A strong trend in the 2010’s will be the adoption of virtual Converged Network Adapters (CNAs), which virtualize the IO. Wikibon has discussed this virtual IO trend in depth. The business drivers are simple, enabled by the integration of Fibre Channel and Ethernet HBA cards onto a single virtual CNA card. The results are fewer cards, less power, fewer cables and simpler connection of servers and server blades to the computing infrastructure. In the long term it enables the use of a single Ethernet backbone to carry multiple protocols, including Fibre Channel over Ethernet (FCoE), which will significantly reduce cabling, switching and transmission costs for enterprise networks.
Figure 1 shows an ogive or S-curve which reflects adoption and how the Wikibon community believes FCoE will penetrate the marketplace. Early adoption is occurring in 2010, particularly with extensions to data centers, new data centers and with cloud service providers. The early adoption will be in large-scale server deployments, with Top-of-Rack (ToR) switches providing connectivity to existing switches. The adoption will move to switches and then to storage.
In response to this market development and early adoption, Wikibon compared two leading slternatives that server & blade manufacturers currently have for CNA technologies-- QLogic and Emulex. These technologies are used in host bus adapters (HBAs), top-of-rack switches and enterprise switches. Other suppliers such as Broadcom, Brocade, and Intel have announced their intention to supply CNA technology; however their presence in the adapter market is limited and therefore are not included in this analysis.
Framing the CNA Decision
The most common use case for CNAs is when there is a significant requirement for Fibre Channel traffic from an installed FC infrastructure. Computing pools usually focus on a single storage protocol (FC, iSCSI or NAS). If the predominant focus is NAS or iSCSI (and only a few servers are FC) then it does not make sense to include the added cost of CNAs as part of a general infrastructure; it will make more economic sense to use Ethernet only cards in general, and FC HBAs or CNAs in the few servers that require it.
The general case for using CNAs is compelling when FC is the predominant storage protocol. In addition, the most important performance and functionality requirements of a CNA revolve round the FCoE component. Storage performance has a far greater impact on application response time and server throughput than communications traffic.
This professional alert will focus on the FCoE part of CNAs primarily. 10Gb Ethernet cards that can support different Ethernet speeds and iSCSI will be investigated separately.
CNA Functionality Ranking
Wikibon has identified 7 functionality categories that are important to CNA selection, and with input from users and manufacturers ranked them in order of current priority to end users. These are shown in Table 1 which provides a framework that we have populated and will update over time.
Performance was ranked most important; if the CNA hardware and drivers can improve latency and bandwidth, the processor can be driven at higher utilizations and become more cost effective and power efficient.
Reliability was ranked a close second as troubleshooting and replacing cards on processors take expert skills and is time consuming in the field.
Environmentals was ranked third, as heat extraction is a major constraint in the design of high-density rack or blade systems. Unlike microcode or drivers, good environmentals cannot be retrofitted to the design of a card. Good environmentals have to be built in at a very early design stage.
Design wins (ranked fourth) are the announcement from a vendor (server, storage or switch) that the CNA’s have been tested and certified. It gives users confidence that the complete hardware, microcode and software stack will work together. Initially design wins are given to one vendor, and then over time a second source is introduced.
Financial strength (ranked 5) is the ability of the CNA vendors to fund the investments necessary for establishing an emerging technology.
At the early stages of introduction of a technology, specific feature support (ranked sixth) is always a patchwork quilt. Over time vendors fill in support with updates to microcode and driver software, usually as the marketing of their partners dictates.
Market share data (ranked seventh) is not so important at the early stages of a technology introduction, and can change very quickly. It is an increasingly useful metric beyond the design phase and demonstrates traction in the marketplace.
Summary Vendor Comparison of CNA Functionality
Wikibon independently assessed QLogic and Emulex in each of the CNA functionality categories shown in Table 1, and created a score (1-10, 10 being outstanding) shown in Table 2. Using the ranking as the weighting factor, Wikibon calculated an overall score for each of the vendors shown at the end of Table 2.
Overall, Wikibon currently believes that QLogic leads with respect to delivering FCoE CNA technology to the marketplace in 2010. Wikibon notes that vendors and users will demand second sourcing, and Emulex will do well in this space. Wikibon also notes that it is early in the overall adoption cycle for FCoE and CNAs. Nonetheless, QLogic’s early execution in this market has clearly outpaced that of Emulex.
