Accelerated Volume Heralds Growth in Transceiver Market

The HP announcements represent the companys first phase in FCoE implementation. This first phase addresses FCoE within the rack using either blade or rack servers and switches. As traffic exits the blade or ToR switches, IP and FC traffic are split and sent to existing SANs and LANs. The second phase is the implementation of multi-hop FCoE networks where the FCoE packets are sent through a converged FCoE network. That phase will take a lot more validation and FCoE switch design. The final stage will be when FCoE targets become available and are fully validated providing fully converged FCoE networks. By implementing only the first phase, HP has simplified cabling and management within the rack, but existing FC SANs and 10 GbE LANs are unaffected. Phases two and three may take several years before users are comfortable moving to them.

This first phase has some important implications for the optical transceiver market. On the one hand, the 16 blade servers use no transceivers as they connect to the BladeSystem backplane via 10GBase-KR. The uplinks, however, should see the attachment of as many as eight, SFP+ SR, LR, or LRM modules. That makes 16 servers sharing only 8 SFP+ transceivers or SFP+ Twinax copper cables. On the other hand, the BladeSystem implementation makes the converged fabric so simple to implement that LightCounting expects a large uptake in 10GigE FCoE implementation over the next 1218 months driving strong adoption of SFP+ modules as users upgrade 1GigE connections to 10GigE connections. Further, the rack server and switch announcements are also significant as each of the connections from the rack servers to the switch and the switch uplinks use SFP+ optical transceivers or Twinax cables.

In the end, LightCounting sees the integration/validation work HP announced in June as a major driver to the acceptance of 10GigE and FC/iSCSI converged fabrics going forward. HP is the big gorilla in the high-volume server space, and the low cost of 10GigE LOMs (10s of dollars) compared to add-in adapters (100s of dollars) combined with the relative simplicity and high performance of the new switches should appeal to their customers. The big unknown is whether end users will adopt the new SFP+ Twinax cables in lieu of SFP+ optical modules and cables for short distances (i.e. 1-5 meters). End users know and trust optical networks, but the decidedly lower cost of short connections that the Twinax cables provide may become too tempting to pass up. Later this year, LightCounting will be updating our forecast of the transceiver market to reflect these trends.

August 3, 2011

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