It's more affordable than a Fibre Channel SAN. When you step back and look at the big picture, if all storage is...
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directly connected, it is stranded and can't be leveraged. Say you have two servers. If server A runs out of storage capacity and server B has a bunch of excess storage capacity, in a direct-attached environment you can't leverage server B to help out server A.
So, in any networked environment, Fibre Channel or IP, you gain economies of scale and free up all stranded storage. And that is what really makes iSCSI SANs affordable; the gains in storage consolidation and utilization. You don't have stranded, unused storage capacity directly attached to storage. And because utilization rates are better, there are typically fewer storage array requirements.
So, you're reducing your footprint, you're saving on power and cooling, management costs are lower and you're probably saving on software licenses as well. An iSCSI SAN could pay for itself in a few short years thanks to operational savings from your storage consolidations. Plus, you get an operational benefit from leveraging your IP network administrators on the storage side.
Check out the entire iSCSI SAN FAQ.