Rumors: Cavium Received Proposal from Cisco - What does it Mean for DPI vendors?

  
Reported by Franklin Price, at benzinga site (August 31):

"Rumors circulating that Cavium Networks has received an unsolicited proposal from Cisco to acquire the company for $37.00 a share. Neither company could be reached for comment" (here).

Cavium (CAVM) closed at $25.21 on Thursday.

Cavium is a leading supplier of network processors for DPI (and other IP devices) equipment vendors. In Cisco hands, I wonder if they will continue to sell to other vendors - which are all Cisco's competitors. This will leave the market to its prime competitor, NetLogic/RMI.

"Cisco and the company’s manufacturing partners buy approximately 1% of all semiconductors produced globally, according to [Gary Mobley, an analyst at Benchmark report]. As a result, Cisco's chip vendors-such as Cavium and NetLogic-could be impacted. Cisco represented 25% of Cavium’s first-half 2010 revenue, up from 20% of 1H FY09 revenue. Cisco represented 29% Netlogic’s 1H FY10 revenue" (EETimes "Cisco's miss sends jitters in supply chain" - here).

See "DPI Announcements - Cavium Networks OCTEON II CN68XX" - here.

DPI Announcements - NetLogic 40Gbps Layer 7 Processing Solution

 

Two months after its rival announcement (see "DPI Announcements - Cavium Networks OCTEON II CN68XX" - here) we get today NetLogic Microsystems 40G announcement - "Hardware and software development kit combines NetLogic Microsystems’ best-in-class XLP™ multi-core, multi-threaded processor, the NL11k knowledge-based processor and NETL7™ Layer 7 knowledge-based processor into a complete L2 - L7 system solution ".

See "NetLogic Microsystems Announces the Industry's First 40Gbps Wire-Speed and Fully Deterministic Layers 2 - 7 Intelligent Processing Solution" - here.

See more on the network processors for 40 Gbps DPI - here. Cavium and NetLogic (based on the acquired  RMI products) are used by vendors to implement DPI products (see "RMI and Allot Communications Expand Strategic Partnership to Broaden and Accelerate the Development of DPI-based Solutions" - here). So I am not sure what is designated as "industry first" but it is certainly for the vendors to see some competition for the most critical solution’s component.

NetLogic Microsystems’ 40Gbps NLX321103A solution enables next-generation switches, routers, access aggregation, metro Ethernet, service gateways, security appliances and storage appliances to perform uncompromised L2 - L7 packet processing on every packet of traffic with minimal network latency under a wide variety of Internet traffic scenarios, which in turn ensures predictable network behaviors and eliminates network bottlenecks

“NetLogic Microsystems is uniquely positioned to deliver this integrated L2 - L7 system solution that leverages the company’s multiple generations of its multi-core processors, knowledge-based processors and content processors,” said Bob Wheeler, senior analyst at The Linley Group. “The explosive growth of video and mobile-data traffic has made the determinism and line-rate throughput of functions such as IPv6 classification and deep-packet inspection extremely critical to the overall performance for next-generation networks.”

Related post - 'Ticonderoga Securities: "DPI will become critical in LTE networks" - here.

DPI Announcements - Cavium Networks OCTEON II CN68XX

 
This time we go to the bottom of the food chain - the processing element. In recent years the computing power needed for packet processing grows faster than CPU evolution. As a result, vendors of smart traffic management devices need to explore new ways to increase performance and keep up with the demand for bandwidth over public networks.

In earlier days DPI devices were using "general purpose" CPUs (mainly Intel x86) but had to abandon the [easy to develop] technology to handle multiple Gbps links. Additional requirements including space and power consumption (see "Making Sense of Dense" by Tom Donnelly, EVP Marketing & Sales, Sandvine - here) led the leading vendors to use specialized network (or packet) processors or even build their own ASICS (application-specific integrated circuit).

See also - "Network Processor Overview" - here.

DPI vendors claim today for total performance of 40,80 or even more Gbps of traffic over multiple 10GE links.

The next step in the carrier deployment will include and upgrade to 40GE links - or even 100GE (see "40G vs. 100G optical technology battle will be decided by cost; 10G remains tough competitor" by Infonetics Research - here)

Cavium, one of the leading packet processor vendors, may have the answer. Cavium announced yesterday a new Multi-Core Processor  - the OCTEON II CN68XX described as family that "integrate 8 to 32 enhanced MIPS64 cores with up to 48GHz of 64 bit compute power in a single chip combined with over 85 L3-L7 application and security acceleration engines, virtualization features, 100Gbps of connectivity, and a revolutionary new Real Time Power Optimizer™ that dynamically adjusts power depending upon the application-level processing requirement.".

Press release - here

Cavium main competitor is RMI - now part of Netlogic.