Brocade, QLogic and Emulex Endorse 16G Fibre Channel

By David Gross

QLogic (QLGC), Emulex (ELX) and Brocade (BRCD) recently endorsed the forthcoming 16G, or FC-PI-5, standard under development by ANSI. While not unexpected, it was refreshing to see Emulex and Brocade in particular support stand-alone Fibre Channel's upgrade path, without the Fibre Channel-over-Ethernet nonsense both have been pushing the last two years.

SANs and LANs are not merging anywhere outside of PowerPoint presentations, and SAN managers continue to need vendors who have expertise in Fibre Channel and storage networks. While 8G Fibre Channel products are just starting to be deployed now, it seems SAN vendors are at least listening to customers who want to know how they will upgrade their networks in the future, not how they will “converge” them.

Brocade plans to have 16G Fibre Channel switches available next year. Still, I have to wonder how they'll maintain their market share in Fibre Channel as they continue on their misguided over-diversification into all things data networking. The press release they put out on 16G was filled with enough marketing gibberish to discourage any investor who thinks they might have turned a corner.

Some of the odd statements from the Brocade PR include :

“Brocade’s heritage is data center networking”

What??? Brocade's heritage is storage networking. No reason to run away from a segment they've dominated the last ten years to catch onto the flavor-of-the-month.

Then there was this...

“delivering unmatched simplicity in managing data-intensive applications, investment protection for existing SAN infrastructure and non-stop networking”

Non-stop networking, are they borrowing bad catch phrases now from HP? Also, if the products are so simple, why can't they described in plain English?

Revenue Growth Slowing for Data Center Technologists

While data centers continue to defy the economy, revenue growth is clearly slowing down for the technology suppliers. Sequential rates have been much lower on an annualized basis than Year-over-Year growth rates, and the 2nd quarter typically gets a rebound off the 1st quarter lull. Mellanox (MLNX) reported strong sequential growth, but guided down for the next quarter, and VMWare (VMW), which is majority owned by EMC (EMC) stated that license revenue would be flat.

I'll have another post with the service providers after Rackspace (RAX) reports, but the trend looks similar there - with growth continuing, but at a slowing pace.


Y/Y Rev Growth Sequential Sequential
Rev Growth Rev Growth Inventory Growth
MLNX 58% 10% -3%
VOLT 54% 7% -14%
QLGC 16% -2% 26%
FFIV 46% 12% 8%
EMC 24% 3% -4%

QLogic Revenue Up 16% Year-over-Year, But Reduces Next Qtr Guidance

by David Gross

QLogic (QLGC) had a strong quarter, growing its top line 16% from a year ago to $143 million.   However it's getting hit in after hours trading as it took revenue guidance down for next quarter from $150 million to a range of $143 million to $147 million.   It's not getting beaten as badly as rival Mellanox (MLNX), which fell 32% today after guiding for a 7% sequential revenue decline, but it's down about 11% off this news from the earnings call. 

Mellanox Revenue up 58% year-over year, F5 up 46% UPDATED

Mellanox (MLNX) and F5 (FFIV), both dependent on data centers and HPC both reported strong revenue growth today, with Mellanox's top line up 10% sequentially and 58% year-over-year, and F5 up 12% sequential and 46% y/y.   But the similarities end there.  Mellanox guided for a 7% revenue decline next quarter due to product mix, while F5 guided up, 5% past current estimates.   After hours trading reflected these two very different outlooks for the upcoming quarter.

Mellanox blamed a shift in product mix from boards to chips, as it ramps up volumes of its silicon for LAN-on-Motherboard cards, which sell for far less than its InfiniBand HCAs.  Still, InfiniBand's share of Top500 Supercomputing interconnects is rising, from 30% in June 2009 to 36% in November 2009 to 42% in June 2010.   If this business is all going to QLogic (QLGC), we'll find out tomorrow, when that supplier reports.