Tech Industry

Storage network gear sees sales growth

Worldwide sales of storage area network switches rose 15 percent last year, largely driven by a move toward 2gbps Fibre Channel switches, according to a new study.

Worldwide sales of storage area network switches rose 15 percent last year, largely driven by an industry transition toward a newer version of Fibre Channel technology, according to a new study.

Storage area network, or SAN, switches generated $954 million in revenue last year, up by double digits over the previous year, said research firm Dell'Oro Group in a study released Monday. The firm predicts growth will continue this year.

"We're forecasting sales to grow 12 percent in 2003 to about $1.1 billion," said Paul Baranello, a Dell'Oro senior analyst. "It's slightly less growth than 2002 and shows growth is slowing. But compared to other segments in networking, it's positive growth...and any growth is good growth."

The storage industry has almost completely moved to the newer 2 gigabits per second (gbps) version of the Fibre Channel networking technology used to link storage systems and servers. Switches supporting 2gbps speeds, as opposed to the earlier 1gbps models, accounted for more than 95 percent of sales in the fourth quarter, compared with less than 20 percent a year ago, the report said.

"There were a lot of new products that came on the market for 2gbps, and that helped the market in 2002," Baranello said. "Almost all the vendors did a complete product transition from 1gbps at the start of the year to 2gbps at the end."

But while the storage industry predominately embraces the Fibre Channel networking standard, a newer standard, which incorporates ordinary IP (Internet Protocol), is making some headway.

SAN switch makers have not been immune to the tough information technology spending environment. Industry leader Brocade Communications Systems, for example, reported a first-quarter revenue that was flat compared to year-ago figures and down from the previous quarter.

Brocade, however, managed to maintain its industry lead last year with a 58 percent market share. The company also increased revenue by 19 percent to $551 million, compared with the previous year, according to Dell'Oro.

McData, meanwhile, generated a 1 percent increase in revenue to $279 million last year but was ranked second, with 29 percent of the market. Inrange Technologies captured third place with its 6 percent market share. The company saw a 35 percent increase in revenue to $57 million last year.

"I think Inrange had stronger year-over-year growth because they were coming off a smaller base," Baranello said. "They focused on the higher-end 2gbps products, and that's where most of the growth was in 2002."