Until recently, the suppliers of Fibre Channel switches and host bus adapters have represented a comparatively insular segment. But now the SAN world is getting rocked out of its niche as FC becomes more widely deployed. More specifically, according to the report, Cisco Systems Inc.'s (Nasdaq: CSCO) initial SAN thrust is having a noticeably disruptive effect on the incumbent switch playing field dominated by Brocade Communications Systems Inc. (Nasdaq: BRCD) and McData Corp. (Nasdaq: MCDTA).
Cisco -- whose $19 billion in revenues last year is roughly 10 times the size of the entire FC market today -- is using a variety of aggressive tactics to win share, according to the Byte and Switch Insider report, "Fibre Channel Market Update." For example, in the second quarter Cisco quickly cut prices on its switches to OEMs as much as 50 percent after originally pursuing a "premium pricing" strategy, and is now offering deals in the sub-$1,000-per-port range as well as buying back users' existing SAN switches, the report says.
Questions remain about how well Cisco can continue to execute its SAN strategy, and the report cautions that it is very deliberately rounding up marquee accounts in an attempt to show traction (see Cisco & IBM Jam on SANs). Nonetheless, Cisco appears to be firing on all cylinders and defied naysayers by securing the four biggest storage systems OEMs in the first half of 2002: EMC Corp. (NYSE: EMC), Hitachi Data Systems (HDS), Hewlett-Packard Co. (NYSE: HPQ), and IBM Corp. (NYSE: IBM).
Another factor that could reshuffle the SAN deck is the rollout of 4-Gbit/s Fibre Channel SANs. QLogic Corp. (Nasdaq: QLGC), which has been the biggest promoter of the technology, stands to gain substantially if the industry moves in this direction. However, the report notes, many companies remain opposed to the interim stop at 4 Gig, including Brocade and McData (see FC Fires Up 4-Gig Fiesta).
The 29-page "Fibre Channel Market Update," researched by storage industry analyst Alan Radding, breaks down the strategy and vision of each of the major players in the sector and explores industry trends. It includes a comparison of recent switch prices as well as detailed features tables comparing 16 switches and 21 host bus adapters.
The public companies analyzed in the report include Brocade, Cisco, McData, QLogic, CNT (Nasdaq: CMNT), Emulex Corp. (NYSE: ELX), JNI Corp. (Nasdaq: JNIC), and Vixel Corp. (Nasdaq: VIXL). Startups covered include Maranti Networks, MaXXan Systems Inc., Sandial Systems Inc., and Sanera Systems Inc.
Other highlights from the July report:
- The Fibre Channel switch market remains positioned for a strong 42 percent compound annual growth rate (CAGR) through 2007.
- Interoperability and price remain the two biggest pain points for corporate SAN buyers.
- While deployments of so-called smart SAN switches remain at least a year away, vendors are aggressively positioning now.
- SAN switch startups have gained marginal traction to date, and bottom-tier players have exited the space.
- iSCSI and other IP protocols complement FC, not replace it -- at least in the near term.
The current Byte and Switch Insider report -- "Fibre Channel Market Update" -- is available here. A single-user license to the report is $400. Annual single-user subscriptions to Byte and Switch Insider, which include access to the complete archives, the current report, and each of the monthly reports issued over the next 12 months, are available for $1,250.