Slow Growth Better than None

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The worldwide Fibre Channel storage area network market grew only 3% last year, according to Gartner, but compared to the rest of the IT industry, that made FC SAN spending a standout.

“While the Fibre Channel industry experienced slower growth than in previous years, any increase is a show of strength in what was another difficult year for storage products and companies,” said James Opfer, research vice president for Gartner’s storage research group.

FC SAN components hardware revenue totaled $1.47 billion in 2002, a 3% increase from 2001 hardware revenue of $1.43 billion, according to the Gartner Dataquest research report “Storage Network Infrastructure: FC SAN Component Market Shares, 2002.”

The market remains heavily concentrated in just four companies — Brocade, Emulex, McDATA, and QLogic — which increased their revenue share from 78% to 85% of the market total.

“The market continued to experience extraordinary market consolidation,” stated Opfer.

Brocade maintained its hold on the No. 1 position in Fibre Channel component hardware revenue with a 2002 market share of 34% (see table below), up from 32% in 2001. Emulex reclaimed the No. 2 position with a 23 percent revenue increase. With a 24% increase, QLogic showed the strongest growth in 2002.

Worldwide Fibre Channel Component Hardware Market Share Based on Revenue for 2002
Company	2002 Market Share (%)	2001 Market Share (%)	Growth (%)

Brocade	34	32	10
Emulex	19	16	23
McDATA	17	17	7
QLogic	15	13	24
Hewlett-Packard	4	N/A	N/A
Others	11	22	-51
Total Market	100.0	100.0	3.0

Source: Gartner Dataquest (May 2003)

“Change in total FC SAN component hardware revenue from 2000 to 2001 was 11% vs. 3% for change from 2001 to 2002. Note that this specifically does not include revenue for unbundled software,” commented Opfer.

The worldwide Fibre Channel switching products hardware market revenue reached $847 million in 2002, up 6% from 2001 as the market made a transition to 2 Gbps products. Brocade remained the dominant supplier, accounting for 59% of revenue. McDATA garnered 30% of revenue, while QLogic remained the No. 3 vendor with 5% of the market.

Emulex and QLogic Battle It Out in HBA Space

Worldwide Fibre Channel host bus adapters (HBAs) totaled $570 million in 2002, an increase of 1% from 2001. Emulex was the clear leader, with 48%
of the market, followed by QLogic with 32% market share. Hewlett-Packard, supplying products for internal use, was the No. 3 vendor.

QLogic and Emulex, which have been locked in a pitched battle in the HBA space, put their own spin on the numbers.

QLogic said the report showed that it had the largest revenue growth year-over-year of all HBA vendors, with an increase of 45%. QLogic’s port shipments increased 51% from 2001, increasing the company’s share of HBA ports by 10 points to 38%.

“SANs are well established as a superior way to manage storage in Fortune 500 companies, and now they are making their way into small and medium enterprises,” commented Frank Berry, QLogic’s vice president of marketing. “QLogic has increased market share by providing our OEM and channel customers with products that are easy to deploy, manage, and service.”

Emulex, for its part, pointed out that it remains No. 1, both in terms of revenue and port shipments, increasing its revenue share by 8 percentage points from 2001.

Emulex said it also ranked number one in Fibre Channel HBA port shipments during 2002 with 43% market share, an increase of 6 percentage points from 2001.

“Emulex continues to focus on maintaining its technological and market leadership, and we are pleased Gartner Dataquest research validates our expanding number one position in the HBA market,” said Paul Folino, Emulex chairman and CEO.

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