In the latest sign that the network processor business has fallen short of initial expectations, IBM Corp. has sold parts of its Picoprocessor PowerNP product line to Hifn Inc., a maker of security processors, for about US$15 million in cash, Hifn announced Monday.
Other IBM intellectual property associated with the PowerNP line, a family of standard network chips, will be licensed to Los Gatos, California-based Hifn under the agreement, according to a Hifn statement. IBM will continue to manufacture the chips as part of its foundry business. Hifn plans to use the licensed technology in its next generation of security service processors, the company said. The processors perform security functions such as data encryption in other vendors' network gear.
Combining the PowerNP chips with Hifn's current technology could allow greater integration of security functions such as firewall, virus scanning and virtual private networks, leading to security appliances that are affordable and easy to use for small and medium-sized businesses, said Bob Wheeler, an analyst at The Linley Group, in Mountain View, California.
The deal is IBM's latest move out of the market for standard, or programmable, network processors, Wheeler said. Last year the Armonk, New York, company stopped new product development for the PowerNP line, Wheeler said, and sold its PowerPRS switch fabric line to Advanced Micro Circuits Corp. IBM continues to sell its PowerPC processors and ASICs (application specific integrated circuits) for network gear, according to company spokesman Chris Andrews.
Because IBM did not have a new generation of PowerNP chips in development, the sale to Hifn shouldn't leave its customers -- network equipment makers -- in the lurch, Wheeler said. Current PowerNP customers include router and switch giant Cisco Systems Inc. and China's Huawei Technologies Co. Ltd., according to the Hifn statement.
Standard network processors can be configured for specific routers, switches or other products in software and are intended as an alternative to ASICs, which are custom-designed as hardware for a particular product. IBM delved into the network processor business in the late 1990s at the same time as many startups did, seeing strong sales potential in a then-booming networking industry, Wheeler said.
"The expectation at the time IBM entered that business was that that was a high-growth business. ... Instead, it has remained relatively flat," Wheeler said. Network processors were seen as the key for startup system makers to rapidly develop innovative products and for established companies to get new versions of products on the market quickly, he said. Unfortunately, the network equipment market crashed around the turn of the century.
Across the industry, "there was a huge number of design wins, (but) a huge percentage of those design wins went up in smoke and never made it to production," Wheeler said. In addition, the potential for fast product development using network processors often wasn't realized the first time a vendor used a new chip because initial software development was more laborious than expected, he said.