After three years of quietly building an internet-of-things platform in stealth mode, Ayla Networks unveiled itself this morning by announcing a $5.4 million round of funding and major partnerships with leading chip producers and a Chinese internet giant.
"We've been around for a while. But we wanted to have something real to show before we actually announced ourselves," said David Friedman, Ayla co-founder and CEO in an interview.
The California-based company has accumulated a cast of founding members with deep experience building embedded wireless chips, plus top engineers from Amazon, Cisco and Silver Spring Networks that have worked on cloud-based services.
So what exactly does the company have to show?
Ayla has built an integrated "plug-and-play" solution for original equipment manufacturers (OEMs) to make their appliances and other devices intelligent. The company offers low-power Wi-Fi modules that are integrated into a device straight off the production line. The module connects to Ayla's cloud-based software to configure the devices and provide an application library for customizing the user interface.
The technology connects with Android, iOS, Wi-Fi, ZigBee, Linux and a variety of other communications standards.
Ayla provides the total package of hardware and software for connecting devices, which an OEM can then customize for its own use. The final interface used by the consumer is branded by the OEM. When fully connected, products will be able to talk to one another across a wide array of communications platforms, allowing them to relay information about customer use patterns, energy prices, weather, maintenance needs -- anything that would be relevant to how the device performs.
The hardware will cost an OEM only "a few bucks" to integrate for simple applications, said Friedman. Costs increase if the architecture becomes more complicated in order to handle high volumes of data. Ayla will make money by charging for the cloud-based applications and data management services.
"The OEMs don't have to write one line of networking code. We provide all the hooks," said Friedman. "At the end of the day, the OEMs know their customers and they know the end product. We simply give them code to build their own applications."
Friedman previously served as VP of business development at ZeroG Wireless working with microcontroller companies and OEMs on embedding low-power Wi-Fi modules. Before working at ZeroG, Friedman was at Matrix Semiconductor and Intel. His co-founders and management team all come from ZeroG, Matrix Semiconductor and Amazon.
"We don't just offer software. We really spend a lot of time working in the ecosystem of the chip suppliers that these guys build their stuff with," said Friedman. "Before we ever wrote a line of code, we immediately met with every big chip guy."
The result is a partnership with leading semiconductor companies Broadcom Corporation and STMicroelectronics to build the hardware.
After forming relationships with these providers, the coding became much more important. The team brought in engineers who previously worked at Cisco, Silver Spring Networks and Sun Microsystems to work on the software platform, user interface and security.
In March of last year, Ayla closed a $5.4 million Series A financing round from Voyager Capital and Crosslink Capital to build hardware partnerships and the software. The team grew from four to twenty people, mostly engineers.
Now the big challenge for Ayla will be getting OEMs comfortable with embracing technology from a startup.
"Of course, we want them to do it a lot faster than they want," said Friedman. "It will be a second product for many OEMs. We have to convince them to get rid of that $15 display and understand the value of truly knowing how a product is operating, how customers are using it, and how to create new revenue streams."
Ayla has already secured one high-profile customer. The company also announced that it had partnered with Sina, a Chinese communications behemoth that owns Weibo, China's version of Twitter, to develop an intelligent weather station with its technology platform.
Ayla hopes to make a dent in the Asian market, where connected devices are becoming increasingly popular; however, Friedman said the team will focus mostly on the North American market for now.
Ayla joins a crowded list of companies working on the internet of things concept in the energy efficiency space. Large firms like GE and Siemens are building their own connected thermostats, wind turbines and building efficiency products; and myriad startups like Nest, Tendril, Electric Imp and Revolv are working on the hardware or software to make consumer devices smarter.
But Friedman believes that no company has a truly end-to-end hardware and software platform to give an OEM out-of-the-box connectivity that can be easily customized.
"There are a lot of great companies out there pulling more and more pieces together. But it's still not enough," he said. "This market can't exist if you're only selling piece parts or if you can only do 70 percent of the equation."
Now that the company is finally out in the open, Ayla will have to prove to OEMs that it has the 100 percent solution.