Mark another notch for Aliso Viejo’s QLogic Corp. in one of Orange County’s longest-running rivalries.
QLogic saw its sales of a profitable bit of electronics for data networks rise in the third quarter, according to a report from Redwood City-based market tracker Dell’Oro Group Inc.
Costa Mesa-based Emulex Corp., QLogic’s main rival in sales of fibre channel host bus adapters,circuit boards that help data flow between computers,saw a smaller gain.
QLogic had 47.6% of the market in the third quarter, up from 44.4% in the second quarter, according to Dell’Oro Group.
Emulex’s stake went from 40.2% to 40.8%
The market’s only other significant player, Milpitas-based LSI Corp., saw its share of the market go from 4.5% in the second quarter to 4.1% in the third.
Brocade Communications Systems Inc. and Cisco Systems Inc., both of San Jose, have the rest of the market.
Combined, QLogic and Emulex control 88% of the market for host bus adapters, up from 73% a year earlier.
“Essentially, (Emulex and QLogic) are getting more of the host bus adapter pie,” said Tam Dell’Oro, president of Dell’Oro Group.
$212M Market
The market for fibre channel host bus adapters was valued at $212 million in the third quarter. QLogic sold $101 million worth, up $200,000 from the second quarter and up 8% from $93 million in third quarter 2006.
Emulex sold $86.5 million, down from $91.1 million in the second quarter, suggesting the company lowered prices. A year earlier, Emulex sold $87 million worth.
QLogic also appears to have cut prices somewhat, as its market share gain outpaced its revenue gain.
Emulex got a boost in the first half of the year by landing its adapters in servers by Sun Microsystems Inc., IBM Corp., Fujitsu Siemens Computers BV and others.
Now the market is slowing. Third-quarter sales were down 7% from the second quarter and off 13% from a year earlier.
Demand for virtualized servers, which use software to better utilize a group of servers, may be behind the slower sales of host bus adapters, Dell’Oro said.
“My hypothesis is that server virtualization software is having a dampening effect on the number of servers shipping and therefore, a dampening effect on the number of host bus adapters shipped,” she said.
Sales are expected to pickup at the end of the year, Dell’Oro said.
“I don’t expect this sales slowdown will last long because users will need higher-capacity host bus adapters,” she said. “We anticipate a typical seasonal strong performance in the fourth quarter.”
Rivalry
The rivalry between Emulex and QLogic goes back more than a decade.
Emulex spun off QLogic in 1994. The two were neighbors until 1999, when QLogic moved to Aliso Viejo.
The companies have been sparring for years to be the top maker of host bus adapters.
In 2005, they were neck and neck, with roughly 40% of the market going to each.
In 2006, QLogic began losing share while Emulex edged steadily upward.
By the end of 2006, QLogic had regained ground with about 43% of the market, versus Emulex’s 35%.
Emulex made a big jump in the second quarter,led by design wins with Sun and IBM,that gave it 40% of the market. QLogic saw a modest gain to 44%.
Both companies are set to square off next year as computer makers look to move to newer eight-gigabyte host bus adapters.
Emulex and QLogic introduced similar products within days of each other back in August.
Last week, both companies put out dueling press releases based on the market share figures from Dell’Oro Group.
Emulex called itself the “fastest growing” adapter provider, based on its gain from a year earlier. QLogic touted its 10-quarter lead in the market.
