Quick takes on McData:
1) Fabric switches went from $7.5M, or 10% of product revenue in 1Q2001 to around $16.7M, or 23% of product revenue in 2Q2001.
By the end of the year, I think MCDTA will start exhibiting the same type of revenue linearity within a quarter -- x+2x+4x -- that Brocade experienced when it was posting sequential growth rates of 40% or more. Right now I think that most of their fabric switches are sold into their director customer base while their 90 or so resellers/system integrators gather momentum with small and mid-sized SANS (10 switches, <100 servers).
2) Aside from impacting margins, the rapid introduction of 4 new products in the last 4 quarters apparently strained MCDTA management and resources. That probably explains the new hires -- COO, CFO, VP-Manufacturing, VP-Marketing. Manufacturing glitches are still being worked out.
3) 2Gbps sked -- 3Q01 internal testing, 4Q01 customer testing, 1Q02 early ship, 2Q02 GA. MCDTA currently sees greater demand for 1 Gbps deployments than 2 Gbps deployments at this point probably because storage consolidation can be more easily justified. This matches the EMC datapoint that the transition to 2 Gbps will probably take 18 months. Remember that there is a logjam for new product intros from the OEMs around the end of the year. With QLGC, VIXL and ZOOX already shipping 2 Gbps switches, this bears watching. Rapid 2 Gbps ramp possibly gated by SFF availability from the likes of FNSR.
4) Software/Services has gone from $2.9M in 4Q00 to $3.7M in 1Q01 to $4.8M in 2Q01. More deferred software revenues coming online during 2H01 along with new software products.
5) Biggest deal in the quarter was probably the US financial institution that added 56 64-port directors to an existing SAN with 90 32-port directors -- 5,000-6,000 port SAN. At $350,000 a pop, those 56 directors were easily worth $19.6M to MCDTA.
6) MCDTA highlighted its penetration of one of Brocade's reference account: the 320-switch Commerzbank SAN. It sold 16 64-port directors, 12 32-port switches and 10 9-port switches -- or almost 1,500 ports -- to that account.
7) BA win: 12 64-port directors, 22 32-port directors, 4 32-port switches, and 8 9-port switches. This is a 1,600 SAN that is expected to eventually grow to around 3,000 to 4,000 ports.
For reference, 64-port directors go for around $350k a pop. 32-port directors go for around $150k each. 32-port switches go for around $57k each, 16-port switches go for around $27k and 9-port switches go for around $5k each. This type of deployment parallels the use of more expensive Symmetrix-type storage devices at the core and less expensive Clariion-type storage devices at the edges. Note squeeze on 16-port switches by 32-port fabric switches. Rackmounted servers proliferating at the department/workgroup levels will probably require more ports, less ISLs.
8) MCDTA Guidance is for 23%-29% revenue growth in 3Q2001, or $82M to $86M and 35%-45% revenue growth for FY2001, or $336M-$361M. This means that FY2001 guidance has gone from 40% at the start of the year to 80% to 50%-60% to 40%-50% to the current 35%-45%. |
