Cisco Boasts SAN Switch Gains

Dell’Oro Group’s latest numbers for the storage area network (SAN) market show Cisco gaining market share in SAN switches, and QLogic pulling even with Emulex in host bus adapter (HBA) revenues.

Dell’Oro’s latest report found that sales of Fibre Channel switches and HBAs declined 3 percent in the second quarter of 2004. The FC switch segment was flat, while the HBA segment declined 7 percent for the quarter.

“In the FC switch segment, Cisco continues to gain traction in large enterprise accounts, posting 20 percent revenue growth in the second quarter,” stated John Carvell, Dell’Oro Group’s principal analyst for SAN Research.

McData’s FC switch revenues declined in the second quarter, in part because of softer demand for its current modular products in anticipation of the launch of its new Intrepid 10000 Director product, Carvell said.

Brocade led the overall SAN switch market in the quarter with $148.7 million in sales, a 2.3% sequential gain, while Cisco posted $44 million in revenues, a 19.9% sequential jump. McData posted $85.3 million in sales, an 8.5% sequential decline. McData continues to lead the modular market by a wide margin, with $64.2 million in sales in the second quarter, but Dell’Oro showed Brocade and Cisco gaining ground there too.

“We are pleased with the continued momentum Cisco and the MDS 9000 are generating in the SAN switching market,” Cisco said in a statement. “The latest market share data from the Dell’Oro Group illustrate that Cisco is executing and customer adoption of the MDS 9000 is increasing as planned.”

“Obviously these are great numbers for Cisco, although still not what it may have expected when first entering the market,” said Nancy Marrone-Hurley, senior analyst at Enterprise Strategy Group. “While these numbers definitely show that Cisco is gaining momentum, it should be put in perspective as it relates to the overall market. McData may have lost a few points, but they still dominate in the director space, and Brocade is still the overall leader by a long shot. Also, remember the growth is on very small initial numbers, so of course it will seem much larger than the incumbents. If either Brocade or McData were to grow their market share as much as Cisco, it would mean the market itself was growing by leaps and bounds, which is not the case in this economy. However, these result do indicate that the SAN market itself is growing, which is positive for all of the vendors.”

“That said, Cisco does have very strong products and are definitely very competitive with the incumbents,” Marrone-Hurley added. “Cisco does a great job of leveraging their existing relationships in their installed base, and often get their foot in the door because of the Cisco presence in an account. However, there is still a significant challenge for them to overtake large accounts and displace McData and Brocade, so we expect that the battle for the enterprise SAN will continue to be a challenge for Cisco.”

In the HBA segment, QLogic pulled ahead of Emulex in HBA port shipments in the second quarter and matched Emulex in HBA revenues for the first time. “It appears that QLogic has overcome its channel inventory realignment challenges, but Emulex is still grappling with this issue,” Carvell said. QLogic’s port shipments grew 16% in the quarter, compared to a 9% decline for Emulex.

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