The biggest question CIOs ask in regard to a new technology transitions is, will this create a competitive advantage for my business? We have all seen marketing collateral, including Emulex’s own sales tools, discuss being more operationally efficient, providing greater enterprise scalability and optimizing precious business resources.  When it comes to network convergence, I am asking my management team to look at this question from the perspective of both CIOs and CEOs.  From the CIO side, are we really delivering these value propositions we espouse and from the CEO side, if we, Emulex, implement network convergence will we see the promised value?  As we expand into new markets, such as the Ethernet NIC market, with larger established players, we need to have significant competitive advantages to win.

In the emerging network convergence market, we’ll need to continue to outmaneuver our competitors  in technology development, create operational efficiencies that drive real cost savings, expand gross margins and continue to  invest in sales and marketing programs to uncover every possible opportunity in our segment. Does this list sound familiar to you? Have you seen a similar list on a whiteboard in your own planning sessions? I am willing to bet that you have. Combine these demands with overall macroeconomic conditions as they are, and we understand that CIOs, our own CIO included, face significant choices as to how and when to implement network convergence to win in a challenging and ever-changing business environment, especially as they make decisions as to whether they should utilize their operating budget to provide line of business solutions or overall infrastructure improvements.

IDC recently released its 2009 Storage Networking Infrastructure 2009-2013 Forecast, which stated, “Over the next five years, the critical challenges for storage interconnect suppliers will be to establish market leadership positions in the emerging markets for FCoE and 10GbE infrastructure. While broad adoption won’t start until 2011, late 2010 is when companies are likely to start making major architectural decisions.”*

The key word in here is “decisions.” CIOs should consider moving to Fibre Channel over Ethernet (FCoE) for their new host deployments for one of the following three reasons:

• The cost of maintenance and service exceeds the depreciation cost of new equipment and dictates upgrading their switch infrastructure
• They are starting a new server upgrade cycle based on the Intel Xeon 5500 series processors
• They are deploying a new green field application/data center, which makes implementing FCoE a simple choice based on long-term return on investment (ROI) calculations. 

Embracing the Strategic Inflection Process to Win

In my July 1 post, I talked about how technology transitions do not occur at a single point in time, but through a process that the industry undergoes to achieve a transition across the entire ecosystem, which requires a strategic decision, a vision, partnerships, resources and time to come to fruition. Emulex faced this choice several years ago, and that is exactly what CIOs are facing today. They need to evaluate their choices and make tough business decisions on the use of precious capital and human resources to make their companies ready to win. How many strategic projects can you implement on your current infrastructure and what will the ROI delta be if you move to 10Gb/s Ethernet sooner? Are you ready to scale IT capabilities when the macroeconomic conditions change? Will your competitors be ahead of you? Are you going to lead or follow? Embracing the transition to network convergence will require investment and leadership, but it should closely align with leading IT agenda items, such as data center consolidation, server virtualization, blade computing, lower operational (power, cooling, space) costs and simplified management.

Simplicity or Complexity: That Is the Key Decision

At the core of the network convergence value proposition is simplicity versus complexity. Converging networks onto a single 10Gb/s Enhanced Ethernet infrastructure will simplify the capital investment, implementation, maintenance, operations and administration of your data center. It will enable tighter policy controls, effective security and compliance support, and provide a more widely deployable set of network administration tools that can work on your entire infrastructure, not just individual segments. Continuing to maintain multiple networks will be more complex and costly for CIOs, which will limit the number of new projects that can be implemented to drive competitive advantage in their markets. 

Personally, I am asking my team to make the strategic decision to embrace network convergence, and to extend Emulex’s leadership both as a technology provider and as an operational organization. Emulex is looking at our budgets, resources and priorities with a hard eye to determine which ones will enable us to reach our goals of being more competitive and grow revenue, even in this challenging market, driving greater market share and demonstrating technology leadership. If these goals sound like the discussions you are having inside your company, I encourage you to make the strategic decision to embrace the transition to network convergence for long term investment protection.. You can read more about how to deploy network convergence in your data center in Emulex’s Convergenomics™: The Guide to Network Convergence Solutions book.