In the “CNA Functionality Ranking Comparison Discussion” section below Wikibon discusses the vendor comparisons in each of the functionality areas (Tables 3 through 9). In the appendix (Tables 10 through 16), Wikibon gives additional details about the individual elements assessed within each category.
CNA Functionality Ranking Comparison Discussion
Performance – Wikibon believes that both QLogic and Emulex have good FCoE CNA performance. Emulex has a narrow lead in FCoE providing 270,000 IOPS (4K block size), whereas QLogic achieves 250,000 IOPS. 4K block sizes is the smallest found in most installations. Emulex have driven performance higher at smaller block sizes (up to ~900,000 at ½ K block sizes), but there are almost no applications or environments running with block sizes lower than 4K.
QLogic has focused on large send offloads, while Emulex has focused on Ethernet performance with TCP/IP offloads. Though not relevant to this report, Emulex has a lead in Ethernet performance over QLogic. Wikibon believes offload features can give some benefit, particularly in error handling situations; however they are less important with multi-core CPUs as the performance improvement on processor throughput is much reduced. Table 3 gives a summary of the Wikibon performance assessment. More details of the components assessed are given in Table 10 in the Appendix.
Reliability – Wikibon has given the edge to QLogic for reliability, and gave particular weight to the fact that in a discusions with OEMs, practitioners and others in the market QLogic was perceived as more reliable and more ready to support deployment. Reliability will improve from all vendors as volumes increase. Table 4 gives a summary of the Wikibon reliability assessment. More details of the components assessed are given in Table 11 in the Appendix.
Environmentals and in particular power efficiency and heat generated are very important considerations for high-density blade systems, which will be the strongest area for early adoption of CNA technology. Power efficiency parameters have to be decided on very early in the design cycle, and cannot be improved by any type of retrofit. QLogic has an impressive lead in this area, with less than 10 watts for the dual-port CNA compared with 14.5 watts for Emulex. Both vendors will achieve savings of at least 10 watts and a card slot compared with the traditional two cards needed for FC and Ethernet cards. Table 5 gives a summary of the Wikibon environmental assessment. More details of the components assessed are given in Table 12 in the Appendix.
Design wins shows that the technology has been tested and qualified by a specific server, blade or storage manufacturer. QLogic has emphatically won almost all the design wins to date, including extensive wins at Dell, EMC, HP, IBM and NetApp. As well, Wikibon believes QLogic has the lead at Cisco based on our analysis of early UCS shipments. The Emulex major qualification has been to join QLogic as an FCoE partner on IBM’s Blade center (with BLADE networks). Both QLogic and Emulex have switch certifications with Cisco TOR switch products for bridging to existing IP networks and FC fabrics. Sun has announced a project to deliver an OpenSolaris driver that will enable the availability of TCP/IP networking on a Converged Network Adapter on OpenSolaris systems with the QLogic CNA.
HP is the only server blade standout and has consistently positioned FCoE as a “future” technology. Wikibon believes that this positioning is to protect HP’s well accepted Virtual Connect technology on its c-Class BladeSystems, which has provided an earlier but more limited form of virtual IO. HP has recently announced FCoE on its Proliant range of servers with support from both QLogic and Emulex.
Emulex has extensive Ethernet design agreements. Emulex indicated in early 2010 that they have a number of FCoE design agreements pending which will be announced later in 2010. Table 6 gives a summary of the Wikibon design-win assessment. More details of the components assessed are given in Table 13 in the Appendix.
Financial strength is a measure of the resources the companies can bring to bear on this marketplace. In addition to its own research on this topic, Wikibon consulted with a number of financial sources, including Mark Gomes - Managing Member & CEO, Pipeline Data, LLC, a financial services consultancy to gain perspective.
The basic numbers between the two companies show that QLogic is valued higher on a revenue basis than Emulex. The balance sheets are similar for both companies - a few hundred million dollars in cash and short term equivalents with no long term debt. A major reason for the variance in valuations is QLogic has been growing while Emulex revenues declined in recent quarters; although this trend was reversed in the December quarter of 2009 with Emulex holding flat revenues in a down market.
