Uni tries wings with cloud start-up

The fortunes of a Melbourne cloud computing start-up could be a prototype for how Australian universities can successfully commercialise intellectual property.

Manjrasoft offers high-end distributed computing services over the internet, by essentially using a network of desktop computers and servers to collectively process highly-intensive computations. Customers are charged for how much computing power they need, and this can be scaled as required.

The Aneka platform was developed in the University of Melbourne cloud computing and distributed systems (CLOUDS) laboratory by a team led by Professor Rajkumar Buyya.

The university believed the product had potential and co-founded Manjrasoft with Buyya in 2008. The university has contributed the IP behind the Aneka platform and also staff and computing resources, while Buyya manages the operation and sales.

Recently, the company received a $750,000 funding injection from $60 million investment fund UniSeed, which is a partnership between the Uni of Melbourne, Uni of Queensland, Uni of New South Wales and superannuation fund Westscheme.

The purpose of the fund is to commercialise research developed in universities. It does this via funding and also its staff, many of whom have worked at multinational technology companies in areas of research and development, sales and product development, according to Buyya.

Traditionally, universities often get no return on the research and development they perform because any lucrative IP and staff are often cherry-picked by private companies. There is an emerging trend for universities and technology companies to partner, but the lion's share of the profits usually go to the private company.

UniSeed appears to be an attempt to prove a university's capacity to commercialise technology, and Buyya said the funding injection has provided the sales and product development staff required to grow the company.

Manjrasoft has six customers based in China, India and the US and turned a small profit last year, Buyya said. One customer, China Southern Railway used Aneka to perform calculations for engineering design.

It must meet strict sales and growth targets set by UniSeed, which is grooming the company for sale, Buyya said. Manjrasoft has projected revenues of $300,000 in the 2010 financial year which will grow to $1.5 million in 2012.

Commentary

Strength

Manjrasoft is significantly backed by the University of Melbourne and UniSeed, which have a lot of skin in the game and have to see a return on this.

Weaknesses

The kind of customers that use this technology (construction, engineering, finance, telco) traditionally deal with big companies with a proven track record, as opposed to a start-up. It's also unknown how Manjrasoft could respond to these demands.

Opportunities

As the internet has opened up new markets, companies require high-end computing power quickly in order to develop new products and services, so Manjrasoft operates in a rapidly growing market.

Threats

A multinational such as IBM, Google or EMC could easily develop a similar or superior product, and more importantly they have the sales and distribution network to quickly profit from it.

Conclusion

Manjrasoft has developed an interesting product with a useful application, but it doesn't appear to have the capacity to secure enough large customers that would make it a worthwhile acquisition. I'm not convinced it will meet sales and growth targets in the set time frame and think it will be cheaply offloaded or re-absorbed by the University of Melbourne.

VERDICT: BUST