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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: buck who wrote (18408)	2/23/2000 12:16:00 AM
From: Greg Hull	Read Replies (6) \| Respond to of 54805

RE: Fibre Channel Brocade Ancor Mike/Buck, I consider myself a student of the FC space, but I don't think this is of any benefit to answering your question: Is there an example of a company in any industry with proprietary architectures that has produced next-generation products to get way ahead and stay way ahead after having been way behind in the earlier-generation products? Instead of answering your question directly (since I can't) I'll add a few comments to the topic that initiated your question. A friend has explained to me that Ancor will be first to market with 64-port and 128-port switches, both apparently expected to be available this year. He thinks that market opportunity has a good chance of catapulting Ancor past Brocade. First some background. Fibre Channel networks have been in place for many years, but of late there is a change from hub-based networks to switch-based networks. If you plug several FC devices (computers, storage systems, etc.) into a hub, each device can talk to each other device, but only one device may speak at a time. The hub is the teacher in the front of the classroom and the devices are the students who raise their hands when they wish to speak. The hub makes sure that there is orderly communication. In the olden days telephone companies had operators that would connect Party A to Party B. The operator and the switchboard functioned as a hub. If Mabel was using the telephone, Bernice would have to wait until the party line was available. When telephone switches replaced operators, multiple conversations were possible simultaneously. Similarly, FC switches allow multiple FC devices to communicate simultaneously. This increases the aggregate throughput of the FC network, since each FC conversation through a switch could transfer as much information as hub-based conversation, but a switch would allow several to many conversations at the same time. The first FC switches were 16 port, that is 16 FC devices could be plugged directly into a single switch. Later (the next generation?) 8 port switches became available for smaller applications. Buck, you said "I also can't imagine a world where Brocade managment, sales, and engineering is perfectly happy to stay with their 32-port switch for the remaining life of the company." Did you mis-state Brocade's current offering or do you know something we don't know? I don't believe that Brocade has announced anything larger than a 16-port switch. Brocade and Ancor have designed their switches with different architectures. Brocade uses a shared memory design and uses Rambus and Wind products in their software-based switching architecture. Ancor uses a hardware-based switching architecture, relying on the ASICs they design to switch the connections. Mike, getting back to your point, Ancor has stated that shared memory architectures can work well for switching up to 16 ports per switch, but for higher port densities the shared memory approach will exhibit greater latency. Latency is the delay before the information is first received at the destination. As an example, a daily newspaper delivered by a paper carrier each day to your home has a throughput of 1 newspaper/day and a latency of several hours. That is, the information that was printed arrives at your house within several hours. Now if you moved away and wanted to receive that same newspaper out of state, you could have it mailed to you. The throughput would still be 1 newspaper/day (assuming mail delivery every day of the week), but the latency would be several days instead of several hours. For many things you don't care that the information is several days old, but some news (stock quotes, e.g.) may not be useful to you if it is several days old. Ah, getting back to the point you raise: Ancor has announced (but not made available) a 64-port and a 128-port switch. Brocade is shipping 8-port and 16-port switches, but has not announced any higher port density switches. This does not mean that they don't have them, only that they have not chosen to announce them. Not everyone needs a switch to handle 50+ devices. Those who do are the Enterprise Storage folks. Ashok Kumar, analyst for Piper Jaffrey, has stated that he thinks a very large segment of the FC switch market will be the 50+ port switches within a few years. Today this market is very small. Brocade owns the FC switch market today. Once again this is the 8 and 16-port switch market. Ancor's largest OEM, SUNW, has not begun to ship their switch-based storage systems yet. The word on the street is that this will happen the second half of the year. This will tilt the revenue ratio away from the current 10:1, but probably will not result in a 50:50 split by itself. Ancor would need to sign up a few more heavy hitters to reach revenue parity with Brocade in the 8/16-port market. This may never happen. Ancor's best chance to catch Brocade would be to capture the large port switch market and hope that this segment will be a significant chunk of the entire FC switch market. Brocade does not have a product for this market today. If this will be a significant segment, as Buck observes, it is unlikely that Brocade will ignore it. Then it can be seen whether there is a performance penalty for a shared-memory architecture. Or perhaps Brocade will develop a different architecture for high port density switches. Both of these companies should do well since the market is exploding, but which will do better? That's the $$$ question. I have wrestled with this subject since reading the FM 6 months ago. Does GG address this issue of Brocade being the first out of the gate, therefore the more likely winner long term? Or is this where the basket approach says buy both and let the market tell you? Has the market told us already? If not, when will it? When can you say that Ancor is out of contention for the Gold Medal, and is merely competing for some baser metal? Greg