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SAN Switch Year-End Summary

As the year draws to a close, the SAN switch market is looking strong, but at least one vendor may wish Santa's elves would deliver better year-end figures, and 2005 could yield some surprises.

By most accounts, the leading light in the SAN switch market remains Brocade Communications Systems Inc. (Nasdaq: BRCD). With over $600 million in revenues anticipated for 2004, the vendor continues to build on its strong OEM relationships, particularly with Hewlett-Packard Co. (NYSE: HPQ). (See Brocade & HP: Blade Brothers, HDS Resells Brocade Switch, and IBM Offers 4-Gig SAN Switch.) Just this week, Brocade announced that its SilkWorm 3250 will be sold with new HP SAN starter kits (see Brocade to Ship With HP Starter Kits).

According to figures from Goldman Sachs & Co., Brocade's estimated revenues for 2004 will be about $612 million, or roughly 48 percent of the $1.2 billion SAN switch market. Comparatively, McData Corp. (Nasdaq: MCDTA) owns roughly 32 percent of the market as the year closes, Cisco Systems Inc. (Nasdaq: CSCO) owns about 15 percent, and QLogic Corp. (Nasdaq: QLGC) holds about 5 percent.

Table 1: Total Storage Revenues ($M)

2002 2003 2004E
Brocade $562,407 $547,201 $612,225
Cisco Not applicable $79,300 $184,300
McData $328,279 $418,860 $398,475
Qlogic $33,750 $51,450 $59,400
Source: Goldman Sachs

Brocade is not the fastest-growing player in the SAN sector, by Goldman's figures; that honor goes to Cisco, which boosted its storage revenues more than 130 percent in 2004. QLogic grew 15 percent, and Brocade grew 12 percent. McData's revenues declined 5 percent.

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