Summary:

Broadcom today agreed to acquire Dune Networks, a chip firm that enables hyper-scale computing, for $178 million. The deal is a response to the changes that virtualization and cloud computing have created in the IT environment.

Broadcom said today it’s agreed to pay $178 million to acquire Dune Networks, maker of a chipset that can be used to build out and manage a network fabric for large-scale computer environments such as compute clouds or hyper-scale data centers. Dune’s chipset supports bandwidth speeds of up to 100 Gbps per port and can connect more than 10,000 servers in a single deployment.

Basically Broadcom, a networking chip company, is buying a business whose silicon can handle the switching for a Google-scale server farm — because it’s betting that such deployments will become more common and mainstream. The Dune buy follows Broadcom’s failed Emulex bid, which was also aimed at the next-generation data center.

When it comes to data center networking, it’s no longer just about faster speeds on the pipe, such as the transition from 1 Gigabit Ethernet to 10 Gigabit Ethernet. It’s also about making sure that those faster pipes can benefit the many virtual machines sitting on a server, because just like a house full of teenagers with a single wireline phone, those VMs all want access to the network at once. Products that help share the networking pipe and make sure the servers get access to the network when they need it is a critical step for the virtualized data center of the future.

Dune has raised $53 million in venture funding from investors including Alta Berkeley Venture Partners, Aurum-SBC Ventures, Evergreen Venture Partners, Jerusalem Ventures Partners, Pitango Venture Capital and U.S. Ventures Partners.

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