VentureBeat

Vinod Dham has lived the quintessential Silicon Valley rags to riches immigrant story. Born in Pune, India, he came to the U.S. in 1975 as an engineering student with just $8 in his pocket. He became a chip engineer and helped invent Intel’s first flash memory chip.  He went on to manage Intel’s microprocessor projects, including the breakaway Pentium chip that debuted in 1993 and cemented the company’s position as the world’s biggest chip maker. He handled the bad press on the Pentium’s bug and later joined Intel rivals NexGen and Advanced Micro Devices. He became the CEO of Silicon Spice, which he sold to Broadcom for $1.2 billion in 2000. Then he became a venture capitalist, first at NewPath Ventures and now at NEA-IndoUS Ventures, where his aim is to give something back to his native India.

VB: What inspired you get into electronics when you were growing up in India?
VD: When I graduated in 1971, at 21, I ended up at the only semiconductor company that existed in India. It was a start-up that spun out of Teradyne Semiconductor and it happened to be in New Delhi. My home was seven kilometers away. It was perfect for me to live at home with my parents and work. It wasn’t until I worked at this company that my love for semiconductors bloomed. I found it to be a very exciting field because it brought in physics, chemistry, mathematics, and mechanical drawing. I moved to the U.S. and studied for a master’s degree in solid-state sciences at the University of Cincinnati, where I studied silicon germanium and compound transistors. I was doing that back in 1975.

VB: You came with very little money?
VD: I came with $8. In the 1970s, the government of India had little money to spare for foreign travel. They gave $8 to foreign tourists. As a student, I could get an additional $20. You had to go to the reserve bank of India. You had to apply. But it was such a corrupt country at the time; you had to bribe somebody to get the $20. I refused to do that. I said I’ll just go with $8.

VB: How did you get off the ground in the U.S. with just $8?
VD: That was the most amazing part. I kept it with me. There were many distractions. Even on the plane, they would sell cartons of cigarettes. People used to smoke. I used to smoke. The carton cost about as much as I had. The hostess offered me just one. I said I could live without smoking for a day. I went to the foreign student office. There was a lady named Mary Campbell. She had been corresponding with me for a year. She asked what she could do for me. I asked about my research assistant job. That was supposed to pay $325. She said I don’t get that money until I did a month of work. I told her I needed $75 to get into an efficiency and $15 for health insurance. I needed $90 to survive, and I needed more for food. She went to a room and came back with $125 in cash. She said it was a distress fund. I paid it back at zero percent interest at about $25 a month. She saved my butt. Read the rest of this entry »

Montalvo Systems was one of the most ambitious chip startups in recent history and one of a few that dared to take on Intel in the low-power mobile processor market. Instead, it shut down in April, unable to raise a new round of financing.

The company had raised more than $84 million and hired an outstanding team of engineers in the hopes of grabbing a small piece of the $30 billion x86 (Intel-compatible) microprocessor industry. But it failed to get its chip out on time and sold its assets to Sun Microsystems for dimes on the dollar.

Understanding the company’s rise and fall offers lessons for entrepreneurs, especially those who would launch quixotic attacks against industry giants such as Intel. Clever design isn’t enough when it comes to getting a product out. For all its planning, Montalvo didn’t execute and was more than a year behind schedule, said several of the key figures involved in the company’s efforts.

The story of Montalvo also offers a peek peak into the game of chess that goes on between Silicon Valley’s biggest companies, and it raises a fatalistic question about whether the door is closed for venture-funded chip startups wanting to take on the world’s biggest chip maker, particularly in its flagship architecture, x86. That fatalism is a hard pill to swallow in optimistic Silicon Valley, where the belief in building better mousetraps rides high.

“x86 isn’t an easy thing to do,” said one of the key Montalvo figures. “There are 1,001 things that can go wrong with it.”

The Santa Clara, Calif. company was born in 2000 as Memory Logix in the garage of Peter Song, a microprocessor designer who, once upon a time, was an analyst for the Microprocessor Report. One of those articles was a prescient analysis that microprocessors would have multiple cores, or processors, on a single chip.

Song had figured out a way to create a low-power processor that was compatible with Intel’s chips. This was at a time when Intel hadn’t yet discovered its low-power religion. In an early interview, Song expressed intrigue in the possibility that Microsoft, having launched the Intel-compatible Xbox in 2001, might consider creating an x86-based portable gaming device.

Intel certainly gave no thought to Song’s company, which was working on low-power “synthesizable” cores. It was not nearly as ambitious as the later incarnation of the company would become.

But another rival, Transmeta, certainly awoke the sleeping giant. Transmeta, founded by former Sun Microsystems chip pioneer Dave Ditzel, raised hundreds of millions of dollars and managed to go public in 2000. Read the rest of this entry »

Avast ye pirates! The Bush Administration is accusing China, Russia and seven other countries of failing to protect American producers of movies and other entertainment from piracy. The question comes to mind: why did it take so long for the U.S. to figure this out? Also included on the list are Argentina, Chile, India, Israel, Pakistan, Thailand and Venezuela. Somehow it seems like this conversation should have taken place, oh, maybe 10 years ago?

