On April 8, Emulex announced that its OneConnect Universal Converged Network Adapters for 10Gb iSCSI and Fibre Channel over Ethernet (FCoE) are now available through EMC Select for use across the Connectrix, CLARiiON, Celerra and Symmetrix product lines. What stood out to me was that this marks the first 10Gb iSCSI connectivity solution available through EMC Select. Emulex hit three birds with one stone by tapping into the fast growing markets for iSCSI storage and 10Gb Ethernet (GbE), and by seizing an exclusive position with EMC, at least until EMC qualifies a competitor.
The growth of iSCSI storage and networking is a blindingly bright spot in the overall market for storage. For example, in their last quarter's earnings announcement, Dell reported 44 percent year-over-year growth for iSCSI storage alongside a slight decline in overall storage revenue. Today, Cannacord Adams published a Daily Letter that expressed "a cautious tone across the storage sector as checks across the high-end server and storage food chain detected a more sober tone vs. September and December." Inside of this sector, I expect iSCSI storage and networking sales to continue double-digit, quarter-over-quarter growth. Considering that over one million server ports will be configured for iSCSI in 2010, there is plenty of short-term potential for Emulex to drive incremental revenue with their iSCSI adapters. Long term, I expect revenue from iSCSI storage to exceed revenue from Fibre Channel storage within five years.
One of the few infrastructure segments growing faster than iSCSI storage is 10GbE networking. Together they form 10Gb iSCSI storage area networks (SANs). In 2010, shipments of 10GbE ports will more than double. Within the next two years, 10GbE ports on data center servers will replace 1GbE ports as the standard as network administrators install faster networks to match the 10x better I/O performance of their new servers with Intel Xeon processors.
EMC storage systems offer connectivity to a server via modules with both 8Gb Fibre Channel and 10Gb iSCSI ports. EMC does not report the percentage of iSCSI storage ports vs. the percentage of Fibre Channel ports configured by their customers. If that percentage is a conservative 10 percent and we multiply that times EMC's 30 percent share of the external storage market, then Emulex is the only 10Gb vendor competing to connect servers to EMC 1/10Gb iSCSI storage that comprises three percent of the storage market, at least until EMC qualifies another 10Gb vendor.
The bottom line is that iSCSI is a critically important growth market for storage and networking vendors. The announcement by Emulex indicates they're getting in on the ground floor, which should translate long term into greater market share and profitability.
