Over its three decade rule of the networking market Ethernet has crushed: PC Network, Token Ring, AppleTalk, DECnet, Myrinet, Quadrics, and dozens of other interesting approaches.  Today only two competing technologies remain and each has tried to carve out its own niche.  Fiber Channel defined and ruled the storage market, while Infiniband has become the network of choice for the scientific community.

Fiber Channel is now seriously threatened by a protocol called FCoE, Fibre Channel over Ethernet. Essentially all that is Fiber Channel is wrapped in an Ethernet package and shipped over an Ethernet network.   Fiber Channel has moved through  2, 4, 8 and now 16Gbps.  During roughly that same time Ethernet has migrated from 1 to 10 and very soon 40Gbps (note 100Gbps exists for the switch to switch connections, but it is impractical today for the server to server communication).  Much of the Fiber Channel world is running with 4 & 8Gbps networks while the server market has been moving rather quickly from 1 to 10Gbps. Furthermore, Ethernet controllers, the chips in the server that connect to the actual network, have gotten far more sophisticated over the last two generations so they can now off-load the host CPU from doing many of the mundane networking chores while delivering amazing performance.  Alan Weckel, senior director at Dell’Oro, said “We believe that in 2013, most large enterprises will upgrade to 10Gb Ethernet for server access through a mix of connectivity options, ranging from blade servers, SFP+ direct attach and 10G Base-T,”  Alan then went on to say “We further anticipate that in 2014, small and medium businesses will upgrade to 10Gb Ethernet.” The bleeding edge customers will begin testing 40Gb Ethernet in 2013, with adoption really starting to ramp in 2014.  At this point several things converge:  Ethernet network performance will far exceed Fiber Channel network performance, this generation of ethernet controller silicon coupled with enhanced value added software should be mature enough to deliver all the features of Fiber Channel, and all of this will be done at a commodity price point.

Infiniband (IB) is a network of a whole different color.  Here the value proposition is two fold, low latency at a low price point.  One of the issues plaguing IB is the decreasing number of competitors in this market that sells switches and adapters.  Several years ago there were well over a half a dozen, today there is just Mellanox and Intel (they bought QLogic’s switch & adapter business in 2012 for $125M).  Intel’s roots in this space run deep, all the way back to 1999.  At that time Intel had co-developed something called Next Generation I/O (NGIO) with SUN and Dell.  In 1999 a consortium was formed that merged NGIO with Future I/O (a competing technology developed by IBM, HP & Compaq) to become Infiniband.  The division of Intel that acquired IB from QLogic is the same division that drives Intel’s very robust 10Gb Ethernet business.  In 2011 they acquired Fulcrum to fill out their networking line in order to compete head to head with Broadcom.  This division of Intel did just over $10B in 2011 with expectations of ramping it to $20B over the next five years. Intel, like Broadcom, is very good at selling chips, and pretty good at selling adapters.  I doubt we’ll see any new Intel developed IB switches anytime soon so Mellanox will likely be walking this path alone. It will be interesting over the next year to see if Intel fuels IB or pours water on it.

Next week – Part II, “Where is Ethernet Headed & How Network Companies, Other Than Intel & Broadcom, Will Survive & Prosper”