Cisco's Elbowing McData, Report Says

Cisco Systems Inc. (Nasdaq: CSCO) is on pace to pass McData Corp. (Nasdaq: MCDTA) and become second in SAN switch market share this year, according to a research report by investment firm Goldman Sachs & Co.

Goldman Sachss quarterly switch tracking report says Cisco remains in third place behind Brocade Communications Systems Inc. (Nasdaq: BRCD) and McData, but is picking up chunks of share from McData. According to the firm's estimates, Cisco had 21.2 percent market share for last quarter and 16.8 percent for all of 2004, while McData’s market share stood at 23.2 percent for the quarter and 25.7 percent for the year.

In 2004, Cisco gained 9.2 percent market share and McData lost 9 percent. Perhaps more disappointing for McData, its market share has dropped eight straight quarters from an estimated high of 41.1 percent in January of 2003 when Brocade was its only major rival.

“At its current pace Cisco is only one or two quarters away from surpassing McData in total market share for the first time,” analyst Brenden Smith writes in the report.

Brocade remains the SAN switch leader with 50.3 percent market share in January and 52.2 percent for the year. Brocade lost 0.5 percent share for the year, but it gained share last quarter on a year-to-year basis for the first time since Cisco entered the market in early 2003. Goldman Sachs attributed Brocade’s gain to success with its blade server switches and new Silkworm 2400 128-port director (see Brocade & HP: Blade Brothers, IBM, Brocade Tie SAN Knot, and Brocade Launches Meteor).