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Mellanox Technologies Idea Proposal (MLNX, INTC)

Mellanox Technologies Idea Proposal (MLNX, INTC)
 

How disruptive is Intel’s Omni-Path to Mellanox’s InfiniBand business?

Report Available: November 11, 2016

 

Blueshift’s initial research reveals that MLNX has had a virtual monopoly as the InfiniBand supplier to the high-performance computing (HPC) market. MLNX has also been slowly and successfully expanding high-speed switching use in cloud computing, storage, and data center applications with ultra-fast Ethernet. Yet, INTC’s launch of Omni-Path switches in November 2015 has introduced an alternative solution for HPC and led to questions regarding the best and most cost effective switching technology for HPC, cloud, and data centers.

 

Observations

  1. MLNX’s Q2 performance beat Street expectations and produced the fifth consecutive quarter of record revenue with growth of 32% year to year. A 3% decline in InfiniBand revenue was offset by Ethernet revenue growth of 28% including sales from the recently acquired EZchip. Q3 guidance came in slightly below the Street consensus.
  2. MLNX’s 3% decline in InfiniBand revenue was caused by stiff performance and pricing competition from Intel’s new Omni-Path switches. According to MLNX management, INTC has secured eight competitive contract wins in the TOP500 list of supercomputers since Omni-Path’s launch.
  3. The HPC community and Wall Street are taking note of the head-to-head competition, wondering if Omni-Path is a disruptive technology that will lead to a shift customers away from MLNX’s InfiniBand in favor of the new Omni-Path Architecture (OPA). What follows is a sample of articles fanning the flames in the debate over InfiniBand and Omni-Path:
  4. According to a February 2016 report, the HPC market is expected to grow 5.45% between 2015 and 2020. The HPC server market is expected to gain the largest market share along with storage, networking devices, and software solutions. This could promote wider adoption of Omni-Path as INTC servers have significant share in the HPC and data center markets.
  5. In an interview with a tech industry specialist regarding MLNX, the source indicated that InfiniBand will remain one of the company’s strengths, at least in the short term. He indicated that MLNX is well positioned for future growth by providing next-generation solutions for open networks, data storage, cloud, and data center computing as the tech eco-structure enters the early stages of a complete re-architecture. The company is achieving this through high-quality R&D and effective joint development and partnering relationships with leading tech companies.
  6. Blueshift’s MLNX and INTC coverage in recent Tech Trends reports shows that both companies are innovating with new, industry leading technology and simultaneously participating in the commoditization of many older or fading tech industry segments due to the high level of competition. In Blueshift’s June 30, 2015 Tech Trends report, MLNX was acknowledged as the HPC InfiniBand leader, but also credited with offering its own line of “X” branded Ethernet switches designed for scaling from small to massive cloud clusters. It is blazing new trails into storage performance and active networking. The July 9, 2015 Tech Trends report indicated that MLNX 100 Gbps switches were taking part in changing the data storage industry.

 

What is the health of the HPC market? What are the advantages/disadvantages of InfiniBand vs. Omni-Path switching? Is Omni-Path a disruptive technology? How much of the HPC market will Omni-Path be able to win? How much will Omni-Path take from InfiniBand? What future tech innovation will drive growth for MLNX? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: High performance computing centers, Value added resellers/system integrators, OEMs, and Industry specialists.

 

Companies: Intel Corporation (INTC) Mellanox Technologies, Ltd. (MLNX))

 

Research Begins: Oct. 24, 2016