Emulex Keeps Its Focus on New and Emerging Storage Networking Technologies

Orange County Business Journal, Mar 28-Apr 3, 2005

At 26 years of age, Costa Mesabased Emulex Corp. is a survivor in the turbulent world of high technology. Founded in 1978 to provide storage and other peripherals for Digital Computer Corp. minicomputers, it reinvented itself in the early 1990s with a strategic bet on the thennew Fibre Channel storage networking technology - a move that has paid off handsomely. Emulex owns nearly half the market for the specialized storage hardware it produces, has grown from $69 million to $364 million in sales over the last five years.

Today, with a new corporate campus and a recent acquisition, Emulex is aiming to grow again with a move into embedded storage switches aimed at making data access even faster, more flexible, more reliable and more affordable.

Large storage vendors such as EMC, HP and IBM were early adopters of Emulex technology and began shipping Emulex' HBAs with their server and storage systems. "Nine companies today represent about 90 percent of the market for server, mainframe and storage systems products," says Paul Folino, Emulex chairman and CEO "and we're an OEM (original equipment manufacturer) provider to eight of those nine."

Key to those relationships has been Emulex' willingness to share its Service Level Interface - key software that runs its HBAs to help the OEMs tune their storage and server products for maximum performance or reliability, or to provide special features their competitors cannot. "We were one of the only vendors who allowed our OEM partners access" to this software, says Folino. Emulex differentiates its hardware with other software as well, such as its HBAnyware suite that makes it easier to manage SANs. This edge in software helps Emulex avoid the price wars that have eroded profit margins on other computer hardware such as disk drives.

Embedded storage switches market

With the acquisition of Vixel Corp. late last year, Emulex entered the market for embedded storage switches - microprocessors which can fit on the main circuit board, or motherboard, of a server or within a storage network to speed data to its destination at lower costs and higher speeds than is now possible. "Instead of connecting servers to a storage subsystem or a tape subsystem, we can connect drives together inside actual storage arrays," says Jim McCluney, Vixel's former president and CEO and now president and COO of Emulex. "With Fibre Channel doubling in speed every couple of years," he predicts, "customers will need an embedded switching environment to ensure the reliability and performance of their storane networks." Such embedded switches already make up 10 to 15 percent of Emulex revenue.

Folino expects Emulex to grow its current workforce of slightly over 500 people by ten to 15 percent a year. A "significant piece" of that hiring will be in engineering, which now makes up 60 percent of the work force, with the rest coming in support and other sales, administrative and other areas.

Folino has no regrets about having made another strategic choice: Committing to Costa Mesa. Orange County may not have the national reputation of Silicon Valley as a center of computer innovation, and "certainly doesn't have the density of high-tech firms." However, he says, "Intelligence doesn't stop at San Jose (the southern end of Silicon Valley.)" "We've had wonderful success in finding the right people."

For more information, visit www.emulex.com.