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Can Vixel Get Rich in Switch Niche?

Gains ground with embedded FC switch strategy, but it will soon face ferocious competitors

Vixel Corp. (Nasdaq: VIXL) -- having withdrawn its troops from the pitched battle for the SAN switch space -- has tried to harvest the comparatively tiny market for embedded switches that provide connectivity inside storage arrays.

So far, it's been a fairly big fish in a small pond. But Vixel, which has made its run at the embedded FC switch space virtually unopposed, will likely face some ferocious competitors before its own InSpeed strategy really starts paying off.

Vixel's latest news on this front is a deal it announced today with BlueArc Corp., which is using Vixel switches in its high-end NAS systems. In truth, however, this isn't a new relationship as much as it is an extension of an existing one: BlueArc struck an OEM deal with Vixel a year and a half ago (see BlueArc Embeds Vixel Switches and Vixel Inks BlueArc Deal).

But Vixel has recently won some legitimate new business with two new customers for its embedded switch products, Fujitsu Ltd. (OTC: FJTSY) and Xyratex. In May it firmed up its relationship with Hewlett-Packard Co. (NYSE: HPQ), and earlier this year signed up Apple Computer Inc. (Nasdaq: AAPL), which is bundling Vixel's box with its 3U-high Xserve RAID array. Other Vixel customers include NEC Corp. (Nasdaq: NIPNY) and Network Appliance Inc. (Nasdaq: NTAP) (see Vixel Recaps HP OEM Deal, Fujitsu OEMs Vixel Switch, Xyratex Designs SBOD, and Apple Slices RAID).

Vixel has also flexed some legal muscle, firing off patent-infringement suits against Brocade Communications Systems Inc. (Nasdaq: BRCD) and QLogic Corp. (Nasdaq: QLGC) (see Vixel Slings Suit at Brocade and Vixel Sues QLogic).

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