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Report Outlines FC Growth, Challenges
The Yankee Group sees SMBs and innovation as keys to switch and HBA growth
August 3, 2004
3 Min Read
The growth of the Fibre Channel SAN component market over the next four years depends on how successful vendors are in capturing small to medium-sized businesses (SMBs), while offering innovative features such as multiprotocol and heterogeneous support, according to a market research report from The Yankee Group.
The report, Storage Networking Market Matures While Customer Requirements Change , forecasts a compound annual growth rate (CAGR) of about 10 percent for Fibre Channel switches, directors, and host bus adapters (HBAs) through 2008. However, Yankee Group senior analyst Stephanie Balaouras says Fibre Channel vendors will have to compete with iSCSI and grab the untapped SMB market to achieve that growth.
The market’s still growing but guarded, compared to explosive growth we’ve seen in the past,” Balaouras says. “We expect the market to grow appreciably in the next several years before it levels off sometime in 2007 or 2008. Key to this growth is the ability to penetrate into the untapped small and medium enterprise markets.”
Among the report's findings:
The market for Fibre Channel hardware components will grow from $1.9 billion this year to $2.6 billion in 2008. Director switches will go from $554 million in 2004 to $846 million in 2008, surpassing Fibre Channel switches, which will grow from $638 million to $813 million.
Directors will also outpace the growth for Fibre Channel HBAs, which will grow from $710 million to $904 million in annual revenue. (Note: The Yankee Group defines directors as switches with 64 ports plus advanced features like the ability to hot swap them.)
As increased competition drives down the price per port in the Fibre Channel SAN component market, customer deployments will grow at a faster rate than overall revenue.
ISCSI is poised for strong growth toward the end of this year and next, but there is no demand for iSCSI HBAs. “Customers don’t see a need for it,” Balaouras says.Figure 1: Fibre Channel Storage Network Forecast
Source: The Yankee GroupFor the anticipated growth in the storage market to happen, switch and HBA vendors will have to control pricing while making their products more affordable and easy to deploy and maintain.
On the enterprise level, the report says, the keys to growth will be multiprotocol support for iSCSI and FCIP to connect SAN islands (see Expanding the SAN). It also predicts that larger enterprises will increasingly look for heterogeneous switch-vendor support.
Major switch makers Brocade Communications Systems Inc. (Nasdaq: BRCD), Cisco Systems Inc. (Nasdaq: CSCO), and McData Corp. (Nasdaq: MCDTA) are already moving in these directions (see Brocade Ships Multiprotocol Router).
But more is needed. “They need to transform themselves from Fibre Channel vendors to comprehensive SAN vendors,” Balaouras says.Prices are already dropping, as customers emphasize value, and the shift to SMBs will accelerate this trend, she maintains. A full 87 percent of SMBs are still using internal server disks for storage, which makes it a huge untapped market for networked storage. However, most SMBs say they won’t pay a total storage bill of more than $10,000.
— Dave Raffo, Senior Editor, Byte and Switch
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