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Sun makes bid for data center hardware

The company plans to acquire switch start-up Nauticus Networks in an all-cash deal, as it looks to beef up its server platforms and enhance its N1 initiative.

Sun Microsystems announced Tuesday that it plans to acquire data center switch start-up Nauticus Networks in an all-cash deal.

Nauticus, based in Framingham, Mass., builds high-performance content switches for balancing traffic between servers and security appliances and accelerating Secure Sockets Layer (SSL) traffic. These switches are often referred to as Layer 4-7 switches, because they can examine Internet Protocol packets using application-specific information found in Layer 7 of the Open Systems Interconnection reference model.

Nauticus, which developed its chipsets internally, was expected to leapfrog current load-balancing and SSL acceleration technology by adding more speed. The new products provide improved capability for "virtualization," which enables users to parcel out resources on the switch for different customers. In effect, it enables data center operators to create multiple virtual switches within a single physical device.

Kathy Pries, group marketing manager for volume system products at Sun, said the company plans to integrate the virtualization technology into its server platforms. However, she said, it is still unclear whether the company will sell Nauticus' N2000 and N2000V switches.

"We are looking to Nauticus to help offer more tightly integrated computing at the front end of the data center," she said. "Whether we will take the current product and rebrand it is still to be determined."

Pries also said the technology will likely be used to bolster Sun's N1 initiative, a new consultancy arm focused on the data center. Through this initiative, Sun acts as a large systems integrator, helping companies build networks out of disparate hardware and software from various providers.

"The company's network management and virtualization technology could be used to enhance and complement N1," she said.

Nauticus isn't the first start-up Sun has bought to help build N1. It also acquired CenterRun, Terraspring and Pirus Networks.

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Sun is under pressure to make N1 a success, as it faces tough competition from comparable "utility computing" projects under way at Hewlett-Packard and IBM. The company is also struggling to find growth in new markets, as competitors such as Intel eat into its core server hardware business.

While financial details of the all-cash transaction were not disclosed, it's likely that Sun got a good deal. Even though the start-up had raised over $38.5 million in venture backing, it had struggled to keep afloat in the competitive market for load-balancing switches. In fact, rumors circulated in October that it had closed down after being unable to secure another round of funding. The company's Web site is still operational, but calls were not immediately returned Tuesday. Sun declined to comment regarding the company's recent business dealings.

"They were entering the game late," said Neil Osipuk, directing analyst for enterprise routers and switches at Infonetics Research. "The market is already controlled by F5 Networks and Cisco, so it's pretty difficult for a newcomer to break in."

The deal is expected to close in the third quarter of Sun's 2004 fiscal year. Most of Nauticus' 45 employees will be offered positions at Sun's Burlington, Mass., facility, company officials said.