Aliso Viejo-based QLogic Corp. widened its market share lead over Costa Mesa-based rival Emulex Corp. for a profitable bit of electronics used in storage networks.
For the fourth quarter, QLogic had 49% of the market for fibre channel host bus adapters,circuit boards that speed up the flow of data between servers and computers on a network.
That’s up from a 48% share in the third quarter and up from 43% a year earlier, according to statistics from Redwood City-based market researcher Dell’Oro Group Inc.
“We see strong momentum in our business,” said Jeff Benck, president and chief operating officer of QLogic. “We’ve had a couple of quarters of market share gains and we’ve been the leader in the segment for a few years.”
Emulex came in at 40% market share for host bus adapters in the fourth quarter, down from 41% in the third quarter and up from 35% a year ago.
“We increased our year-to-year gain by five percentage points,” said Mike Smith, Emulex’s executive vice president of marketing. “That has been a key goal.”
Together, the two companies have nearly 90% of the host bus adapter market. The balance is made up by LSI Logic Corp., Brocade Communications Systems Inc. and others.
QLogic has been the market leader for four consecutive years.
The market for host bus adapters is slowing as more companies turn to server virtualization, the biggest trend in storage networking, according to Tam Dell’Oro, principal of the Dell’Oro group.
Virtualization software helps multiple sources of data, often under different operating systems, appear as a single source, saving space and power.
“Over the past one to two years, enterprise users have rapidly embraced server virtualization software,” she said. “This means users could reduce the number of server units they used to operate the same amount of stuff. So, the rate of growth of server shipments has slowed down and so has the number of HBAs.”
Blade Server Boom
QLogic’s biggest gains were in selling mezzanine cards, small circuit boards for networking blade servers made by Hewlett-Packard Co., IBM Corp. and Dell Inc.
Blade servers combine multiple circuit boards,each acting as a server,into one slim box. They go hand-in-hand with the virtualization of storage networks.
For the fourth quarter, QLogic had a 75% market share of host bus adapters for blade servers, up from 62% in the third quarter and up from 26% in the year-ago quarter.
Emulex had the rest of the market,25%,during the fourth quarter, up from 23% in the third quarter and up from 6% a year earlier.
QLogic’s been able to grab more market share because of its tight relationship with IBM and HP, according to Benck, who joined QLogic last year from IBM.
While at IBM, Benck headed its blade server division.
Top server makers used to make the mezzanine cards themselves. In recent years they’ve turned to QLogic and Emulex to develop them.
“It’s pretty natural that the large server makers are looking to partner and take advantage of our technology,” Benck said.
Demand for storage,led by companies with ever-expanding networks,is set to stay strong, according to Dell’Oro.
Dell’Oro Group predicts that host bus adapters sales will total $4 billion in 2012, up from $2.6 billion last year.
Emulex and QLogic,which compete to be first-to-market on new products,are set to show down this year as server makers are expected to transition to newer 8-gigabyte host bus adapters.
The next frontier, Dell’Oro said, is developing products for a new technology that combines fibre channel and Ethernet, commonly called fiber channel over Ethernet.
The technology allows local networks (used to share files on a server and connect to the Internet) to merge with the storage area network (used for long-term storage and large databases).
“This is a very big deal to Emulex and QLogic,” Dell’Oro said. “You can imagine that Ethernet connections are one heck of a lot more than fibre channel connections. This convergence will make the pie bigger for Emulex and QLogic.”
Irvine’s Broadcom Corp. and Intel Corp. are developing chips that would help regulate the flow of data on such networks.
