At Mobile World Congress, we had the chance to meet a company we have been hearing about for a while. Napatech is based in Denmark, and provides solutions for networking. Their product lines include IPUs/DPUs and Smart NICs among others (more on those in a moment). Napatech seems to be gaining real market traction, and merits attention on that basis alone. But what really intrigued us about the company is the nature of the products they sell.
An investor in the company introduced us to the company, and in a brief text exchange described the company as making interesting networking chips, but that is not quite what they do. Instead, they sell a bundled networking solution built on top of standard silicon, largely Intel Altera FPGAs. In many ways, Napatech is that holy grail of a software company that monetizes through hardware.
Data Processing Units (DPUs), or as Intel calls them Infrastructure Processing Units (IPUs) are a fairly important element in modern networks. They sit between the the CPUs and GPUs in servers and the wider networks. In data centers and campus networks, the use of these products, or their close relative the Smart Network Interface Card (Smart NICs) frees up the the digital logic chips to do more of their function – serving e-mails or ads or search recommendations, by off loading the management of moving bits around the network to these special purpose chips. A big part of AWS’s early success was their use of their Nitro chips, which made more CPU time available and thus greatly reduced the cost of their service. The use of DPUs is not mandatory, but with almost all enterprise workloads now running through someone’s cloud (public or private), networking overhead can be significant and a DPU or SmartNIC can make a real difference.
That all sounds great, but the catch is that managing network traffic is complex stuff. If your corporate email stops working the network is almost always the first area to get blamed. It took a lot of work for AWS to get Nitro working, and few companies even then had Amazon’s software and networking capabilities.
Enter Napatech. Over the years, they have invested heavily in building out the software required to manage those networking loads. This includes things like efficient routing of packets, security and policy management. This sounds mundane, but is now essentially a requirement for modern enterprise networks. They design their software to run very efficiently on top of Intel silicon, maximizing performance. They have a close relationship with Intel, and say what you will about that company, their networking products are still popular in many organizations. We have just begun our research into the company, so it is too early to tell how far Napatech can go, but they seem to have real traction, with a fairly solid set of recent earnings.
As with all things in this field, DPUs/IPUs are not the only way to build networks. The hyperscalers all seem to be developing their own, internal approaches. And competitive products from the likes of Marvell and AMD’s recently acquired Pensado have the benefits of those companies’ scale. That being said, Napatech is much smaller, small enough that a little bit of share goes a long way. For us, the most interesting part is the way in which they have built their business, achieving what is effectively hardware revenue for a software product. As networks evolve and adapt, we think this is the smartest ways for chip companies to develop.
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