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QLogic Has Edge on Emulex in Network Race

Aliso Viejo’s QLogic Corp. has a tenuous lead on local rival Emulex Corp. in the race to market new technology that promises to combine two types of corporate networks.

QLogic and Costa Mesa-based Emulex are competing for design wins for what’s known as fibre channel over Ethernet. The technology combines the speed of specialized data networks with the cheaper, more common networks of servers and desktop computers.

The fight for media attention started last year, even as the two companies worked to iron out the technology.

“They need to do it from a marketing standpoint,it’s a horse race,” said Kaushik Roy, senior analyst of data storage technologies at Wedbush Morgan Securities Inc. in San Francisco. “They each want to be the first and the best in a market that everybody knows is coming. The sooner you have it, the sooner you get qualified and the chances are you’ll capture the bigger share.”

Both companies have come out with something called a converged network adapter.

It’s basically a circuit board card loaded with chips that sits inside a server in a company’s rack room.

The card allows technology managers to run both Ethernet and fibre channel networks from a single adapter, cutting down on equipment costs and day-to-day expenses of running a data storage network.

As it is now, companies run two networks with a server acting as the go-between.

“Converged networks cut down the need for separate wires, separate software drivers and separate adapter cards,” Roy said. “When you only have one physical adapter, it saves capital expenditures and operational expenses.”

At least for now, industry watchers and analysts say QLogic has a leg up on Emulex for its chip’s design.

QLogic is marketing a card that uses only one chip compared with Emulex’s card, which has multiple chips.

Using fewer chips cuts down on the amount of power needed to run and cool the servers in a data center,the Holy Grail for managing technology costs.

“Our single chip converged network adapter has a much better cost factor,” said Scott Genereux, vice president of sales for QLogic. “Emulex today is shipping a board with five chips. We are the only company that has announced the single-chip adapter that you can buy right now.”

The company’s single chip card “is specifically designed for space and power-constrained environments,” said Aaron Rakers, an analyst at Stifel Nicolaus & Co. in Baltimore. “It operates at one-third the power of existing converged network adaptor chip sets and generates much less heat.”

Emulex did announce a single-chip version of its card, but it’s not set to be available until the end of this year.

Neither company has made any official announcements about design wins,but they are on the horizon.

QLogic has said Dell Inc., EMC Corp., Hewlett-Packard Co., IBM Corp. and Sun Microsystems Inc., among others, have been testing its chips,igniting another war of words between it and Emulex.

“Emulex has still to make the leap from the press release to silicon,” Genereux said. “We have secured a significant number of tier-one design wins.”

Emulex’s Steve Daheb, marketing chief and vice president of business development, downplayed QLogic’s announcements.

“While QLogic claims to have announced design wins, they essentially just announced alliance quotes,” Daheb said. “While we have signed design wins with three tier-one manufacturers” that haven’t been disclosed yet.

The two companies have continued to spar with press releases in order to get an edge on the other.

Both have said that they were first to have converged network adapters.

In February, Emulex announced a suite of products and software dubbed “one connect.”

“We introduced the first one in the industry that runs from a single technology,” said Shaun Walsh, vice president of corporate marketing for Emulex.


QLogic’s Side

QLogic said it was sampling its converged network adapters with makers of servers months before Emulex made its announcement.

Emulex fired back after the latest QLogic announcement, citing a feature of its cards that supports so-called “enhanced Ethernet” protocols.

QLogic is touting its timing lead.

“Emulex, by all accounts, won’t have an actual converged network adapter available until late December, which puts us nine to 12 months ahead,” QLogic’s Genereux said. “They announced a vision, we announced a product.”

Disputes over timing don’t really matter because the market still is tiny.

Industry watchers see it taking hold in 2012 or 2013.

The market is projected to be small but fast-growing until then.

Fibre channel over Ethernet adapter shipments are expected to more than double each year for the next five years, according to data from market storage industry tracker Dell’Oro Group Inc.

Estimates for adoption rates have fluctuated some as companies pull back their technology spending.

“Very, very few people are actually using fibre channel over Ethernet,” analyst Roy said. “It’s still a small market. I don’t think any companies will see material revenue from it in the next two years.”

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