Intel buys data-centre Ethernet maker NetEffect

Intel (Nasdaq: INTC) has acquired the assets of NetEffect, a maker of Ethernet chips and adapters for high-performance computing clusters, for US$8 million.

The company’s Gigabit Ethernet and 10-Gigabit Ethernet adapters, ASICs (application-specific integrated circuits) and intellectual property will complement Intel’s current Ethernet portfolio, Intel announced on Wednesday. The added products will help Intel address demand for server compute clusters, server virtualization, and convergence of network and storage traffic, Intel said.

NetEffect’s products support iWARP, a set of extensions to Ethernet from the RDMA (Remote Direct Memory Access) Consortium that is designed to eliminate overhead and latency in Ethernet networks. Intel described iWARP as an alternative to InfiniBand.

NetEffect was formed in 1998 as Banderacom, a maker of an InfiniBand switch and adapters, and recapitalized under its current name in 2004. Its 30 employees have joined Intel but will remain in Austin, Texas.

Intel will continue to sell NetEffect’s adapters and work with the former NetEffect engineering on future generations of ASICs, said Steve Schultz, director of marketing for Intel’s LAN access division. Intel supports but doesn’t make InfiniBand products, and NetEffect’s iWARP-based products give Intel a lineup that offers comparable performance with the benefits of Ethernet, he said.

Consolidation and virtualization of data-center servers has created new challenges in connecting them at high speed. InifiniBand is commonly used to meet those challenges, but there is a long-term trend toward using Ethernet as the single networking technology across LANs, data centers and storage. The transition to a single network protocol from data centers that today may have Ethernet, Fibre Channel and InfiniBand is expected eventually to simplify administration and lower costs for enterprises.

The NetEffect acquisition may be a good move for the long term but isn’t likely to change the game soon, analysts said.

Although the RDMA Consortium was kicked off in 2002 with support from several big names, including Broadcom, Microsoft, Adaptec and NetApp, iWARP has remained a niche technology because the top manufacturers have stuck with InfiniBand, said Bob Wheeler, an analyst at The Linley Group.

“Having a company the size of Intel behind iWARP should help substantially” in the long term, Wheeler said. “Strategically, it fits into Intel’s vision of having Ethernet everywhere.”

The Ethernet-based RDMA technology doesn’t yet match InfiniBand for reducing latency, said Yankee Group analyst Zeus Kerravala.

“InfiniBand still gives you better performance at a lower cost, with lower latency,” Kerravala said. “I do think Ethernet is the way the market will go. I just think it will take a while.”

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