Jim

*IDC, 2009 Storage Networking Infrastructure 2009-2013 Forecast – Server Slow Down Stifles FC HBAs and Switch Sales, while Laying the Ground Work for FCoE and 10GbE, doc #218480, May/2009

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The cornerstone of our converged networking strategy is one that unifies IP and storage networking over a single wire, which translates into less complexity, less infrastructure, reduced cabling, lower power consumption and simpler management. We recognized early on, that for the new convergence market, producing simple extensions of either Ethernet Network Interface Cards (NICs) or Fibre Channel Host Bus Adapters (HBAs), would not deliver on the requirements and demands of our OEMs and data center end user customers. That is why we developed the OneConnect™ Universal Converged Network Adapter (UCNA) platform, the industry’s only truly universal converged network I/O connectivity solution, and OneCommand™, Emulex’s convergence management framework. These products represent a fundamentally new direction and opportunity for Emulex.

To be the leader in this new market, Emulex understood that its OEMs and data center customers needed a new and innovative connectivity infrastructure that preserved their current investments and positioned them for the future of network convergence, leveraging the ubiquity of Ethernet, while providing them with the low latency and high performance of Fibre Channel. We believe Emulex is the only company to make the transition to a fully offloaded Ethernet driven network convergence product family, with a complete array of enterprise proven drivers, management and intelligent services.

The primary difference between Emulex’s UCNAs and competitive CNAs is our ability to offload and support all three I/O protocols, versus just one for our competitors’ CNAs. This competitive advantage enables Emulex to provide unparalleled customer choice, while maximizing IO performance, server virtualization and data center consolidation.

OEMs are looking for partners that provide a complete portfolio of solutions for their converged I/O requirements, providing a one-stop shop for all of their I/O needs. Our OEM clients are telling us, through award wins and development engagements, that our product strategy is hitting the mark and beating the competition. Our OneConnect UCNA wins are based as much on our 10Gb/s Ethernet performance and capabilities, as our proven FCoE software stack.

To provide some perspective on our momentum, we currently have 16 unique 10Gb/s Ethernet-based OEM card designs in flight. And we have already been awarded five tier-one 10Gb/s Ethernet NIC placements, three 10Gb/s iSCSI CNA placements and four 10Gb/s FCoE CNA placements. Our Ethernet-centric convergence strategy is winning business away from traditional Ethernet NIC suppliers and locking out storage networking competitors that do not provide a complete portfolio of CNA solutions. To accomplish this, we uniquely matched a high performance 10Gb/s Ethernet engine with our battle-hardened enterprise software stack, to create a product that balances Ethernet strength with our Fibre Channel heritage.

Upon seeing the level of engagement Emulex is having with OEMs, we have noticed that a number of our competitors have struggled to put together the technology needed to compete with our strategy. As you know, yesterday, QLogic announced its acquisition of NetXen. With this move, QLogic may eventually be able to deliver on the I/O protocols necessary to compete with Emulex’s OneConnect UCNA platform with the acquisition of NetXen, they will still only be able to deliver on two-thirds of those necessary protocols, because the acquisition leaves them without hardware-based iSCSI off-load capabilities. This strategy defeats the entire purpose of having a single I/O model that can be dynamically provisioned.

Second, their roadmap now includes two unique convergence adapter solutions built on different architectures, firmware, silicon and hardware designs, which would require OEMs to perform two qualifications, resulting in higher testing and supply chain costs.

Finally, the other major issue is for QLogic’s customers will be how to make choices based on QLogic’s fragmented roadmap. What should they buy to ensure investment protection?  The, now old, QLE8200 CNA that does not offload IP or iSCSI or even with the new NetXen-based products that don’t currently offload FC or iSCSI, only IP? When QLogic does port their Fibre Channel stack to the new NetXen-based products, what then?  End users would be choosing a dead end platform, since QLogic must eventually eliminate one of the two platforms. It is clear that QLogic created more questions than answers with this acquisition.

QLogic’s acquisition only validates Emulex’s converged networking strategy. QLogic has recognized, as Emulex did over a year ago, that extending their Fiber Channel, storage centric, position with FCoE is not sufficient for achieving new OEM converged networking design wins. It takes a unique set of technologies to execute on this strategy and we’re flattered that competitors recognize that our solution set is at the forefront of customers’ requirements. Customers who chose Emulex have a long-term road roadmap based on the Connectivity Continuum™ that is simple, clear and based on the same enterprise hardened Ethernet, iSCSI and Fibre Channel software stack they are using today.

