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Fibre Channel switch port shipments expected to spike after 2009 drop, then decline over long term

Fibre Channel switch port shipments are expected to increase after first-time decline in 2009, but long-term outlook calls for eventual decline as Fibre Channel over Ethernet (FCoE) picks up steam.

Fibre Channel (FC) switch port sales declined for the first time in 2009, and market research firms predict a temporary upswing over the next few years before a permanent decline as Fibre Channel over Ethernet (FCoE) cuts into FC use.

In its November quarterly report, Dell'Oro Group Inc. forecasted that last year's 12% drop will be offset by a healthy rebound in the range of 20% during 2010 and 2011, largely fueled by shipments of new 8 Gbps ports and purchases of next-generation servers based on Intel Corp.'s Nehalem chips.

Dell'Oro predicted increases of 12% in 2012 and 3% in 2013 before a 3% decline in 2014, as shipments of FCoE ports ramp up and command a larger part of the SAN mix.

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"At this point, it would be hard to bet against FCoE," said Seamus Crehan, a Dell'Oro Group vice president. "It's got a very compelling value proposition in terms of cost and power savings, and all of the incumbent vendors have strong programs and offerings."

IDC predicts a similar pattern. The company's last market report, issued in May, anticipated a 3.7% drop this year in shipments of Fibre Channel switch ports followed by spikes of 11.7% in 2010 and 11.2% in 2011.

"By 2012, it starts to decline, and by 2013, the total market goes into decline," as users shift to FCoE in lieu of FC, said Rick Villars, a vice president at IDC.

Villars said the economy wasn't the only factor affecting FC switch port shipments in recent years. Server virtualization helped to drive the growth rate into the mid-30% range prior through 2008, and it also played a role in the declining shipments, he claimed.

Before virtualization, organizations often relied on internal or direct-attached storage (DAS) for many of their servers. As they virtualized, they often moved to storage area network (SAN)-based storage, spiking the FC switch port count. When the economy turned sour in 2008 and 2009, some IT shops used virtualization to support new growth, installing more virtual machines (VMs) on each physical server rather than buying new machines and adding new FC switch ports, Villars said.

Villars predicted that, during the next two years, more companies will upgrade to faster servers as they seek out better virtualization engines to run more VMs per physical server. That, in turn, will boost shipments of 8 Gbps FC switch ports, even though the growth rate will be lower than it was in the past, he said.

"If you have enough horsepower, you don't need to buy as many physical servers, and therefore, the demand overall is flatter," Villars said.

Storage area network admins experiment with FCoE

The Mississippi Department of Information Technology Services reduced its Fibre Channel switch port count by approxmimately 10% when consolidating its older servers into newer virtualized servers, according to Kemper Porter, systems manager of the data services division. Because the retired servers were SAN-connected, that meant two returned FC switch ports per server, Porter said.

But, also in line with the industry-wide trends, the decline will likely be temporary. Porter expects the state to add physical servers and storage as more state agencies request services, raising the FC switch count. The growth rate of FC ports, however, will be lower in the past, since the state can run more VMs per server.

Although Mississippi's IT division has experimented with FCoE through top-of-rack switches, Porter said he's content to stick with "tried-and-true" FC as he waits for true multipathing in the new technology. "I can't afford to be in a situation where there would be an I/O problem on the disk storage," he said.

Porter isn't alone in his loyalty to FC. Representatives for Brocade Communications Systems Inc. and Cisco Systems Inc. said they expect demand for FC switches to continue, and both expressed commitments not only to 8 Gbps but also to next-generation 16 Gbps technology.

"If I look five years out, there's still going to be Fibre Channel in data centers. People have millions and millions of dollars invested in that infrastructure," said Bob Laliberte, a senior analyst at Enterprise Strategy Group. "But, we're starting to see Ethernet technologies potentially playing a bigger role. People that have a small Fibre Channel SAN and deploy a lot of iSCSI might take a hard look and say: 'Do I still need Fibre Channel for performance? Or, can I leverage 10 Gig Ethernet in such a fashion that I don't need it?' "

Although use of block-based iSCSI storage and file-based network-attached storage (NAS) is growing, the vast majority of Fortune 1000 IT shops still attach their new servers to FC SANs, according to The InfoPro Inc., a New York research firm that surveys enterprise IT managers.

But, a recent survey also showed that Fortune 1000 companies are using just 70% of their FC switch ports. That, in turn, could slow new port consumption and refreshes to 8 Gbps FC switch ports, especially if no applications justify the need for greater bandwidth, according to Robert Stevenson, InfoPro's managing director of storage technology.

"We're getting near this inflection point where people are trying to make a long-term decision whether they expand Fibre Channel services or they just isolate [FC] to mission-critical applications and do more with 10 Gig and Ethernet-based transports," Stevenson said. "It's not clear what the direction is yet."

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