Agilent Stands Firm on Fibre Channel

Agilent Technologies Inc.s (NYSE: A) storage networking division has taken the wraps off its 2-Gbit/s Fibre Channel chip, reinforcing its commitment to this market and this technology. In fact, the company tells Byte and Switch it has no plans just yet for the up-and-coming iSCSI (SCSI over IP) market, a technology that some believe will one day usurp the Fibre Channel kingdom.

“iSCSI’s at least 12 to 18 months off,” says Julian Elliott, vice president and general manager of Agilent’s storage networking unit. “We currently have no plans for a chip to address this sector… most of our customers want Fibre Channel."

That doctrine is at sixes and sevens to the strategy being posited by startups like Trebia Networks Inc. -- which just won $40 million in funding to build network processors designed specifically for operation in the kit installed in IP SANs (see Trebia's $40M Secret).

It’s also distinct from the policy of Adaptec Inc. (Nasdaq: ADPT), a components firm that recently acquired Platis, specifically for its iSCSI chipset; and Broadcom Corp. (Nasdaq: BRCM), which has announced its intention to leap into this market with both broad feet.

“Agilent is caught in the big company mindset. It's just thinking about what it needs in the pipeline right now in order to meet its earnings numbers,” says Sunil Dhaliwal, a storage investor at Battery Ventures. “Fibre Channel is where the money is right now, but hanging onto incumbent technologies and customers for too long puts it at risk of missing the boat on new opportunities coming along."It’s easy to see Agilent’s dilemma. It reaped more than $200 million last year from its storage networking components business, representing roughly 20 percent of its overall revenue. Sales from this unit grew 80 percent over the previous year. And these numbers were driven in the majority by sales of its Tachyon Fibre Channel controller, which commands 60 percent of the market for FC chips. Moreover, the market for storage networking products is expected to grow 70 percent over the next three years.

Agilent says it's keeping a watchful eye on iSCSI and there's no danger it will miss the boat on the technology. Yet others have made much bolder moves. The budding standard, although not ratified yet, already has the backing of Cisco Systems Inc. (Nasdaq: CSCO), IBM Corp. (NYSE: IBM), and most of the startups in this space, and the momentum behind it is building (see IP Storage Test Draws Crowd).

Instead of linking storage over limited FC distances of a few hundred kilometers, iSCSI wraps the data in IP to link it over much longer distances. As companies rely more heavily on online data to run their businesses, moving information across geographical boundaries becomes critical. iSCSI could be a handy tool for that application.

"Fibre Channel is dying," says James Jungjohann, analyst at CIBC World Markets, “It would do Agilent no harm to look at what’s happening to Finisar Corp. (Nasdaq: FNSR).”

Another storage components vendor, Finisar recently lowered its guidance and slashed its earnings expectations -- which analysts attributed partly to the economic slump but also to a slowdown in orders for traditional FC components (see Finisar Lowers Guidance).“The market’s moving towards Gigabit Ethernet and IP for storage,” says Jungjohann.

Elliott counters that, according to IDC estimates, by 2005 only 15 percent to 17 percent of all storage networking ports will be connected via IP. “That means the majority of the market will be Fibre Channel, and Agilent is aggressively pushing Fibre Channel forward to meet the needs of the existing market,” he says.

Despite this position, Agilent is paying heed to the iSCSI camp, albeit not openly, perhaps for fear of alienating its FC customers. It has an undisclosed investment in SAN Valley Systems Inc., a company building technology that bridges FC to IP networks.

— Jo Maitland, Senior Editor, Byte and Switch http://www.byteandswitch.com

Want to know more? The big cheeses of the storage networking industry will be discussing iSCSI in a session at StorageNet, Byte and Switch’s annual conference, being held in New York City, October 2-5, 2001. Check it out at StorageNet2001.Movers and shakers from more than 100 companies – including Agilent – will be speaking at Opticon 2001, Light Reading’s annual conference, being held in San Jose, California, August 13-16. Check it out at Opticon2001