[qi:gigaom_icon_cloud-computing] Intel today said it’s invested an undisclosed amount in Joyent, the 6-year-old Sausalito, Calif.-based startup that started out as a web hosting company but eventually evolved into a cloud service provider. Neither Intel nor Joyent disclosed the amount of money invested, but Intel’s investment in the company is a strategic bet for the chipmaker, as it faces a smaller end user base for its silicon thanks to enterprises turning to computing delivered as a service to help limit the number of servers they buy. First the deal specifics.
Intel Capital has invested $8.5 million into the company, as per a filing with the Securities & Exchange Commission. Sources tell me that Dell has also invested an undisclosed amount of money in the company. Dell has not returned my request for comment, but the company has been supplying gear to Joyent for a long time. Joyent shifted vendors from Sun to Dell over two years ago, a move I wrote about. Previous investors in the company include Peter Thiel, former PayPal-executive-turned-hedge-fund-investor whose investments include Facebook.
I emailed Joyent CTO Jason Hoffman, who declined to comment on either the total funding raised or the other co-investor. He added that the company engaged with Intel Capital after meeting them at our Structure 09 conference, held in June in San Francisco. One thing led to another and eventually, the funding took place. Hoffman said that the company plans to use the money to make an aggressive push into China and other Asian economies where demand for IT infrastructure is growing at a rapid clip. (Related research note from GigaOM Pro, sub. req’d.: Why Bringing Cloud Computing to China Is Joyent’s Golden Opportunity.)
So why the Dell and Intel interest in Joyent? I’ve been talking to a lot of folks involved with the cloud computing industry, and there has been a growing concern with the Cisco-EMC-VMware joint venture company.
Joyent isn’t a mere service provider, but has actually built a software competency, which makes it one of the strong contenders in the cloud computing market, especially as large enterprises look to build private clouds. Joyent has been aggressively helping companies build private clouds based on its software delivered on Dell machines. There are several significant companies that are using Joyent’s offering. For Dell (or any server maker), that is the kind of push that is necessary as the bulk of enterprise customers beginning to buy their compute hardware as a service.
In an email to his partners, Joyent CEO David Young wrote:
Joyent plans to take cloud computing to a place where our competitors, built on virtualization foundations such as VMware ESX, Microsoft HyperV, Xen, KVM, won’t be able to go. That made the decision to raise money a clear choice and one that translates into greater benefits for Joyent, its customers and the market-at-large. We see a clear opportunity, and we intend to race towards it.
Intel Capital agrees with our vision for the market, as said best by Lisa Lambert, Managing Director of Intel Capital:
“Cloud computing technologies play a crucial role in allowing companies to scale their data center infrastructure to meet performance and TCO requirements. Joyent’s approach to flexible and cost-effective cloud control and cloud development sets it apart and provides measureable performance advantages versus the competition in this fast growing sector.”
It’s no wonder that Dell and Intel want to get in on a piece of this market while they still can.