Intel is buying Barefoot Networks, a challenger to Cisco that had raised over $150 million from giants like Google and Alibaba (INTC, CSCO, AVGO)

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Intel is buying Barefoot Networks, a Silicon Valley startup with over $150 million in funding. Terms of the deal were not disclosed.
Barefoot Networks sells networking equipment, with its main differentiator being that developers can write code for its hardware that runs directly on the processor — a technical, but important, difference that allows for more customization than you often find on Cisco or Broadcom gear.
The deal comes as Intel faces new challenges, as its data center revenues recently faltered for the first time in a long time.
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Intel is acquiring Barefoot Networks, a Silicon Valley startup that had raised over $150 million from giants like Google, Dell Technologies Capital, Alibaba, and Goldman Sachs.

Terms of the deal weren't disclosed, but Intel says that Dr. Craig Barratt, the CEO, and his team will be joining the chip giant after the deal closes, which it expects will happen in the third quarter of 2019.

"Upon close, the addition of Barefoot Networks will support our focus on end-to-end cloud networking and infrastructure leadership, and will allow Intel to continue to deliver on new workloads, experiences and capabilities for our data center customers," Intel data center boss Navin Shenoy said in a blog entry announcing the deal.

Barefoot Networks is a data center networking startup that's taking on the likes of Cisco and Broadcom with an unconventional approach to the market — an approach that focuses on Tofino, its proprietary line of processors that power its lineup of hardware products.

Specifically, Barefoot boasts that Tofino allows developers to program right on the processor itself, the lowest technical level possible, which means that customers can do things with its products that were never originally intended.

For instance, Barefoot says, a Tofino-powered switch can be used to analyze and diagnose network traffic as it travels through the data center, with the developer free to apply fine-tuned controls over exactly what they're looking out for, and add to the model as they go.

A nice talent grab, too

This approach stands in contrast to how it usually works: Cisco, Broadcom, and the like usually offer software that lets users install new applications and put their networking gear to use in new and novel ways — but without giving programmers access to the processor itself, which limits what can be done with it.

This philosophy seems to have caught on, however, with Cisco and smaller competitors like Arista Networks both reportedly deciding to use Barefoot's Tofino chips to power some of their newest products.

Also of note is that Barefoot Networks carries something of a pedigree: Nick McKeown, co-founder of Barefoot Networks, was also a founder of Nicira, a networking startup that VMware purchased for $1.26 billion in 2012.

As for Intel, the acquisition of Barefoot Networks makes a certain amount of sense, given that both companies are focused on chips, especially for the data center. However, the deal also comes as Intel faces a rough patch, with revenues in its data center segment recently sliding for the first time in a long time.

While Intel already sells networking products, this is clearly a bet that having Barefoot's technology on its side will open some doors, and perhaps lead it to a stronger market position.

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