In December, reports indicated that Microsoft had acquired Fungible, a startup that makes a type of data center hardware known as a data processing unit (DPU), for about $190 million. Today, Microsoft confirmed the acquisition, but not the purchase price, saying it plans to use Fungible’s technology and team to deliver “multiple DPU solutions, networking innovations and hardware systems enhancements.”
“Fungible’s technologies help enable high-performance, scalable, disaggregated, scalable data center infrastructure with reliability and security,” Girish Bablani, CVP of Microsoft’s Azure Core division, wrote in a blog post. “Today’s announcement further signals Microsoft’s commitment to long-term differentiated investment in our data center infrastructure, which enhances our broad range of technologies and offerings, including offloading, improving latency, increasing data center server density, optimizing energy efficiency and cost reduction.”
A DPU is a special piece of hardware designed to handle certain data processing tasks, including security and network routing for data traffic. The approach is designed to help reduce the load on CPUs and GPUs for core computing tasks associated with a given workload.
Fungible was started in 2016 by Bertrand Serlet, a former Apple software engineer who sold cloud storage startup Upthere to Western Digital in 2017, along with Krishna Yarlagada and Jupiter Networks co-founder Pradeep Sindhu. Replaceable sold DPUs that relied on two operating systems, one open source and one proprietary, and a microprocessor architecture called MIPS to control flash memory volumes.
Fungible was able to raise over $300 million in venture capital prior to Microsoft’s acquisition from investors including Softbank’s Vision Fund and Norwest Venture Partners. But its DPU architecture was reportedly difficult to develop, which may have affected its momentum. In August, after rumors of a failed Meta sale, the company revealed it was cutting staff and reducing its product portfolio.
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Increasing competition in the DPU market is also putting pressure on Fungible. Nvidia acquired DPU maker BlueField in 2019, while AMD snapped up Pensando late last year. Other rivals include GigaIO, Liqid, Lightbits, VMware’s Project Monterey, and Amazon Web Services’ Nitro cards that provide DPU-like functionality.
In Fungible, Microsoft gets DPU technology that it can use to bolster Azure—perhaps by selling it as a subscription product or tiered block storage service. This is the second data center acquisition in recent months for the tech giant, interestingly, following the purchase of high-speed fiber startup Lumenisity in December.
“Fungible DPU was invented in 2016 to address the most significant problems in scaled data centers: the inefficient execution of data-centric computations in server nodes,” Fungible wrote in a statement on its website. “We are proud to be part of a company that shares Fungible’s vision and will use the Fungible DPU and software to enhance its storage and networking offerings.”
The Fungible team will join Microsoft’s data center infrastructure engineering teams, Bablani said.
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