Cisco's First in Directors, Dell'Oro Says

Less than four years after entering the Fibre Channel storage market, Cisco reached No. 1 in director switch market share in its last quarter, according to market research firm the Dell'Oro Group.

Regarding the as-yet-unpublished figures, Dell'Oro Group president Tam Dell'Oro says Cisco edged Brocade for the top spot in director revenue. Cisco had revenue of $68.5 million, giving Cisco a 33.6 percent market share in director switches, compared to Brocade's $68 million and 33.3 percent market share. Brocade led in director ports shipped for the third straight quarter, with 36.7 percent market share. Cisco moved up to second in ports shipped, with 34.1 percent market share. (See Can Two Be One?)

McData lost its director revenue market share lead for the first time, placing third with $67.1 million in revenue and a 32.9 percent share of market.

Cisco, which has concentrated on the high end since entering the market with its MDS switches, was the only one of the three to gain in director revenue last quarter. (See Cisco Buys Andiamo.) Cisco's director revenue increased $3.8 million from the first quarter while Brocade slipped by $600,000 and McData by $7.3 million.

Brocade remained dominant in smaller-count switches and the overall Fibre Channel switch market, but Cisco's rise in directors no doubt helped along Brocade's $713 million acquisition of McData last month. (See Brocade Buys McData.)The tale behind the figures? With McData soon to be out of the picture, Brocade and Cisco will battle intensely for McData customers as those customers start to upgrade. (See Users Ponder Life Under Brocade.)

"Cisco has been certainly gaining share over the last several quarters," Dell'Oro says. "There might be a quarter or two here or there where they pop down, then they pop back up. Now the question is, 'Are McData customers going to buy stuff from Brocade or Cisco on the high end?' You can bet Cisco is going to be offering some aggressive swapouts."

Dell'Oro breaks Fibre Channel switch revenue into classifications that include modular switches (directors) and fixed switches, defining modular as switches with redundant power supplies, fans, control modules, and hot-swappable modules. Fixed switches have a fixed number of ports, and cannot be upgraded. Dell'Oro does not use port count as a differentiator, but directors generally have 64 or more ports.

Dell'Oro numbers shed light on the storage performance by Cisco, which does not break out its exact storage revenue in its earnings reports. (See Cisco Storage Spikes and Cisco Doubles SAN Sales.) They also show how much the director landscape has changed since Cisco entered the market.

For the full year of 2003, McData owned 52.3 percent of the director share compared to 28.8 percent for Brocade and 8.8 percent for Cisco. Last year, McData's share decreased to 38 percent with Cisco at 33.1 percent and Brocade at 27 percent.One factor that's helped to shift market shares has been 4-Gbit/s functionality. As McData CFO Scott Berman admitted last week, McData got hurt by being slow to adopt 4-Gbit/s technology. (See McData Post-Mortem.) Brocade was a distant third in the director market with 25.8 percent share before it began selling 4-Gbit/s directors in the third quarter of 2005. Cisco's jump to first came after it introduced 4-Gbit/s cards for its directors, including a new 528-port chassis.(See Cisco Goes 4-Gig & Big.)

For the overall 4-Gbit/s director market, Brocade still had 60.1 percent market share last quarter with Cisco charging hard at 23.5 percent and McData at 16.3 percent, according to Dell'Oro.

"Four-gig was propelling Brocade's growth over the last three quarters, and now Cisco's giving them a run for their money," Dell'Oro says.

Despite Cisco's gains, it still has a way to go to replace Brocade as the Fibre Channel switch leader. Brocade led the overall Fibre Channel switch market in the second quarter with 42.8 percent share compared to McData's 29.7 percent and Cisco's 21.9 percent. Adding McData's revenue for the quarter would give Brocade a combined 72.5 percent share of the overall market and 66.2 percent share of the director market.

And Brocade has gained more ground in the director market over the past year than Cisco, increasing $29.3 million compared to Cisco's $22.1 million gain. McData's revenue stayed flat over that period.But Brocade has lost its early adopter lead in 4-Gbit/s gear, and it's no sure thing it will keep the market share it inherits from McData. McData lost share after acquiring CNT, which had 9.2 percent of the director market before McData picked it up last year. (See McData Bags CNT for $235M.)

Dave Raffo, News Editor, Byte and Switch