QLogic Corporation(QLGC) announced the optimization of its third-generation 10GbE (Gigabit Ethernet) converged network adapter (3GCNA) for the Cisco Data Center Fabric.
The portfolio of QLogic 10GbE 3GCNA is innovative, with a simple network design that increases scalability without any additional complexities and overheads associated with networking architecture.
QLogic 3GCNA adapters are suited for an environment associated with cloud computing, and QLogic’s unique ConvergeFlex technology enables the converging of storage and data networking over 10GbE through simultaneous multiprotocol support. QLogic’s VMflex technology physically virtualizes 10GbE ports into virtual ports.
QLogic’s solutions have helped cloud service providers record the lowest CPU utilization in operating various concurrent protocols.
QLogic’s 3GCNA products, in combination with the Cisco Data Center Fabric deliver an environment of extremely secure data center virtualizations and cloud computing. The products will be available through QLogic authorized resellers globally.
Cloud computing has a number of advantages and the cost advantage of sharing resources has resulted in its growing adoption by businesses across a number of industries. However, proper management and usage of the technology is a prerequisite.
The cloud computing market is expected to grow at a CAGR of 40.0% from 2010 to 2015, crossing $7.0 billion in revenues by 2015. Cloud computing leads to improved services and requires elevated security standards and QLogic’s product portfolio is well positioned to deliver on both these counts.
In terms of product portfolio, QLogic garnered substantial revenue share in Fibre Channel adapters, Fibre Channel over Ethernet (FCoE) converged networking adapters and 10Gb Ethernet adapters in calendar year 2010.
According to latest reports by the two leading industry research firms Dell’Oro Group and Crehan Research, QLogic retained its #1 position in Fibre Channel adaptors for the second straight year, with 54.0% of total revenue share in calendar year 2010, a 16 percentage point lead over its nearest competitor.
In the emerging FCoE adaptor market, QLogic became the frontrunner with 43.0% of revenue market share, 13.0% more than its nearest rival. In the 10Gb Ethernet adapters market, both the reports suggest that the company has gained significant market share in calendar year 2010.
The significant market share growth was primarily driven by strong customer demands, primarily due to the recovery in enterprise information technology (IT) spending in 2010. We expect this trend to continue in calendar year 2011, along with a strong demand for QLogic’s converged networking technology.
We believe that QLogic will benefit from major OEM customer wins and increased focus on its key strategic initiatives over the long term. However, tough competition from Emulex Corp. (ELX) and Broadcom Corp. (BRCM) will act as a headwind for the stock. Thus, we have a Neutral recommendation in the long term (3-6 months).
Currently, QLogic has a Zacks #3 Rank, which implies a Hold rating on a short-term basis.
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