 Live from the Moscone Convention Center in San Francisco, California, it's the queue at Oracle OpenWorld 2014. Brought to you by headline sponsor QLogic with support from HGST. Violin Memory and MarkLogic. Now here is your host, Stu Miniman. And we're back. I'm Stu Miniman with wikibond.org here in the QLogic booth at Oracle OpenWorld 2014. We're at Moscone South, 65,000 people gathered to see the biggest show in the database world, one of the larger shows in the IT community. This really just takes over all of San Francisco. So not only Moscone, but if you're looking for a hotel, you're probably out of the airport or in one of the surrounding communities. And so many different aspects of what goes on here. Lots of the show talking about what's happening with cloud as Larry Ellison takes the reins as the CTO, talking about infrastructure as a service and platform as a service. And of course, lots of applications, the software as a service offerings that they have. There's a big data session going on all this morning, Jeff Kelly's watching that. And we've been talking to some of those partners at the show here. But here in the QLogic booth, we're actually going to focus on QLogic first segment. So joining me is Vikram Karvat, who's the VP of marketing, but really one of the main product guys at QLogic. Cube alum, joining us back here. Vikram, thanks so much for coming on theCUBE. Thanks for having me, Stu. All right, so Oracle Open World, obviously an important industry show. Why is it important for QLogic? Well, you know, first off, it's hard to believe what it's been like 12 months since we last spoke, right? And in our industry, the cadence we work on, so much stuff changes. And there's a lot of focus in different areas, whether you're talking about virtualized infrastructure, and you're doing something with VMworld, or you're talking about some of the cloud shows. But as far as mainstream enterprise, and some of the things that are occurring there, Oracle Open World is actually a great place to get a sense of what's going on in the enterprise, which is still, believe it or not, pretty significant portion of the industry spend goes into traditional enterprise. Yeah, great point, Vikram. So those of us, especially in the industry watchers, we always love to chase the new shiny thing there. So I love the Docker discussion that's going on, and what's happening in Paz and everything there. But Docker's not being discussed at this show. I mean, we're talking about enterprise application, what's living there, kind of the bread and butter for a huge chunk, majority of the revenue in the IT world. So Q-Logic just had an announcement that hit the wire this morning. Can you tell us a little bit about what's the news and give us a little bit of behind the scenes as to what led us to this? Sure, happy to. So just kind of as a little bit of a backdrop, the last 12 months have actually been full of change, a good change for Q-Logic. You know, in February we acquired Rokade's fiber channel adapter assets, and we've been working with them pretty closely to do some end to end stuff. And a couple of months later we announced the acquisition of certain controller assets, ethernet controller assets from Broadcom. And we've been on a roll since then with the addition of some of those product lines, and that's what brings us to today. So traditionally, Q-Logic has been very, very focused on working with our OEMs, and we're very pleased to announce that as of yesterday, over 70 different OEM solutions on both the ethernet and fiber channel side have gone out with the tier one server platforms with the Grantley launch. But today, this morning, what we announced is the same product that went out on the tier one server side are now being offered in the Q-Logic channel. So both for mainstream ethernet controllers as well as for converged network adapters. It's pretty exciting for us because it signals a little bit of a change for Q-Logic. We're seeing a significant ramp in 10 gig adoption with the Grantley launch, and this affords us the opportunity to fulfill some of the buying needs and purchase needs that are changing, they're non-traditional. So we've typically gone to more of an OEM side, but now we're investing more on the channel. All right, so Vikram, let's double click on that a little bit to give our audience a little bit of an insight. When I look at those adapter businesses, Q-Logic has had a presence in the channel for a number of years. Obviously, strongest piece has been through the OEMs, especially if you're talking from a fiber channel standpoint. You needed to have all of the server OEMs as well as embedded solutions when it comes to the storage side. When I looked at Brocade, Brocade was almost all OEM. I mean, there's a little bit of channel here and there, but very much focused on the OEM. And Broadcom, it was really synonymous to the OEMs. I think from the one gig ethernet standpoint, it was all about the embedded solutions, which meant it had to go through the OEMs because it was embedded. So tell me what's different about 10 gig? Why has the channel become more important? And how does that, if we're talking on the ethernet side, there's Q-Logic equipment and there's Broadcom, heritage, where do those things sort out? Well, I think it's a sign of a maturing market as I said, changing customer needs. Certainly, if you look at our product portfolio, our fiber channel business is still very largely driven by the OEMs. The ethernet business has been traditionally largely driven by the OEMs and a good chunk of that will still go through the OEM channels. But as markets mature, the number of routes to market change because different customers have different needs and what this allows us to do is service those needs. Now, historically for 10 gigabit