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Devilish flash DIMMer Diablo gets $19m and new CEO

Funding round coincident with legal foe getting another defeat

Comment Flash DIMM developer Diablo Technologies has had a $19m funding round, got itself a new CEO, and seen off legal foe Netlist in a great start to the new year.

Diablo has Memory1 flash DIMM technology which adds NAND to a server's memory space as a cheaper but slower DRAM substitute, enabling server applications to run faster, as they can avoid PCIe flash card, Flash DAS or external storage array primary data accesses.

Earlier Memory Channel Storage product technology is licensed by SanDisk as its ULLtraDIMM technology licensed to Huawei, Lenovo and Supermicro.

Diablo was founded in 2002, had a 2008 $15m A-round, a $28m B-round in 2012, and a $7.5m VC-round in 2013. Now, in 2016, we have an additional $19m for the C-round, taking total funding past $69m. This latest infusion of cash was led by new investor ICV with participation from Battery Ventures, BDC Capital, Celtic House, and Hasso Plattner Ventures.

The company will use the funding to expand sales, applications support and R&D. ICV partner Glen Schwaber had a quote: "Diablo has a first-class management team comprised of industry veterans and a technology roadmap filled with proprietary innovation, not to mention a stellar, value-add existing investor base. We look forward to contributing our expertise to help grow the company to its full potential."

CEO change and boardroom putsch

Okay, that's the funding. The CEO change is ... well, see what you think. Existing CEO and co-founder Riccardo Badalone becomes a customer-facing Chief Product Officer. Diablo already has a CTO, Maher Amer, by the way.

Independent board director Mark Stibitz becomes both the new CEO and board chairman, which sounds like a boardroom coup has taken place. Roger Blethen was the previous chairman, heading a nine-seat board with Riccardo Badalone and Mark Stibitz plus six VC reps. We imagine Stibitz as CEO replaces Badalone and as chairman replaces Roger Blethen.

Stibitz was president and co-founder of Adaptive Chips (next-gen system interconnect), an ex-board member at flash developer Anobit which was acquired by Apple, and has PMC-Sierra, Agere, Lucent and AT&T on his CV before that.

It's extremely tempting to see the Stibitz board chair and CEO takeover as connected to the $19m funding round; new cash and new blood so to speak, with old blood – Blethen and Badalone – pooling on the boardroom floor.

A canned Stibitz quote about the new funding and his role was provided: "This investment will contribute significantly to our customer support, product portfolio and innovation engine. Our strategy is clear and we are focused on successfully delivering products that seamlessly deploy flash as enterprise-grade system memory and high-performance, low-latency storage. I am excited to join the leadership team as we enable new opportunities for NAND flash and in-memory computing within enterprise-class data centers and across large-scale IT applications."

Ex-IBMer Alex Yost ceased being a Diablo president in December after 14 months in post. The timing suggests that this departure is connected to the assumed boardroom putsch; putsche coming after the shove, so to speak.

Netlist almost vanquished

Diablo and Netlist have been involved in a complicated lawsuit, with Netlist asserting Diablo has improperly used its IP as a result of a collaboration. This suit involves patent validities and more and has had several court cases involved with it.

In April last year, Netlist was awarded a derisory $2 for Diablo using its logo when it shouldn't. Apart from that almost sarcastic damages award, Netlist legal actions have had negative outcomes.

In March 2015, a jury exonerated Diablo from Netlist's accusations of trade secret misappropriation, breach of contract, and incorrect inventorship.

Diablo's lawyers say the Patent Trial and Appeal Board (PTAB) has decided in Diablo's favor in three patent reviews. Diablo challenged the validity of the asserted Netlist patents, and the PTAB found that Diablo had shown by a preponderance of evidence that all challenged claims were unpatentable.

A case, about Netlist alleging Diablo infringed on two of its patents, is currently pending in the District Court for the Northern District of California. Judge Yvonne Gonzalez Rogers halted ("stayed," technically) the case pending the resolution of the patent review proceedings at the United States Patent and Trademark Office.

It's possible that this PTAB decision could lead to Diablo winning in the Northern District of California case.

Meanwhile Netlist is partnering with Samsung in a 5-year deal involving Samsung investing $23 million and joint development of non-volatile DIMMs using Samsung DRAM and NAND, and Netlist's HyperVault technology.

All-in-all it looks as if Netlist can move ahead with Samsung, and Diablo can drive forward with new funding and new exec leadership. We might hope for wider use of non-volatile DIMMs by server suppliers, and the adoption of 3D NAND and even XPoint memory into this technology space. ®

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