Emulex’s fiscal year starts around July 1st, and our recent announcement of a definitive agreement to acquire ServerEngines leaves us feeling like it is Christmas in July. Why? We have the opportunity to expand our market and drive our strategic vision forward. Below is a chart that shows our core strategic framework for our product lines, including the product lines that would be added in the transaction.
Let’s take a look at how the transaction will expand our strategic vision if ServerEngines’ products are added to our product lines.
Unified Management
As Emulex looked into the future and thought about entering the network convergence market, we knew that the hard connectivity would be the easy part. Connectivity is relatively binary: it works or it does not work. Management, on the other hand, isn’t quite that simple–you have many questions, many scenarios, many regulations and policies to support, and perhaps the most challenging of all, many human factors to address. This is why we have placed so much of our development and marketing resources in this area to find out what IT administrators need for IP, storage and clustering.
This lead to the development of our OneCommand Framework tools such as Manager for device management and Vision for I/O management, with the planned acquisition of ServerEngines we would add Pilot integrated management controllers that provide Emulex the opportunity to add new I/O virtualization tools and better remote management of I/O over IP.
Universal LAN on Motherboard (LOM)
The core of the Local Area Network (LAN) is the LAN on Motherboard (LOM), and it will soon be known as the Universal LOM (ULOM). Just as our OneConnect Universal Converged Network Adapters (UCNAs) converge IP, iSCSI and Fibre Channel networks, we are now bringing that capability to the core of LAN connectivity with our ULOM. Our ULOM shares the same management, drivers and configuration as our standard and mezzanine adapters, but it is now provided as a ULOM on the base systems or blade. This is a core change to how networks will be deployed and we believe it will certainly accelerate the adoption of both 10Gb Ethernet (10GbE) and Fibre Channel over Ethernet (FCoE).
Embedded I/O
Our Embedded System Products (ESP) group has been working on providing end-to-end I/O for years, and with this acquisition we will be able to drive new target opportunities in the market as makers of storage arrays, deduplication, Virtual Tape Libraries (VTLs) and tape automation systems move to native 10GbE Network Attached Storage (NAS), iSCSI and FCoE. As I have said many times, network convergence is starting in the server/rack, and then moving to the network core, and finally being incorporated into target devices.
These product line expansions are perfectly timed to enable Emulex to address new markets and work more closely with our key OEM customers.
$350 Million of Total Available Market (TAM) Presents As we said during our announcement call, we expect that these new opportunities will represent an additional$350 million in TAM by 2013. It is summer and Christmas is a long way off, but the presents are expected to arrive early. We have much work to do to realize the opportunities in front of us, but when you start a new fiscal year; plenty of opportunity is all you can ask for.
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