Storage Vendors Look East

Judging by economic figures and a flurry of news coming out of the Asia/Pacific region, storage vendors see fertile ground there for revenue growth in 2004 and beyond.

According to IDC, fourth-quarter 2003 revenue in the Asia/Pacific jumped to $544.5 million, 10.6 percent higher than the previous quarter. New storage capacity in the region grew by 38.1 percent to more than 79,000 TBytes for the entire year. IDC cites Asias recovery from an economic downturn and from SARS, plus demand for storage capacity, as reasons for the upturn in spending.

The momentum appears to be carrying over to 2004, as recent earnings reports show:

Executives from switch vendors Brocade Communications Systems Inc. (Nasdaq: BRCD) and McData Corp. (Nasdaq: MCDTA) both identified Asia as an emerging market for their products during calls with analysts in February. “It looks like an expanding market, and we see some strength coming there,” Cisco CFO Tony Canova said.

McData has aggressively attacked the region, naming an Asia general manager and country managers in China and Japan since December (see McData Names Asian GM, McData Hires China Country Manager, and McData Appoints Ishimoto in Japan). “Asia/Pacific provides us with the biggest upside, if you look at it over the whole year,” McData CEO John Kelley says.Asia is also a ripe spot for emerging technologies. For instance, Emulex Corp. (NYSE: ELX) EVP Michael Rockenbach cited his company’s new embedded switches as the primary reason it recorded record revenues in Asia last quarter.

Hang on! All this enthusiasm should be tempered by warnings that no single geographic area should be viewed too enthusiastically in this post-bubble era, right? No doubt. But the figures speak for themselves, and vendors cite specific pockets of opportunity.

Because Fibre Channel SANs aren’t entrenched in Asia, for example, iSCSI vendors see an opening to tackle the market. ISCSI startup Intransa Inc. recently established regional headquarters in Asia and Europe, but CTO Peter Wang says “Asia is clearly growing faster than Europe. India is especially looking for cost-effective technologies.” Wang says the startup sold three iSCSI SAN systems in India through OEMs this year (see Intransa Expands Overseas, and Intransa Goes to India With SES).

InfiniBand is another emerging technology looking for a home in Asia. InfiniCon Systems Inc. EVP Chuck Foley says Asian high-performance computing sites are more open to InfiniBand because their infrastructures are new and they haven’t already invested heavily in other technologies (see Interconnects Look to HPC List). InfiniCon lists Shondong University and National Tsinghua University in China as customers.

InfiniBand startup Voltaire Inc. has been expanding its sales force in Asia; and Topspin Communications Inc. has announced a distribution deal with Nissho Electronics Corp. of Japan (see Voltaire Inhales $15M).Other recent stories about companies' Asian successes include:

— Dave Raffo, Senior Editor, Byte and Switch