ISCSI Shakin' Goin' On

As the iSCSI bandwagon rumbles ahead with momentum, some seats are getting taken, and a small group of players are already falling overboard.

A fleet of startups and one established player, Adaptec Inc. (Nasdaq: ADPT), have taken the lead in low-end iSCSI, but there are signs that the segment's open for more.

The chief evidence is Adaptecs earnings from last quarter, which indicate it's starting to see some solid iSCSI sales (see Adaptec Posts Q4 Profit). Adaptec was among the handful of storage companies that increased revenues over the final quarter of 2003, and CEO Bob Stephens claims Adaptec’s new iSA1500 Storage Array is an early hit. That array includes low-cost SATA drives and is aimed at companies looking to replace direct attached storage with low-cast SANs.

Stephens claimed on the earnings call that Adaptec has won a Tier 1 OEM deal; and at least one analyst, Kaushik Roy of Susquehanna Financial Group, suspects the agreement could be for iSCSI gear with IBM Corp. (NYSE: IBM) or Dell Computer Corp. (Nasdaq: DELL).

“There is a significant iSCSI market coming,” Roy says. “And there’s more competition coming. It looks like LSI Logic

will get into that space, too.”Meanwhile, newer players EqualLogic Inc., Intransa Inc., iStor Networks Inc., LeftHand Networks Inc., StoneFly Networks Inc., and Xiran position their wares as the same kind of low-cost alternative. And so far, a few of them also appear to be holding their own.

Indeed, at least one says the only major challenge is meeting demand. “It’s a question of how fast the limited number of iSCSI vendors can engage the market,” Intransa CTO Peter Wang says. “It’s a matter of keeping up with demand. There’s more than enough market for all the startups.”

While Adaptec has been the most aggressive established player in low-end iSCSI, other big companies have entered the space, mostly at a higher end than Adaptec and the startups. Network Appliance Inc. (Nasdaq: NTAP) was among the first to offer iSCSI storage systems (see NetApp Casts Wider Net and Adaptec, NetApp Team on IP SAN). EMC Corp. (NYSE: EMC), which sells Symmetrix high-end SANs with iSCSI interfaces, is expected to announce native iSCSI connectivity for its midrange Clariion this month. Later this year, Dell is expected to offer an iSCSI version of the new low-end Clariion CX 100 that it will co-brand with EMC.

“The entire midrange will become iSCSI within two years,” Wang predicts. “I believe we’ll see a very fast ramp through ’05 and ’06.”

Wang says the startups can win the midrange by carving a spot on the low end and scaling up, but it’s hard to imagine them holding off the likes of EMC, NetApp, IBM, or Dell once those giants decide the iSCSI market is big enough to tackle head-on.Already there's been consolidation among vendors in the iSCSI initiator space, which consists of TPC/IP offload engines (TOEs) and IP HBAs. Trebia Networks folded last August, and iReady was sold to Nvidia Corp. for chump change a few weeks ago (see Trebia Croaks and iReady to Go).

Remaining iSCSI initiator startups include Alacritech Inc., Astute Networks Inc., iVivity Inc., and Silverback Systems Inc..

Adaptec also plays in the HBA space, but analysts expect QLogic Corp. (Nasdaq: QLGC) to dominate once this part of the market heats up. While its major Fibre Channel HBA rival Emulex Corp. (NYSE: ELX) so far has snubbed its nose at iSCSI, QLogic has lined up 10 design wins with at least six OEMs, according to its CEO H.K. Desai (see Emulex Slaps iSCSI).

But it's likely the IP HBA market won’t get strong until IP SANs move up into the midrange, since entry-level iSCSI systems don’t require HBAs.

“Right now we expect [iSCSI] to be in the product ramp in early 2005, but that’s really a new market, so a lot of different pieces have to come together,” Desai told analysts during QLogic’s earnings call last week. “But our forecast right now is probably the first quarter of 2005.”— Dave Raffo, Senior Editor, Byte and Switch