Intel will acquire Israeli Startup Granulate which improves performance of cloud servers

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by Ifi Reporter Category:Financial Apr 1, 2022

Intel reported that it has agreed to acquire the Israeli company Granulate, which has developed a product to improve the performance of cloud servers in real time. The deal was revealed last week. The terms of the deal were not announced in the companies' announcement, but sources close to the deal estimate that Intel will pay about $ 650 million for the Israeli start-up company. Nearly $ 100 million of that amount will be channeled into about 120 company employees' compensation and retention packages, all of which will be integrated into Intel's data center and artificial intelligence department.
Granolite has raised about $ 45 million since its inception four years ago from Red Dot, Arrow Ventures, TLV and Insight, which are expected to enjoy a phenomenal return on their investment. Granulite's last capital raising, in February 2021, was done at a value of less than $ 150 million, after the money. From the updated number of Granolite employees mentioned by Intel, it appears that in the year since the recruitment - Granolite has managed to double its number of employees by 3.5 times - which was only 35.
Granolite is a graduate of Intel's Ignite start-up accelerator and the companies have worked in commercial cooperation since 2019. Granolite was founded in 2018 by two graduates of the IDF Talpiot program, Assaf Ezra and Tal Sage. Its system is installed on servers that its customers rent from cloud companies , Learns their performance and knows how to optimize the performance of the server without any intervention from the developers.Improving performance allows companies to consume less computing power, thus lowering costs significantly.
Granolite's field of interest is gaining worldwide interest - a year ago, IBM bought one of the Israeli company's competitors - Turbonomic from Boston for about $ 1.5 billion.
Intel CEO Pat Glasinger has stated several times since taking office last February that he wants to make the software business a more central part of Intel's strategy. Software - which in turn will prefer to run their software on Intel processors rather than competitors.
In October 2021, Glasinger told CRN that Intel wanted to launch software services that would generate a new revenue stream for it, and that this was "part of the planned business model." Intel wants to sell more software services in the SaaS model (software as a monthly paid service), to generate recurring revenue with certainty about future revenue, and also to enjoy relatively high profitability. It will be able to sell such software services to its chip customers and thus generate more revenue from each customer.
Meanwhile, Intel brought in about $ 100 million from the software industry in 2021 - a fraction of its estimated revenue of $ 79 billion - but Glasinger takes the matter seriously. The actions are done, to a large extent, in response to Anvidia, which in recent years has also been selling a range of paid software services for developers and organizations. The acquisition of Granolite stands out as a very significant step in Intel's software strategy to date, and it is likely that Intel will want to offer the service to its customers for an additional fee.

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