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Intel stuffs more dough down Big Switch Network's trousers

Here's $6.5m more – now that is a respectable SDN wad

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Intel has come in late in the Series B round of funding for SDN upstart Big Switch Networks, and has crammed another $6.5m into its pockets.

Why? Simple: Chipzilla's Intel Capital venture arm knows that its parent company is counting on the switching business to help keep its Data Center and Connected Systems Group growing revenues and profits, and the chip giant can't afford to miss out on the software-defined networking action.

Big Switch is a spinout from the Stanford University lab that helped create the OpenFlow protocol, which virtualizes switch and router forwarding tables and externalizes them in a controller so they can be programmatically controlled across groups of switches and routers instead of being altered manually on a per-device basis as current network gear requires.

The company was founded in March 2010 with angel funding from Charlie Giancarlo, a former chief development officer at Cisco Systems who knows a thing or two about switching.

In April 2011, Big Switch raised $13.75m in Series A venture funding from Index Ventures and Khosla Ventures. In early November 2011, Big Switch announced $25m in Series B funding led by Redpoint Ventures with contributions from Goldman Sachs, Index Ventures, and Khosla Ventures. But it left the door open for others to kick in money, and Intel has walked through that door carrying $6.5m.

All told, Big Switch has raised $45.3m in its two rounds of funding, not counting unspecified angel funds from Giancarlo.

Big Switch hails from the same Stanford lab that earlier spawned Nicira, the SDN startup for which VMware paid $1.26bn in July 2011 before Nicira even officially uncloaked from stealth mode. Nicira coupled to VMware's server and cloud virtualization tools are the foundation of the "software-defined data center" that VMware thinks can make it a $10bn IT powerhouse in the coming years – basically a little more than twice its current size.

"Data center operators need programmable and cost-effective, merchant silicon-based networking architectures to meet their data center economic and operational objectives," said Bryan Wolf, managing director of Intel Capital, in a statement announcing its $6.5m injection into Big Switch.

"At Intel Capital," he said, "we're looking for companies creating the most disruptive data center solutions, and Big Switch Networks open software-defined networking product suite is a leading solution in data center network virtualization."

What Intel Capital didn't mention is that it missed the Nicira gravy train and can't afford to miss the Big Switch train, which could be loaded with gravy or not depending on who tries to buy it.

Cisco Systems has its own ideas about how to do SDN, as do Juniper Networks and HP. IBM is a possibility and, of course, so is Intel – particularly if the money in switching shifts from ASICs and coprocessors in the physical switches to virtual switches and OpenFlow controllers.

Intel may have no choice but to be a big SDN software player it if wants to stay in the switch business. Ponying up some money now gives Chipzilla an inside looksee at what Big Switch is up to and a chance to pounce at the right moment.

Intel Capital was founded in 1991 and has pumped more than $10.8bn into 1,276 companies since that time. Of these, 201 have gone public and 317 have been acquired or merged with some other firm. Last year, Intel Capital injected $352m in 150 different companies. ®

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