Big customers, a top-flight engineering staff and $110 million in venture backing was not enough to save Hammerhead Systems Inc., a data-switching company that closed its doors on Thursday.
“We were in a Catch-22 situation, and we are a casualty of the economy,” said Rob Keil, the Mountain View, Calif.-based company’s chief executive.
Hammerhead planned to sell its Ethernet aggregation switches to major telecom carriers and had inked major deals with two of them, Keil said. But to continue, the company needed to enlist more carriers as customers, something that proved tricky in the current economic climate.
“We had them excited about our technology,” Keil said, “but they wanted to get the financial viability issue off the table. The carriers liked the product and the team, but they needed us to have a partner…for financial stability. It just wasn’t possible to get the carriers comfortable.”
Partnering with a name-brand networking hardware company might have catapulted Hammerhead to success, he said. “But as the economy melted down, the prospective partners became risk-averse,” Keil said.
Keil could not disclose which hardware companies Hammerhead approached, or which two carriers had agreed to buy the company’s switches.
Hammerhead made a data switch that routs information for carriers. The switches collect data circuits from the carriers’ customers, aggregate them, and rout them back to the operators’ core networks. This process, said company spokeswoman Mari Mineta Clapp, enables carriers to use much of their aging equipment to keep up with the demands of today’s smart phone traffic, including backhaul and Ethernet functionality needs.
Read the full WSJ article from By Timothy Hay here
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