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Mellanox acquires Voltaire

Further consolidation of InfiniBand market

Storage Alert By Deni Connor, Network World
December 06, 2010 12:04 AM ET
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Mellanox last week announced that it has acquired InfiniBand vendor Voltaire for $218 million, leaving two companies – Mellanox and QLogic in the InfiniBand space.

Mellanox will pay $8.75 per share for Voltaire. Combined, the businesses will have 700 employees and a revenue of $217 million. The company will retain both companies' products. Mellanox has historically provided Voltaire with its ASICs for InfiniBand switching and host channel adapters. The combined companies will also offer 10Gigabit Ethernet switches and network adapters. Integration of the products will occur in the second half of 2011.

Mellanox/Voltaire competes with QLogic, one of the last companies making InfiniBand host channel adapters and switches. QLogic manufactures the dual- and single-port 40Gbps 7300 Series host channel adapters (HCA) and the 7200 Series HCAs, as well as 12000 and 9000 InfiniBand director-level and edge switches. The 12000 ranges from 18 to 864 ports, while the 9000 has 24 to 288 ports. This contrasts with Voltaire which has the Grid Director switches that scale from 20 to 648 40Gbps ports. Of interest and a potential sticking point is that Voltaire OEMs its HCAs from QLogic.

Voltaire and QLogic also compete with each other for market share. According to equity analyst firm Cannacord Genuity, the two represent a 'duopoly' – Cannacord recently upgraded QLogic from Hold to Buy and said, "He who controls the spice, controls the enterprise" in reference to QLogic owning the protocol stack from Fibre Channel, InfiniBand and iSCSI. Coupled with its single-chip 10G Ethernet ASIC, Cannacord Genuity puts QLogic at the front of network and storage convergence.

One month later, Cannacord recognizes that the Mellanox/Voltaire acquisition is "modestly negative" to QLogic's dominant 50% InfiniBand market share. "With this transaction, Mellanox takes a big step towards the 80/20 rule upperhand, thereby materially challenging QLogic's future InfiniBand market potential," says Paul Mansky of Cannacord Genuity. Mansky estimates that the current market share percentages are 50% for QLogic, 30% for Mellanox and 20% for Voltaire.

Read more about data center in Network World's Data Center section.

Deni Connor is principal analyst for Storage Strategies NOW and host of both the Masters of Storage and Masters of Servers Solution Centers.

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