much wider shakeout under way among makers of network processors, a fallout of the slumping networking industry. At least two other network processor companies — Acorn Networks and Entridia Corp. — have succumbed to the market collapse and more casualties are expected.

"Way too many companies, particularly in the network processor market, have been funded under a good economy. But frankly, a lot of them were bad ideas," Gwennap said. In today's more sober funding environment, many would find it tough to raise cash "unless they can show investors a real product meeting market ne eds or offering unique value," he said.

— Additional reporting by Anthony Cataldo.