Cisco's storage-networking gambit draws mixed reviews
SAN JOSE, Calif. Analysts and competitors gave mixed reactions to the announcement Tuesday that giant Cisco Systems will jump into the storage-networking market through its novel spin-in company, Andiamo Systems. Most noted Cisco faces an uphill battle gaining technology and market credentials in storage, but some said the move could ultimately force a shakeout of existing Fibre Channel switch makers and accelerate the delayed rollout of storage systems based on Internet Protocol.
Thanks to its backing from Cisco, Andiamo has become the most talked-about stealth-mode startup in Silicon Valley since CPU designer Transmeta Corp. But whether the company can live up to its stated expectations of making Cisco the top- or second-ranked player in storage-networking switches, overtaking Fibre Channel switch leaders Brocade Communications Systems Inc. (San Jose) and McData Corp. (Broomfield, Colo.), remains to be seen.
Cisco claims Andiamo's MDS 9000 multiprotocol switches, set to ship at the end of the year, give it leadership in scalability and performance and provide such new features as support for Fibre Channel, iSCSI (SCSI over Internet Protocol) and the FCIP tunneling protocol as well as virtual storage-area networks and new Fibre Channel diagnostics. But Cisco will have to garner support from third parties for a new Cisco-designed application-programming interface for management software.
Management software is seen as key to the value of networked storage. Today, leading vendors such as EMC and IBM have their own management APIs and applications, but several vendors are backing an emerging standard called the Common Information Model (CIM) as a de facto management software interface.
In addition, it could take two years or longer for today's 1-Gbit iSCSI standard to take hold, opening the door for Cisco to fully leverage its IP expertise. Many observers believe existing Fibre Channel products will hold sway at least until the 10-Gbit generation.
Cisco said the MDS products will support iSCSI and CIM in early 2003.
Despite the hurdles, some analysts said Cisco's move spells the beginning of the end for a number of smaller Fibre Channel switch makers such as McData and Inrange Technologies Corp. (Lumberton, N.J.).
"The entrance of Cisco/Andiamo puts a flare in the sky announcing the zombiehood of Fibre Channel four years at the outside, two years at the earliest," Ashok Kumar, senior analyst at US Bancorp Piper Jaffray, predicts in a research note. "Of the Fibre Channel switch manufacturers, only Brocade seems to have a chance at surviving this environment over the long haul, but they will have to establishing a role in the iSCSI industry soon to have credibility as an Ethernet/TCP/IP switch vendor."
Brocade is the leading Fibre Channel switch vendor, with more than $500 million in annual revenue. McData is second, with revenue of about $380 million. Market watcher Gartner Dataquest expects the Fibre Channel switch market to grow from $1.2 billion this year to about $4.3 billion in 2006.
Kumar and many others said Cisco is not likely to have significant market impact for its first year as it tries to come up the learning curve. The storage system buyer is a new customer for Cisco, and the networking giant lacks the other storage network pieces that companies such as EMC, Hewlett-Packard and IBM can sell, said Jack McDonnell, chairman of McData.
"Typically Cisco calls on the network buyer. This is a new customer for them," he said.
For its part, McData expects to ship a 140-port Fibre Channel switch this fall. It will also demonstrate iSCSI and FCIP interfaces in the fall and put them into products next year.
"Cisco is a real veteran of the LAN, but in the storage world they are very new," said Daniel Raup, senior vice president of corporate development at Inrange, which sells high-end Fibre Channel switches with as many as 256 ports.
At the same time, "Cisco has really validated this storage-networking business, and I think they could accelerate the drive to iSCSI," said Greg Schultz, director of storage networking for Inrange. The move to iSCSI has faced several delays but should take hold in the market in 18 months, he said.
Schultz and others said the end goal extends beyond Cisco's stated plans of switches that support Fibre Channel and iSCSI to include Infiniband. "All these technologies need to come together. The question is whether it's one or five years from now," Schultz said.
The MDS systems include about eight ASICs developed by Andiamo including the company's own iSCSI silicon. The systems use dual 720-Gbyte/second passive backplanes and support six to 13 slots.
Cisco has invested in Andiamo since April 2001 and houses the 270-person company on its San Jose campus. It has made its investment in the form of an $88 million convertible note that gives Cisco a 44 percent stake in the company.
Cisco said it will acquire the rest of Andiamo by July 2004 at a price to be determined based on market milestones it has set for the startup.