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Dilithium Powered Networks

Andrew Madden, a former Red Herring editor, launches his alarm:clock column, covering the business of technology startups. This week: Dilithium Networks.
March 16, 2005

Blogs have become a powerful tool for media organizations – or they will be once we figure out how to use them effectively. At, we think we’ve found one interesting proposition.

We’ve teamed up with Andrew Madden, a former Red Herring editor who now runs his own blog, alarm:clock, covering the business of technology startups. Madden updates his site daily, but starting today and appearing each Wednesday, he will write an in-depth piece about one company exclusively for the, along with a brief synopsis of the week in venture capital and technology.

The outcome, we hope, is to provide the readers with a look at the financial markets influencing emerging technologies while encouraging the growth of the blogosphere.  – By Brad King

Dilithium Networks

Headquarters: Petaluma, CA (with offices in Sydney, London, and Singapore)

Founded: 2002

Management:  Paul Zuber, CEO, was previously President of Solectron Australia, a subsidiary of the electronics manufacturing services company. Zuber ended up at Solectron because it acquired the Bluegum Group, a company he co-founded, which grew to 800-employees before its acquisition.

Dr. Marwan Jabri, co-founder/CTO, is an expert in multimedia communications systems and the founder of Macchina, the predecessor to Dilithium Networks. Jabri has done stints at serious geek think tanks like the Salk Institute of San Diego, California and at Bell Labs in New Jersey.

Investors: Announced on March 14 that it secured $18 million in Series C funding. Round was led by U.S. Venture Partners, with existing investors Motorola Ventures, JAFCO, Deutsche Bank Capital Partners, and CM Capital.

Singapore’s Infocomm Investments, a subsidiary of Infocom Development Authority, also participated. A $10 million Series B was raised in April 2003. Undisclosed Series A of “under $10M,” according to Paul Zuber, raised in 2002. Other investors have included Entrepreneur America, TMT Ventures, and Ericsson Technology Fund.

Business Model:  Dilithium Networks’ core technology reduces the cost of delivering voice and video across telecommunications networks, with a particular focus on emerging 3G networks. Products are designed to facilitate interconnectivity between diverse networks and a range of multimedia network devices.

Also sells diagnostic equipment that helps operators test the quality of their networks. The company likes to think it is solving the “Universal Connectivity Challenge” – allowing every manner of device to connect over every manner of network. Customers include OEMS, system integrators, and major carriers.

Competitors: Major wireless infrastructure manufacturers including Alcatel, Nokia, Ericsson, Motorola, and Nortel. Fortunately, most of these companies are also customers or investors. Also competes with Tekelec.

Dirt: 3G, shorthand for the “third-generation” protocols that can support much higher data rates across wireless networks, has fallen well short of its promise. Have you seen anyone conduct a videoconference over his cell phone yet?

The success of the market ultimately hinges on the continued investment, both in terms of technology and marketing, by the major mobile players, none of which are strangers to Dilithium. The company has already sold products to Ericsson, Nokia, Samsung, NEC, Motorola, Alcatel, Lucent, and Nortel. Research firm IDC anticipates another year or two of waiting for widespread 3G products and services, pegging the timeframe to 2006-2007.

With a fresh $18 million in the bank, Dilithium Networks is in a good position to benefit from this market’s long overdue maturation. Oh, and yes, the company’s name is a Trekkie homage to “dilithium crystal,” the substance that powered the U.S.S. Enterprise.


Private Company Round-up:

What’s a poor little start-up to do when it has burned through $195 million in cash and still doesn’t have a business model to speak of? We’d say shut the doors, but Austin, Texas-based General Bandwidth just won’t go away. This provider of Voice over IP equipment managed to raise another $18 million last week from a lengthy list of investors that includes blue chippers like Oak Investment Partners, Sevin Rosen Funds, and Venrock Associates. We urge the VCs to take note of the fact that that General Bandwidth was known for hiring has-been rock bands to play trade shows and that it burned through $50,000 on one gig.

In another trendy investment area, Waltham, MA-based Colubris Networks, a developer of equipment for wireless local area networks (WLANs), pulled in $15 million last week. Wireless networks have been sprouting up everywhere after several years of fits and starts. And any doubt that the market has not arrived for equipment makers was erased by the fact that Cisco purchased Airespace, a Colubris competitor, for $450 million in January. This bodes well for Colubris if it can continue to execute.

Not to be outdone on the trendy investment front, Nantero, a Woburn MA-based nanotech venture, also had a banner week, raising $15 million. The company is using carbon nanotubes for the development of next-generation semiconductor devices. We suspect Nantero’s excitement was tempered slightly when, in a meeting with reporters last week, Dr. Gordon Moore, the Intel co-founder and semiconductor luminary, expressed doubts about the viability of carbon nanotubes as a mass-produced semiconductor component.

Petaluma, CA-based MarketLive, a developer of eCommerce software for catalogers, retailers, direct marketers, and manufacturers, has been plugging away since 1995 and seems to have survived the worst of the online retailing downturn, adding venerable VC Sequoia as an investor in late 2003. MarketLive has carved out a nice market, but we wonder what the future holds, particularly as behemoths like Amazon increasingly offer up their technology, expertise, and audience to retailers that are seeking to move online.

Speaking of bumping up against a behemoth, the unimaginatively named Digital Map Products, recently drew our attention – but only because of the blandness of its offerings and the fact that Google entered this space by purchasing digital mapper Keyhole.  Google’s acquisition suggests there may be a market for Costa Mesa-based Digital Map Products, but we think the company needs to sex things up a bit. We’d start with a corporate name change.

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