Don’t expect Wii price cuts: Nintendo’s CEO Satoru Iwata said the company has no plans to cut the price of its popular Wii video game console, which costs $249 in the U.S. Demand for the Wii has been so strong that the company has been able to keep it at the same price since its launch in the fall of 2006. The same goes for the Nintendo DS handheld, Iwata told Reuters. The company said earlier this week that said its operating profit more than doubled in the year ended March 31. It forecast a further 9 percent gain this year to 530 billion yen ($5.08 billion). Clearly, Nintendo is just as happy as Microsoft and Sony to milk gamers dry.

Sun swallows Montalvo: Sun Microsystems confirmed that it bought the assets of Montalvo Systems for an undisclosed price. The high-flying microprocessor design company had tried to develop low-power chips to go up against Intel, but it ran into delays finishing its chip and had to sell out for a fire-sale price. Peter Glaskowsky, former editor of the Microprocessor Report and an executive at Montalvo, mourned the end of Montalvo in a blog post. Sun declined to say how it will use the Montalvo assets. Now what is Sun going to try? It could use Montalvo to go to war with Intel, protect itself with patents, or get a good engineering team. Glakowsky, by the way, has interesting analysis of Apple’s $278 million purchase of PA Semi.

EA to release Spore creature creator June 17: Spore is the next big game coming from Electronic Arts’ game design master Will Wright. The Spore Creature Creator tool will allow gamers to start designing their own creatures ahead of the Sept. 17 release of the big game. Gamers will be able to show off their creations and EA will get a lot of free labor. That’s because it will use the creations as rival creatures inside Spore. Thus, when you play the real game starting in September, your character will have square off against other creatures created by all of the people who use the tool. It’s another brilliant move by Wright.

Fashion venture moves forward: Online fashion company Indochino has received an undisclosed investment from Burda Digital Ventures, the venture capital arm of German media company Hubert Burda Media. Indochino will use the financing to build up its operations, according to a release from the company. Visitors to the company’s Web site, Indochino.com, can order custom-tailored men’s suits for home delivery. Boris Wertz, a principal at W Media Ventures, previously invested in Indochino and introduced the company to Burda Digital Ventures, according to the release. Indochino has offices in Victoria, British Columbia, and Shanghai.

AT&T boots T-Mobile: Clearing the way for Apple’s iPhones and iPod Touch handhelds to be used in Starbucks, AT&T began replacing T-Mobile as the Wi-Fi service provider in the Starbucks coffee houses in San Antonio. AT&T will talk more about how it will replace T-Mobile in Starbucks stores in other markets.

Skype guys raising a new fund: Skype co-founders Niklas Zennström and Janus Friis, as well as former Skype veteran Geoffrey Prentice, are raising a new venture fund of as much as $450 million. GigaOm reports that they plan to raise a total of 300 million euros.

Dell says ignore XP end-of-life deadline: Dell said that it would keep selling Windows XP as long as customers want it, despite a deadline from Microsoft, which wants everybody to start buying new systems with Windows Vista. Microsoft has set June 30 as the deadline for selling XP to consumers.

Setting up a possible brawl with Intel, Sun Microsystems is rumored to be acquiring the assets of stealth microprocessor design company Montalvo Systems, according to a source familiar with the matter.

Sun, based in Menlo Park, Calif., will acquire Montalvo’s patents, intellectual property and hire the remaining employees. The Santa Clara, Calif.-based start-up had raised $73 million in venture capital but failed to raise more money as its plans for an Intel-compatible microprocessor fell behind schedule. That’s why it had to sell off its assets to the highest bidder. Sun and Montalvo declined comment.

The Sun rumor, also reported yesterday by CNET’s News.com, is the likeliest so far, but other companies would clearly benefit by acquiring Montalvo. The obvious ones are Nvidia and Advanced Micro Devices. For antitrust reasons, Intel itself is unlikely to get such a purchase past the Justice Department. Nvidia makes graphics chips but those might one day be subsumed into the PC’s microprocessor. Hence, Nvidia needs a processor of its own to combine a graphics chip and a processor into a single chip — or it may get swallowed up itself. AMD has its own architecture but isn’t in the best financial shape.

Montalvo tried to create an innovative processor with four cores – two big ones and two small ones – to more efficiently handle the small and big processing tasks. The theory was that such chips could operate with lower power consumption – a key requirement in a variety of computing products in the modern era of high energy prices.

Earlier this week, Montalvo cut two-thirds of its staff (our coverage). The company had tried to raise a round in the past weeks but failed (our coverage).

Read the rest of this entry »

Montalvo Systems has been seeking a hoard of cash in its latest fundraising round, but the chip startup is dangerously close to running out of money, VentureBeat has learned.

Although it raised $73 million, the company has run into problems finishing a chip that will compete with Intel in the low-power portable devices market, a market where chip giant Intel has become increasingly competitive. The company grew to nearly 300 employees in Santa Clara and India, resulting in a big burn rate and forcing the company to go back to fundraising. (our past coverage).

