A Startup Founded By Some Of Cisco's Most Prestigious Former Engineers Wants To Knock Cisco's Lights Out

A group of former Cisco engineers who worked on some of the network giant's most important technology just came out of stealth with a product that could unseat their former employer.

The company is called PlumGrid. It's part of a brand new market called software-defined networking (SDN) that will completely change how companies build networks.

With SDN, instead of buying expensive network hardware with a lot of fancy features from companies like Cisco, enterprises will buy cheaper hardware and less of it, with all those features handled in the SDN software. SDN networks are easier to setup and modify than traditional networks, proponents say, and work well with cloud computing technologies.

There's a whole bunch of SDN players, but PlumGrid is worth watching for three reasons:

1. The Cisco pedigree of its founders.
2. It is challenging the SDN market leader, VMware's Nicira, with alternative technology.
3. It has already signed on a bunch of big-name partners.

PlumGrid's cofounders have worked on some of Cisco's most important networking products. For instance, CEO Awais Nemat worked on Cisco's flagship Catalyst 6500 and Nexus 7000 switches. CTO Pere Monclus, a Cisco Distinguished Engineer, worked on handfuls of Cisco's top products and even created an early prototype of an SDN product for Cisco.

PlumGrid's claim to fame is that it doesn't use the same open-source software called OpenFlow invented by the SDN leader, VMware's Nicira. In fact its founders have some sharp things to say about OpenFlow calling it "a demonstration of a concept. It's a demo, not a production-class system," Nemat told Business Insider.

Instead, they wrote their own software and included tools enterprises need like management and troubleshooting apps. PlumGrid's software is not free and open source like OpenFlow is, however developers can still write apps for it which are distributed through PlumGrid's app store.

Perhaps the best reason to watch this startup is because it has already attracted some big-name companies to support its initial product, the PlumGrid Platform, most of them from the ranks of Cisco's biggest competitors. Its partners include: A10 Networks, Arista Networks (run by another prominent ex-Cisco engineer Jayshree Ullal), Broadcom, Check Point Software, Citrix, F5 Networks, Palo Alto Networks, and others.

PlumGrid also part of AT&T's Foundry program, a proving ground for new network tech.

PlumGrid has raised nearly $11 million from investors Hummer Winblad Venture Partners and US Venture Partners.

Cisco plans to defend itself against SDN in general, and PlumGrid in particular, with its own SDN technology. Word is that this tech is being created by a Cisco-funded start-up called Insieme but Cisco has been very tight-lipped about the technology.

PlumGrid's Monclus isn't worried about Insieme. "We don't care. Cisco is very weak" in this new "virtual networking" market, he tells us.

There's a lot at stake. SDN promises to gut the $23 billion networking hardware market where Cisco dominates. It will be replaced by a brand new SDN market expected to generate $4 billion by 2016, according to market researcher IDC.

And, even though these SDN products are very young and enterprises aren't spending a lot on them yet, SDN startups have already had some spectacular exits. This includes the year-ago purchase of Nicira by VMware for $1.26 billion, the $176 million acquisition of Contrail Systems by Juniper Networks a mere two days after Contrail came out of stealth and F5 Network's acquisition of LineRate in February for millions, 10 months after it came out of stealth.