With exclusive design wins at NetApp & IBM, and offering the only single chip CNA you can get from EMC today, QLogic continues to pommel its competitors. If this was a boxing match, Emulex would be Gerry Cooney in the 1990 bout with George Foreman.
For IT vendors, when a big customer has been buying tens of millions of dollars worth of your products each year, life is good. Wall Street is happy with your recurring revenue stream, your market outlook is upbeat, and you can showcase that big customer's brand to attract new business.
The problem with large revenue streams for IT vendors is that the vendors sometimes become complacent. They assume the business will continue to exist unchallenged. They make the same product every year with minimal upgrades, living off a cash cow. In the case of Fibre Channel adapters, Emulex was living large off of revenue from IBM Power Systems, bringing in approximately $100M a year from its FC adapter business. As the only provider to IBM Power Systems, Emulex got all the divisions' FC adapter business.
However, as is typical, industry players have not stood still, and Emulex has taken some solid hits. As the industry started to make plans to migrate to converged network FCoE adapters (CNA's), Emulex has been battling with having no Ethernet stack of its own. The company has scrambled to lash together a product known as "UCNA" with Server Engines in an effort to avoid defeat and try to gain some FCoE design wins and avoid an early round knock-out. The strategy isn't working; IBM Power Systems is sole sourcing single-chip CNAs for FCoE from QLogic. The single chip part is important because it reduces power consumption and enables systems vendors to integrate FCoE much more easily. I believe Emulex just lost its biggest customer to its main rival, and Emulex is out telling Wall Street that network convergence will be a big revenue driver for them--so much for that story.
One of Emulex's biggest customers has effectively told them that their FCoE offering isn't up to snuff, and that has to hurt. This is what happens in these heavyweight vendor battles when one side has been engaged in concentrated training and preparation, and the other side has been coasting on old wins. I believe EMC has also been a top customer for Emulex, and they haven't announced support and use of the "UCNA" either. Available information indicates that much like IBM, the only single-chip CNA that EMC has currently qualified is QLogic's 8100 Series. There is no confirmation that UCNA is even in EMC test labs yet.
I'm still thinking about who would be a good representation of Brocade in this heavyweight mash-up. Who would you suggest?