VentureBeat

Xsigo Systems,  after three years of secrecy, has launched saying it can dramatically lower the cost of running data centers by using virtualization techniques, has finally launched.

The Sunnyvale, Calif. company, backed by venture firm Kleiner Perkins Caufield and Byers (see our coverage last year), uses techniques similar to the popular VMWare. While VMWare enables a single computer to run multiple operating systems, Xsigo focuses on another problem: Reducing the multiple connections between servers and networks into a single connection. The company launched earlier this week, and the Mercury News has a story today.

The company, started by former Juniper engineers, also has backing from Greylock Partners and Khosla Ventures. The amount was undisclosed. The company has also recruited Steven Haley, a top sales guy from Cisco, to be its chief operating officer.

Cisco has invested $50 million into Nuova Systems, considered a competitor. Cisco also says it has a product called the Vframe Data Center that solves the problem in a different way — without virtualization. Meanwhile, Intel is backing another competitor, 3Leaf Systems, which launched in May with $32 million in backing (see our coverage)

Xsigo Systems is a secretive Sunnyvale start-up that designs more efficient datacenters, which are the places where companies manage their computer networks.

Xsigo is backed by Silicon Valley venture capital firms Kleiner Perkins and Greylock, and is notable because it is run by a few former top Juniper engineers, including Ashok Krishnamurthi and RK Anand.

We recently got a reader tip that the company was going through a “restructuring,” and that RK had landed back at Juniper. From our correspondence with several people, it sounds like RK has “health problems,” and decided that working for a start-up was too stressful. Yet another core Xsigo guy was going to head back to India, but he’s now staying in Sunnyvale, according to Xsigo. So Xsigo is apparently stable. In fact, Xsigo is scheduled to sign a deal tomorrow (Friday) to accept another round of venture capital, and the company’s value has gone up. “It is a major step-up,” said Ray Lane, a venture capitalist with Kleiner Perkins who said he will be investing. Now we’re hearing that Cisco may have created a competitor unit, possibly called Nuevo, to compete with Xsigo. Anyone have any info on this?

Update: Thanks to readers who reminded us about Nuova. In fact, we remember seeing this a couple of months ago, but Cisco wouldn’t talk, so we couldn’t add to what was already out there (see San Jose Business Journal). It was one of these creative “spin-ins,” where a Cisco group (this one led by former Cisco executive Mario Mazzola) goes out and forms a company, and gets a rosy deal from Cisco whereby Cisco buys it back again after it meets certain milestones. Cisco now owns 80 percent of it. Nuova bolsters Cisco’s datacenter products like “Catalyst 6500 switches, MDS storage switches, SFS server networking switches and application acceleration offerings.” So it is Cisco’s effort to stave off “another Juniper” from happening, in this case the threat being the ex-Juniper guys at Xsigo. Now let’s see if Juniper invests in Xsigo. Musical chairs.