We noted last year that the network management space was consolidating, with point solutions being snapped up by platform players, when we wrote about new investment for Israeli startup Granulate — which applies AI to high-priority computing workloads to optimize how they travel across a customers’ cloud and on-premises networks — Today, that trend has reached the startup itself, with Intel announcing the acquisition of Granulate in order to expand both its operations in Israel and the capabilities that Intel gives to clients to better control traffic on Intel-powered equipment.
The deal had been a well-guarded secret in Granulate’s home market, with some outlets stating that it had been in the works for a week. Although Intel and Granulate do not include an exact amount in their press release today announcing the announcement, well-placed sources tell us the purchase is worth $650 million. The transaction is slated to finalize in Q2 2022, with all 120 Granulate workers joining Intel.
In a statement, Sandra Rivera, executive vice president and general manager of Intel’s Datacenter and AI Group, stated, “Today’s cloud and data center clients expect scalable, high-performance software to make the most of their hardware investments.” “Granulate’s cutting-edge autonomous optimization software can be deployed to production workloads without the client having to alter its code, resulting in optimal hardware and software value for every cloud and data center customer.”
“We’re expanding our portfolio of software optimization tools to give us the flexibility and scalability we need to meet the growing demand of the ubiquitous compute era,” said Greg Lavender, Intel’s chief technology officer, senior vice president, and general manager of the Software and Advanced Technology Group. “Granulate’s revolutionary real-time optimization software complements Intel’s current capabilities by assisting clients in achieving performance benefits, cloud cost savings, and ongoing workload learning.”
According to PitchBook, Granulate has raised $45.6 million at a low valuation of $110 million, with prior investors including Insight Partners, Red Dot Capital, and Dawn. It last raised money little over a year ago, in a $30 million Series B that we highlighted here, thus this deal appears to have resulted from the firm pitching to companies for investment (a moment that often leads to acquisition offers, when the conversations are with would-be strategic backers). On a variety of levels, the acquisition is part of Intel’s larger strategy.
To begin with, it emphasizes how Intel is continuing to develop more tools and services to help customers better manage Intel-powered networks, in part to compete more directly with Nvidia, which has been acquiring smaller companies to expand its high-performance computing capabilities and management. Granulate claims that their software may increase reaction times by up to 40% and throughput by up to five times while lowering expenses by up to 60% for an organization’s workloads across different cloud and on-premise settings.
As we’ve previously stated, larger tech companies such as Netflix, Google, and Amazon typically invest significant sums to develop their own optimization technology, but smaller businesses (and you can be huge while still being smaller than Google) would not have the resources — pun intended — to address the issue in the same way. Asaf Ezra, co-founder and CEO of Granulate, told me last year, “We are aware of comparable things going on inside of Netflix as what we have done.” “However, it demonstrates how huge you need to be to handle this issue, as well as the skill you need to employ to address the lowest-level concerns,” says the author.
