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Brocade, HP see storage sales decline

Considering the poor numbers coming from storage array vendor’s recent earnings, it’s no surprise Brocade Thursday said its storage switch revenue declined from last year.

EMC, NetApp, IBM and Hewlett-Packard all reported declines in storage revenue last quarter. Brocade sells SAN and Ethernet networking switches, with its storage switch revenue usually reflecting industry demand. Last quarter, Brocade’s storage switch product revenue of $316 million was down two percent from last year and its overall revenue of $546.5 million fell about $5 million below expectations.

Brocade blamed the shortage on disappointing sales by OEM partner Lenovo with low-end switches due to a rocky transition with products Lenovo acquired from IBM last year. Brocade’s Fibre Channel (FC) director switch sales actually increased nine percent to $139.5 million, while smaller FC switches fell 5.5 percent to $145.4 million and embedded switches in servers dropped from $37.6 million last year to $28.7 million. The embedded switches are the products used by the Lenovo servers.

Brocade forecasted another drop in SAN switches this quarter, ranging in a decline from two percent to six percent.

Brocade has been pushing IP storage switches for workloads switching from FC to Ethernet SANs, but CEO Lloyd Carney said he expects FC to get a bump from flash arrays. He also sees high performance applications remaining on FC.

“There are certain workloads that are best suited for Fibre Channel and then they’re designed around Fibre Channel,” he said. “There are certain workloads that don’t like the Ethernet-based latency, so they’re going to be biased towards Fibre Channel.”

Carney also pointed out that part of the declining storage array revenues are due to falling disk prices, while demand for capacity remains high.

“What you pay for a terabyte of storage today is a fraction of what you paid just two years ago,” he said. “But the actual terabytes of storage going out the door is growing at a really good clip still.”

HP Thursday joined the list of array vendors to report declines from last year. HP’s storage revenue of $740 million last quarter fell eight percent from a year ago, compared to two percent declines by IBM and NetApp and a five percent drop by EMC.

On the plus side, HP said its 3PAR, StoreOnce and StoreAll brands improved five percent to $356 million and made up 48 percent of its storage revenue. On the down side, HP’s “traditional” storage (EVA, MSA and tape) fell 18 percent to $384 million.

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