Chelmsford startup gets million in funding

Wednesday, August 01, 2007 CHELMSFORD, Aug. 1, 2007 (McClatchy-Tribune Regional News delivered by Newstex) -- Software startup Desktone Inc. yesterday announced that it has lined up million in venture funding, a major boon for a company that has been in business for less than a year. Desktone offers a way for large companies to outfit their employees with a 'thin client' computer -- basically just a keyboard, a monitor and a mouse -- while all work stations are serviced by a single data center. This eliminates the need for each employee to have a hard drive, and can lead to substantial cost savings, according to Desktone CEO Harry Ruda. Called a 'virtual desktop,' Ruda compared the concept to the user-friendliness of telephone service. That's where the name Desktone came from, he said. 'When you pick up the phone, it's a dial tone,' Ruda said. 'All you have to do is pick up and you have phone service. (The name) is meant to elicit the concept of the dial tone for the desktop.' Desktone's technology is already being used at a major Wall Street financial institution, and others companies are preparing to adopt the platform, Ruda said. Desktone is partnering with large service providers -- Ruda declined to name them, but big companies in that business include IBM (NYSE:IBM) and Verizon (NYSE:VZC) (NYSE:VZ) -- to offer the virtual-desktop solution under a revenue-sharing agreement. Michael Rose, a research analyst for enterprise virtualization software at Framingham-based IDC, said financial companies are likely interested in Desktone's technology for security reasons, not because of cost savings. Virtual desktops are still a developing technology and have significant limitations when it comes to cost, performance and mobility, Rose said. 'It's still a relatively isolated adoption,' Rose said. 'In the future, as those limitations are addressed, then the amount of users will increase.' Ruda believes customers will be attracted by the potential to save time and money. He stated that the cost of running an information-technology department can run from ,200 to ,000 per desktop per year; by contrast, Desktone's solution would cost less than ,000 per desktop per year. The company anticipates rapid expansion in the near future. Desktone, founded last year by serial entrepreneur Eric Pulier, now has 15 employees, but will likely grow to 30 or 40 by the end of 2007, Ruda predicted. The million in venture capital will be used to support new hiring, stepped-up sales and marketing efforts, and the ongoing development in China of a second-generation virtual-desktop product. 'We're in heavy growth mode right now,' Ruda said. The company's headquarters on Apollo Drive in Chelmsford will house sales and marketing professionals, as well as an engineering team. Desktone's venture-capital take compares favorably with other recent deals in Greater Lowell. The largest in 2006 was million, to Bedford-based medical-device company Insulet. In the software space, Acopia Networks of Lowell topped last year's list with a million round of funding. Newstex ID: KRTB-0117-18590394 Delivered by Newstex LLC via theFinancials.com