10-Gig Gains Momentum

Could 10-Gigabit Ethernet be breaking out of its traditional high-performance computing niche? Startup S2io Technologies Corp. certainly thinks so after clinching a key OEM deal with hardware giant Hewlett-Packard Co. (NYSE: HPQ) earlier this week (see HP Selects S2io's Xframe).

By signing the agreement, HP has effectively rubber-stamped S2ios 10-Gigabit Ethernet adapter for its family of enterprise servers. Until now, this type of technology was mainly the preserve of academic institutions and conehead-style research projects. S2io’s other big OEM deals are with supercomputing giants Cray Inc. (Nasdaq: CRAY) and Silicon Graphics Inc. (SGI) (NYSE: SGI).

There is one key difference between these agreements. Whereas Cray and Silicon Graphics are big-hitters amongst white-coated scientists, HP ships servers to a wide range of enterprise users. Clearly, there is a growing market demand.

Recently, there have been other signs that 10-Gigabit Ethernet is gaining momentum. A report from Communications Industry Researchers Inc. (CIR) this week predicted that the overall 10-Gigabit market will grow from $570 million in 2005 to reach a massive $3.3 billion in 2009. CIR attributes much of this growth to 10-Gigabit Ethernet, which will account for 80 percent of the market in four years’ time (see Report: 10-Gbit/s Market to Reach $3.3B).

Industry observers believe falling prices for 10-Gigabit Ethernet are helping expand its popularity. “Initially, it was so expensive that it was only universities and government research labs playing with it and doing wire speed testing,” says David Gross, research analyst at CIR. “They were the ones that could spend $50,000 per port.”