“There are a lot of people and burning it quickly,” said one venture capitalist who received a pitch but declined to speak on the record. “No matter how much money you raise, it won’t last long. ”

Reached by phone, Montalvo CEO Matthew Perry declined comment. At this exact moment, I’m not sure of Montalvo’s status but I have heard enough to be able to say as much as I am in this story. One source told me the situation is fluid.

If Montalvo is unsuccessful in saving itself, that says a lot. It’s increasingly difficult to challenge Intel in the $30 billion x86 (Intel-compatible) microprocessor business, as Montalvo tried to do. It also shows that creating complex chips in this day and age is not an easy feat, even with tens of millions of dollars and hundreds of engineers. And it provides further evidence that venture capitalists are shying away from increasingly expensive semiconductor start-ups.

The company attempted recently to raise more than $100 million from investors but apparently has come up dry, VentureBeat has learned. Read the rest of this entry »

1. Amazon S3, VentureBeat go down
2. Montalvo Systems vs. Intel, with chip for handheld devices
3. Fox Interactive to introduce “music Hulu for MySpace”
4. Yahoo’s board moving against Yang
5. Google searchers are wealthier, buy more online
6. Xobni hires Jeff Bonforte away from Yahoo, to be its new CEO
7. Stormfisher raises $350 million for biofuel project
8. Cable veteran Philip Balboni moving to online news site
9. Nielsen buys Audience Analytics
10. Air commuter conference coming up this spring
11. Report: Online Community Best Practices
12. Wal-Mart chooses Blu-Ray

Amazon S3, VentureBeat go down — Online data storage service S3 went down. Affected startups include SmugMug, 37Signals, Twitter and many others. Lots of coverage on Techmeme. Earlier today, VentureBeat was down because of separate hosting problems.

Montalvo Systems taking on Intel, focusing on a chip for handheld devices — It has designed a chip for smartphones, notebook computers and other portable devices, that should run software that works on Intel or AMD chips. The company’s plans have been outlined in some detail by Michael Kanellos at CNET (our previous coverage ).

Montalvo’s chips, however, will fundamentally differ from the latest Core or Opteron processors from Intel and AMD in that the cores on its chip won’t be symmetrical, i.e. identical to each other. Instead, Montalvo’s chips will sport a mix of high-performance cores and lower-performance cores on the same piece of silicon, similar to the Cell chip devised by IBM, Toshiba, and Sony, according to sources close to the company.

It has received more than $73 million venture and private equity firms including Bay Partners, NEA-IndoUS Ventures, U.S Venture Partners, Leapfrog Ventures, CMEA and Adams Street Partners.

Fox Interactive to introduce “music Hulu for MySpace”– The project, which is still being put together, intends to sign up all the major music labels as content providers — who would get equity. The music would be distributed on widgets and contained in a portal page, similar to video-sharing site Hulu, which Fox is a part of. The music on MySpace would be DRM-free and ad-supported. PaidContent has the scoop.

Yahoo’s board moving against Yang — Founder and chief executive Jerry Yang and a small group sympathetic members are trying to avoid a sale to Microsoft at all costs. But Yahoo Chairman Roy Bostock is leading an informal group of board members and billionaire Ron Burkle who think that Yang may be ignoring his fiduciary duty to maximize shareholder returns. The New York Post has more.

Google searchers are wealthier, buy more online — Hitwise numbers here. See chart for more.

Xobni hires Jeff Bonforte away from Yahoo, to be its new chief executive — Bonforte was previously a vice president who helped lead the growth of Yahoo Messenger. Company blog post here.

Stormfisher raises $350 million for biofuel project — It turns agriculture and food-industry byproducts into methane gas, which reduces the levels of waste in landfills. The investor is private equity firm DenHam Capital, which has already sunk many millions into biofuel projects.

Cable veteran Philip Balboni moving to online news site — He’s leaving New England Cable News to join online international news company Global News Enterprises LLC, which is slated to launch in April with more than 70 international correspondents. The new company has taken on around $8 million from angels. (Photo via Columbia University.)

Nielsen buys Audience Analytics – The web measurement company says the Provo, Utah-based startup will improve its ability to handle large quantities of audience measurement data

Air commuter conference coming up this spring — Tech commentator Esther Dyson and publisher Imaginova are teaming up to organize the fourth annual Flight School from July 4-6, an event that brings entrepreneurs together to talk about innovation in aviation and space travel. The focus is still on “air taxis” — basically, smaller planes making local flights on-request — but Flight School’s scope will be broader this year, Dyson told us. Since the conference began, air taxis have become a marketplace reality through companies like DayJet, and commercial space flight is becoming more and more practical too, Dyson said. She added: “When I was a kid, I took it from granted that I would go to the moon. Now it looks like I’m going to have to work pretty hard to get there.”

Report: Online Community Best Practices — Forrester analyst Jeremiah Owyang delivers the report (buy here). Its tagline is “Communities Are A Powerful Tool, As Long As You Put Members’ Needs First.”

Wal-Mart chooses Blu-Ray — More here. Meanwhile, Toshiba may be ready to give up on HD DVD.