The war of words between local rivals Emulex Corp. and QLogic Corp. has gotten louder lately.
The two are clashing over who will be the first to market with fibre channel over Ethernet, a technology that promises to combine the speed of special data networks with everyday networks of desktop computers and servers.
“Everybody is in a race to capture that market and everybody wants to look good and be early and show customers that they are ahead of the competition,” said Kaushik Roy, a data center technologies analyst at Pacific Growth Equities LLC in San Francisco.
The technology, which industry watchers see taking hold around 2012, has the potential to simplify data centers and cut server, wiring, power and other costs for businesses.
Costa Mesa’s Emulex and Aliso Viejo-based QLogic have been racing to develop the technology and land their electronics in servers made by their biggest customers: Dell Inc., EMC Corp., IBM Corp. and Hewlett-Packard Co., among others.
Since the spring, both companies have released a steady trickle of announcements detailing their progress in getting their fibre channel over Ethernet gear tested, vetted and approved by various standards bodies and industry players.
Most revolve around the single buzzword “interoperability,” which means their products work together with storage systems already in place.
So far, neither has landed any significant design wins and revenue is scarce.
“Both QLogic and Emulex are in a race to make announcements that their product is working with Cisco Systems Inc.’s switches and software from VMWare Inc.,” Roy said.
“The fact is that customers are not buying fibre channel over Ethernet products yet. Everyone is trying to claim that they are ahead, but it’s just a marketing gimmick,” he said.
Roy estimates that fewer than 100 big corporate customers have bought the technology. Most of those purchases are for installation in test labs and pilot programs, he said.
The technology’s adoption is a ways off.
“In 2010, you’ll see customers investing in it for their own use, not just pilots. But not until 2013 or 2014 will most data traffic
be carried on fibre channel over Ethernet,” Roy said.
Rapid Clip
One thing QLogic and Emulex do have in their favor is that the standardization process for fibre channel over Ethernet is moving along at a rapid clip. The technology has achieved important industry certifications just 18 months after its introduction in 2007.
“It is moving (at) a very rapid pace for a new technology,” QLogic Chief Executive H.K. Desai said in a recent conference call.
A spokeswoman for Emulex declined to comment for this story.
Desai listed QLogic’s “impressive list of partner certifications,” which include some from VMWare, Oracle Corp., NetApp Inc. and others.
The true golden ticket for both QLogic and Emulex would be a win from server maker EMC, analyst Roy said.
Strict Standards
EMC is known for having the most rigorous qualification requirements of all the major server makers.
“If EMC qualifies it, then IBM and HP will follow,” Roy said.
Emulex’s already close ties with EMC could give the company a bit of an edge.
“A bigger chunk of Emulex’s revenue comes from EMC compared to QLogic’s,” Roy said.
The wild card in the race for fibre channel over Ethernet is the larger economic situation and whether companies will be willing to shell out money amid tightening budgets.
“When times get tight and spending contracts, new technologies are the not the first things reached for by companies,” said Skip Jones, chairman of the Fibre Channel Industry Association.
Over time, fibre channel over Ethernet can save money for companies, Jones said.
The general consensus is that it’s premature to say which company will come out the winner.
“It is too early to tell right now,” said Tam Dell’Oro, principal of Dell’Oro Group Inc., a market tracker in Redwood City. “Which company has agreements with which partner is hard to assess. I think allegiances are still being forged.”
