Fibre Channel, SANs take off in 99

Posted on February 01, 1999

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Fibre Channel, SANs take off in `99

Dave Simpson

The markets for Fibre Channel equipment and storage area networks (SANs) are poised for significant growth this year, according to recent reports from International Data Corp., a market research firm in Framingham, MA. For example, IDC predicts that by 2002, 40% of all multi-user and workstation disks shipped will be Fibre Channel. And, while the compound annual growth rate for SCSI disk drives is pegged at only 4.3%, IDC is projecting a 153% CAGR for Fibre Channel drive shipments. That would translate into more than 10 million Fibre Channel drives shipped in 2002.

Also by 2002, IDC predicts that Fibre Channel will account for 45% of all embedded RAID controller shipments. While SCSI RAID controller shipments plow along at a respectable 32% CAGR, IDC expects Fibre Channel RAID controllers to grow at a 211% CAGR.

Meanwhile, the expected growth in Fibre Channel will lead to a spurt in the market for SANs. IDC forecasts suggest that storage networks will account for 37% of all external storage spending by 2002. That will amount to a SAN market of roughly $11 billion.

Estimates from Needham & Company, an investment firm in New York, correlate closely to IDC`s estimates. For example, Needham expects the market for storage, networking and software for Fibre Channel SANs to top $10 billion in 2002, up from less than $1 billion in 1997. Needham analysts say the early "killer apps" for SANs will be storage backup and server clustering.

Until last year, the storage area network market was comprised primarily of solutions in the IBM mainframe and Digital OpenVMS environments. Now, the SAN market is being driven by Unix and Windows NT (a.k.a. Windows 2000). Robert Gray, research manager of storage systems at IDC, says Unix will be the primary environment for SANs through 2001, with NT taking over in 2002 with an estimated $4.5 billion market.

If IDC`s SAN market estimates prove correct, there should be a huge market for related products such as Fibre Channel hubs and switches. For example, Gray expects hub port shipments to spurt from 55,000 in 1997 to more than six million in 2002, a CAGR of 122%. At the same time, per-port prices are expected to drop 23% per year to about $125 per port in 2002. The total market for Fibre Channel hubs should top $800 million in 2002.

Projections for the Fibre Channel switch market are even rosier, with the market pegged at twice the size of the hub market in 2002, or $1.6 billion. Price-per-port for switches is expected to decline 25% annually, reaching $750 per port in 2002. The number of switch ports shipped is expected to grow at a CAGR of 185%, to 2.2 million ports in 2002.

Although growth in the Fibre Channel market is undisputed, storage industry participants disagree as to when--or even if--Fibre Channel will eclipse SCSI as the dominant storage interface. At a panel discussion at Fall Comdex, hosted by Disk/Trend Inc. and Eurologic Systems, attendees were asked whether they thought Fibre Channel would dominate and, if so, in what year. Approximately 80% of the attendees (which were mostly vendor representatives) said that Fibre Channel would eventually dominate. Of those, 32% said that Fibre Channel would eclipse SCSI in 2000, while 48% said that it would dominate by 2005.

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