Emulex operating margins had also been negative, while QLogic’s are quite high. Importantly, the source of the difference in operating margin is not gross margin as the gross margin of both companies is comparable in the mid-60's range. Emulex is matching QLogic’s R&D spending on a dollar basis but for QLogic R&D spend hovers in the low 20’s as a percent of sales, while for Emulex it’s in the low 30’s. SG&A for QLogic is also substantially lower as a percent of sales. This means QLogic operates more efficiently than Emulex.
If Emulex can continue to ramp its sales without incurring extra costs, aside from sales commissions, it could in theory attain the type of valuation that QLogic is seeing. Dollar for dollar, Emulex expenses look very similar to QLogic’s but because of QLogic’s better revenue figure, its higher valuation is justified. Emulex has guided Wall Street that it will continue to grow on an annual basis.
Wikibon believes that CNAs will be in the early adopter phases in 2010, and start to take off in 2011. The development and introduction of new technologies always takes deep pockets to finance the take-up period, before the volume business kicks in later. QLogic has shown impressive financial results in a challenging business environment, with increasing revenues and profits. Emulex seems committed to investing early in emerging technologies.
QLogic has used some of its financial leverage to buy in FCoE ASIC and Ethernet stack IP, which gives it more control over its technology roadmap and feature introduction. Emulex sources its FCoE ASIC and Ethernet stack from privately held ServerEngines.
Table 7 gives a summary of the Wikibon financial strength assessment. More details of the components assessed are given in Table 14 in the Appendix.
Detailed support for operating systems, industry standards and specific vendor standards is a moving target and is changes significantly over time. Base security features are available in both CNAs, and more specific functionality is expected to be added with microcode and software extensions as the market matures. Emulex has a lead in support for security standards such as RSA Key Manager, KMIP and FC encryption. QLogic has a lead in OpenSolaris. QLogic and QLogic have recently announced an important certification for vSphere V4 from VMware. However, Wikibon believes that both vendors will fill in the missing items over time with updated versions of microcode and device drivers. Table 8 gives a summary of the Wikibon detailed support assessment. More details of the components assessed are given in Table 15 in the Appendix.
Market share is measured by early port shipments and revenue. We believe market-share is inconclusive at this time and too early to call any meaningful trends. IT Brand Pulse released early market data which appears to favor Emulex while other research firms such as IDC and Dell’Oro have not weighed in as of yet due to the small size of the market. There seems to be confusion in the definition of FCoE shipments as capable or actually deployed. On the other hand QLogic has dominated shipments for the more power and space efficient single chip CNAs which will garner the lion’s share of the business in 2010. Nonetheless, at this time we believe QLogic has shipped less than 10,000 single chip CNAs; not enough to give a meaningful advantage. As such we have rated market share even as we’re heading into the first turn of this market.
Most server and blade manufacturers will dual source technologies, so there will be space in this market for both QLogic and Emulex. Table 9 gives a high level scoring of the market-share data which is inconclusive at this time.
QLogic have been more focused on FCoE, and have driven the adoption hard with the early introduction of single-chip CNAs and early design wins. Emulex has focused more on 10Gb Ethernet, with FCoE "when you need it". Wikibon believes that QLogic is currently a more enthusiastic and better partner for 2010 FCoE implementations. Emulex strength as a partner is heightened for 10GE implementations of NAS and iSCSI. Wikibon believes that the CNA market needs two strong CNA vendors and that QLogic and Emulex will be the primary suppliers in the near-to-mid term and perhaps beyond.
Action Item: Virtual CNA technology was introduced in 2009, and for large Fibre Channel IT installations is ready for implementation in 2010. Most early 2010 implementations will be pilots. QLogic has established a lead in CNA reliability, design wins and environmentals. In 2010, Emulex should be considered if there are specific areas of support that are not available from QLogic, for very IO intensive applications with very small (½ K) block sizes and for second sourcing.
Appendix: Methodology and Detailed Component Assessments
Details of the CNA functionality components listed in Table 1 are shown in the following Tables 10 through 16. A “+” in a column indicates that the component is available and/or supported, and a “-” shows that the feature is not available. A “?” indicates that information is not available at this moment. For the purpose of analysis, a “?” is treated as “-” in calculating the scores at the conclusion of each table.
The assessments in Tables 10 through 16 are used Tables 3 through 8, and are translated into a single score (1-10) for each vendor for each category. The evaluation is discussed in the section “CNA Functionality Ranking Comparison Discussion” above. The scores are used in Table 2 which provides overall evaluation of each category, and an overall rating for each vendor.