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Report: Fibre Channel's Outbound

Memo to Fibre Channel vendors: These are the good old days.

Thats what a report on storage networking from The Linley Group

claims. The study forecasts a steep drop in the price of Fibre Channel products over the next few years as iSCSI and other new technologies eat into the SAN market.

Principal analyst Linley Gwennap says the major Fibre Channel switch players will likely move into the IP fray with no problem, and opportunistic startups could use the technology shift to their advantage, tapping price reductions in Fibre Channel components. Gwennap projects the selling price of HBAs and other Fibre Channel products to fall by at least 50 percent over the next three or four years.

Like many other analysts, Gwennap thinks Fibre Channel revenue will continue to grow near-term. By his lights, Fibre Channel unit sales will grow rapidly over the next two years, and revenue should grow by about 20 percent per year in 2004 and 2005 despite the price drop. But he expects growth to slow to single digits in 2006. By 2007, he expects IP SAN devices to outsell Fibre Channel SAN devices.

Who are the winners and losers in this scenario? Much depends on a company's investment in Fibre Channel for its own sake. “If you look at yourself as a SAN company, then IP is a different way to implement the SAN,” Gwennap says. “But if you look at yourself as a Fibre Channel company, then you’re going to get caught up in the technology switch.”

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