Ario Hops SATA Train: Page 2 of 3

Karp says the timing and OEM features are key, but nothing's guaranteed. “They’ve come into the marketplace at the right time and probably with the right product. They’re going towards OEMs rather than direct. With a startup, the question OEMs ask is whether the company will be around in a couple of years.”

Ario's working on that. This is the company's first product. It has raised $17.3 million in three rounds of funding from Clearstone Venture Partners, Partech International, Triton Network Systems Inc., and Evercore Ventures. Ario has partnership deals with chip makers LSI Logic Corp. (NYSE: LSI), QLogic Corp. (Nasdaq: QLGC),
and Marvell Technology Group Ltd. (Nasdaq: MRVL); and hard drive vendors Western Digital Corp. (NYSE: WDC)
and Maxtor Corp. (NYSE: MXO). It claims to have OEM deals with major subsystems vendors but isn’t ready to announce them.

Ario spokespeople say the company is contemplating a fourth funding round. Most of its 59 employees are in research and development, and it plans to keep pace with the market by offering SATA II and SAS support later this year.

Bottom line? Ario's got a couple of things going for it, including the fact that it's entering the SATA market for lower-cost disks just as it heats up. It's also got a well-planned strategy based on a clear differentiator pitched at OEMs. On the downside, Ario's likely to run into gangs of competition, some of which could put it out of the game -- or, then again, keep it alive through acquisition.

“The SATA market is really starting to take off,” acknowledges Eric Herzog, Ario’s VP of business development. “This is a huge market and there’s going to be a lot of players.” But he's optimistic, he says, because Ario's starting out "on top of the pricing and feature curve."