By delivering on this strategy, Emulex has doubled its addressable market, beyond traditional Fibre Channel, and has expanded into new product categories that have significantly increased our strategic value to OEMs. Our leadership in converged networking does not mean we are taking our eye off the rest of our Fibre Channel portfolio. In the March quarter, we also launched a number of new 8Gb/s Fibre Channel offerings with key OEM’s, including HP, Dell, and EMC, and we continued to deliver in the strategic blade server market by completing qualifications and beginning shipments of 8Gb/s mezzanine form factor HBAs for the latest Intel Nehalem blades from Dell and HP. In fact, we are currently the only company shipping 8Gb/s Fibre Channel mezzanine in standard PCI adapters to the new Dell PowerEdge 11g servers. We have ongoing commitment to Fibre Channel. We recently announced the industry’s first 8Gb/s Fibre Channel encryption HBA and we continue to invest in 16Gb/s Fibre Channel solutions.

Emulex has made the transition from a Fibre Channel storage company, to a converged networking company. Our industry leading technology is winning 10Gb/s NIC, iSCSI and FCoE qualifications over both traditional Ethernet NIC and Fibre Channel storage networking providers. We have significant new opportunities that are driving a high level of attention from customers and grudging respect from our competitors. We have a winning strategy, we are executing that strategy and we are building a next generation network convergence company.

Jim

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Leadership vs. Bravado

Lately I have noticed that our competitors have been pounding their chests and spreading FUD in the marketplace in a feeble attempt to reduce the impact of their being badly positioned, with inferior products, in the emerging converged networking market. It’s not in my character to let them get away with it, so here is the truth of the matter:

Re: Timing and Availability
Two months ago, Emulex announced the industry’s first single-chip Converged Network Adapter (CNA). At that time, we also announced that we were delivering samples to our key OEM partners. Both QLogic and Brocade have announced single-chip solutions in the last two weeks and are claiming availability. However, the products are nowhere to be found in the channel.  We told the world that Emulex’s OneConnect™ Universal CNAs (UCNAs) would be available beginning in the second half of 2009 and we are right on track. Emulex has already gained several unannounced tier-one OEM design wins, but as you know OEMs release on their own timelines, not when vendors ship samples. Emulex is in line with its customers’ needs.

Re: Universal CNAs vs. CNAs
This is the real competition killer and game changer! Competitive single-chip CNAs only solve 1/3 of the convergence equation. They off-load FCoE, but they are missing IP TOE/iSCSI and RDMA off-load. Emulex UCNAs provide true network convergence, supporting Enhanced Ethernet protocols that support IP and storage networking, including TCP/IP, NAS, FCoE, and iSCSI. It’s interesting to note that both Brocade and QLogic’s new single-chip CNAs seem to be based on the same set of limited specifications. They are both storage-centric products with limited protocol support, whereas Emulex’s UCNAs are optimized for both networking and storage. Make no mistake, data centers run on Ethernet and Emulex’s OneConnect UCNA will maximize the entire converged stack across all protocols, not just the storage portion.

Emulex UCNAs deliver hardware-accelerated I/O offload for Fibre Channel, IP and iSCSI, which maximizes performance through increased CPU efficiency. This allows Emulex UCNAs to support more virtual machines (VMs) per server, thereby further increasing data center consolidation. The other recently announced competitive products only provide offload for the Fibre Channel protocol.

And if that’s not enough, in terms of applications, the Emulex UCNA is applicable across the entire three tier datacenter architecture i.e. the web tier, application tier and the database tier. QLogic’s CNA applications are limited to the database tier, so customers would have to choose different products for the other tiers. This increases management overhead in large environments – a big issue these days.

RE: What the Industry is saying:
Proof of Emulex’s leadership in the converged networking market can be seen in the recent FCoE Adapter Leader Survey conducted by IT Brand Pulse detailing the opinions of 149 IT professionals. The survey respondents favored Emulex in five out of six categories: overall FCoE Adapter Market, Performance, Reliability, Service and Support and Innovation. In the overall FCoE Adapter market leader category, 35 percent of respondents selected Emulex over QLogic, Brocade, Intel, Broadcom and Mellanox.

We are still in the early stages of the converged networking market, and you will no doubt continue to read many outlandish competitive claims. However, in a new emerging market the true leaders are often defined early, and let me tell you, Emulex is first to market no matter what FUD others are trying to create. Emulex is fundamentally delivering a product that matters by providing the multiprotocol support and performance features that customers are looking for. We are leading the pack.

Jim

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