Frank Berry's  Instablog

On November 11, Emulex and QLogic issued press releases announcing their respective Fibre Channel HBA market share gains in Q3CY09. Emulex highlighted a 4% gain in the standalone 8Gb HBA segment while QLogic emphasized their strength in blade server mezzanine cards that led to a overall 1.9% gain in market share.

As the two giants in the Fibre Channel HBA market slug it out for a percentage or two each quarter, the entrants in the new market for CNAs are out of the blocks, and the race is on, and the pace is fast.

New Products Appearing

On October 6, the Wall Street Journal reported an oxymoron: “Brocade Communications Systems Inc. has quietly put itself up for sale.”  Since then news from one of the most widely read publications in the world has taken on a life of it’s own as the industry leveraged the full capabilities of social networking to speculate on the endless possibilities.

It’s not going to happen

I’m told at the Brocade sales meeting last week in Las Vegas, CEO Mike Klayko put up a slide that read “NOT FOR SALE.” I for one am joining the Brocade sales team in taking it at face value and moving on. – it’s not going to happen – at least not now.

On October 27th, 2009, Emulex announced that its OneConnect™ Universal Converged Network Adapters and OneCommand™ Manager are now generally available through the commercial distribution channel. Emulex also announced that it has entered into a technology agreement with IBM to deliver 10Gb/s Ethernet Network Interface Cards (NICs) and 16Gb/s Fibre Channel Host Bus Adapters (HBAs) for the entire IBM Power Systems product line.

The announcements represent important milestones for the data center network adapter market where approximately 98% of server ports are Ethernet NICs or LOM and the remaining 2% are Fibre Channel HBAs or InfiniBand Host Channel Adapters (HCAs).

For the huge base of servers that need Ethernet connectivity, OneConnect universal CNAs are the first in a new class of 10Gb Data Center Ethernet (DCE) adapters with OEM validation of NIC functionality rich enough for the data center. This means data center managers for the first time have a platform for the vast majority of their server ports upon which they can build-out additional converged networking capabilities in the future.

The Wall Street Journal wrote on Monday that Brocade (BRCD) has quietly put itself up for sale.  Brocade customers HP (HPQ) and Oracle (ORCL) were mentioned by unidentified WSJ sources as among the potential buyers that are kicking the tires.

Brocade is coveted by its customers because the company is the only networking vendor that has a complete portfolio of Ethernet and Fibre Channel technology that spans adapters and switches. The end-game for HP and Oracle is cloud computing. They know they will need this broad networking capability in the future to compete with Cisco (CSCO) for delivering compute power, storage capacity and networking bandwidth from the cloud. HP and Oracle also know this range of technology is needed short-term to protect their business from Cisco as servers evolve to fabric-based servers featuring sophisticated, high-powered networks inside.

I consider HP most likely to buy Brocade simply because the companies are so closely aligned.  HP is Brocade’s biggest customer and Brocade products are already tightly integrated into HP storage systems and blade servers.  The Brocade portfolio would help HP compete better in the networking and server markets today and in the cloud computing market tomorrow.

QLogic (QLGC) announced on September 16th that it’s a manufacturing and marketing partner for the new HP (HPQ) Virtual Connect 8 gigabit Fibre Channel module – a relatively new class of product that has become very popular because it solves a nagging problem for data center managers.

Data center managers routinely deal with Brocade (BRCD) Fibre Channel switches not working seamlessly with their Cisco (CSCO) switches or their QLogic switches. These multi-vendor interoperability issues make overall SAN management a hassle, or forces the data center manager to buy only one brand.  Virtual Connect blade server modules have become volume products because they eliminate multi-vendor switch interoperability issues by making the ports look like Fibre Channel HBAs.  Brocade, Cisco and QLogic switches are designed to play nicely with any HBA so they all connect perfectly to these pseudo-HBAs.  Interoperability problem solved.

The Good

On September 2nd, Brocade (BRCD) announced an expanded relationship with longtime customer Dell. According to the announcement Brocade will provide Dell customers with a comprehensive suite of end-to-end computing, networking and storage solutions through the Dell global sales organization.

One facet of the agreement marks a change in direction for Dell and significant upside for Brocade’s small but growing adapter business and for their newly acquired Ethernet switch business. In contrast to the past where products were Brocade-branded, the products covered in the recently announced agreement include Dell-branded Fibre Channel host bus adapters and converged network adapters, Fibre Channel over Ethernet switches and Converged Enhanced Ethernet switching products.

Dell is skating to the puck