An independently produced Storage Networking report from the Linley Group predicts that Fibre Channel (FC) unit sales will grow strongly for the next couple of years, then slow and be overtaken by IP San unit sales in 2007. The main FC competitor technology will be iSCSI.
The Linley Group is primarily Linley Gwennap, who used to work on the Microprocessor Report and has credibility from that. He sees vendors focused entirely on Fibre Channel losing out whereas vendors who embrace IP have a better chance of surviving and prospering. Emulex is singled out as a very FC-dependent vendor; Gwennap says, "Emulex is fixated on Fibre Channel. It just spent US$300 million on Vixel. In effect, it doubled its bet on Fibre Channel."
The reports suggests that FC component prices will fall to half or more of their current levels by 2007, putting pressure on suppliers such as QLogic with thin profit margins currently. The number of FC suppliers can be expected to fall, reducing customers' choice.
The report is seeing a rapid peaking of FC sales with increased customer sales driving revenue up by a fifth in 2004 and 5 but a rapid slowing to less than 10 percent growth in 2006 with IP SAN sales overtaking it in 2007. Good news for Cisco Systems.
Suppliers which embrace iSCSI are better positioned, if IP Storage really does take off. So far it hasn't. The report acknowledges this; 'Although we expect the IP storage market to become quite large, initial deployment has been slowed due to the networking downturn and IT conservatism. The Fibre Channel market is already large and will continue to be a big market for several years.'
It suggests that the supposed switch to IP SANs opens up opportunities for innovative start-up vendors. How that can take place against the supposed 'IT conservatism' isn't spelled out. The Linley Group is hoping that you will buy the report for $2,945 and find out.