ethernet for the last few years, not a big deal because that market was still nascent. And the OEMs are really taking the lead in that. But what we're seeing now is as the market ramps, the number of users that want to buy through different venues has morphed. So, Vikram, I wonder if you can clarify, because you say 10 gig is nascent. I mean, we're over 10 years into the adoption of 10 gig. 10 gig is ubiquitous at the core. It's in just about, huge proportion of the switch base. But you're talking about from the edge and last number I heard, I mean, I know it was over 30% of the overall server market but dominated by kind of the bladed solutions, which are what, over 90% 10 gig as opposed to kind of the rack and tower. Where are we with kind of that adoption? I think you hit it right on the heads too. Because we've hit that 25, 30, going to 35% connect rate. And a lot of that has been driven by the blade side. And of course those are very much an OEM focused play. But now as we start talking about going from that 35% type of threshold, growing to that mainstream, going to 70 plus percent type of mix, those people that are picking up those things are buying their IT infrastructure from a variety of sources now. And that's what we're really driving for is going from that 35 to getting to that 70% type of connect rate. And that's what I consider mainstream. Yeah, absolutely. So here just, some people might be watching and saying, well with one gig we really, we just put the lane on motherboard and put that chip on there. Are we going to see that for 10 gig? Because obviously if it's just a standard component and it's on the motherboard, tends to be a little bit cheaper and it's easier to consume. Yeah, I think the market has changed in that with 10 gigs there's no single answer. There is a lot of choice that need to be made in terms of physical layer interfaces, how many ports you want, the type of functionality you want. And it's no longer a simple decision for an OEM to just drop something on the motherboard. So we've seen most of the OEMs have adopted some sort of daughter card strategy and we see that continuing for some time to come. And it's actually, it's interesting because it's actually going to get worse in my view over time because the number of choices which is good is going to expand. We're talking about 10 gig today and it was a choice between one and 10. 10 gig optical versus 10 gig base T. But now we have 25 gig coming downstream. We have 40 gig, we have 50 gig, we have 100 gig. We have low latency stuff, we have CNAs. I mean if you look at that mix, the IO portfolio for most of our OEMs is going to expand dramatically over the course of the next three to five years. All right, so let's switch focus a little bit and talk about the channel and who they're selling to. One of the things that really jumped out at me is you've got the managed service providers called out which what we would say in many ways has become the new channel for many of the technology suppliers and it's a growing, vastly growing part of the market in addition to the enterprise that we've traditionally focused on and then of course you've got above them you've got the web scale or hyperscale giant clouds of Amazon, Google, Yahoo and Facebook type people. The announcement that you've made, how does it fit for the enterprise and for the managed service providers and does it touch on any of, maybe you can touch on how Q-Logic thinks about those kind of 20 largest clouds out there and how you interact with them. So the announcement we made today is actually geared towards filling a gap there. So if you look at what you just described on the one side enterprise combined through the traditional OEMs. On the other side, I wouldn't even say 20 I'd say they're probably the top five to eight hyperscale data center guys that have always bought stuff directly from the ODMs or not always but they've moved to an ODM model and then in between the MSPs that are kind of a hybrid between the two because they're servicing tier one enterprises in private public cloud type of infrastructure deployments but they're under the same sorts of cost pressures and scale out pressure as they scale out as some of the hyperscale guys are. So they're taking a page out of the books of some of the hyperscale guys saying look for certain of our applications and certain of our customers the OEM product offerings are exactly the right fit and Q-Logic plays into that through our traditional routes to market but now we're servicing a new set of customers and in order to address their needs we're going to have to look at potentially stitching together our own solutions. We might have OEM branded servers in there we might have OEM branded adapters but we may also have alternatives. So as they look to those alternatives we want to make sure that we have an offering that meets their requirements because they're the customers at the end of the day. All right so how should customers be looking at Q-Logic going forward? I mean you talked at the beginning of the segment we've had a lot of consolidation out in the market play. How does Q-Logic differentiate from the remaining players out there and what sets you apart? So from a scale standpoint with the addition of the NetExtreme 2 controller family we're essentially the number two player in Ethernet. So from a user perspective when they deal with Q-Logic they're dealing with the number one provider of fiber channel solutions and the number two provider of Ethernet. Whether you want to buy those solutions or acquire them through OEMs or directly through Q-Logic what you're getting is a Q-Logic support infrastructure that is backed by a significant position in either of these technologies. So you have the confidence when you buy these things that any issues that come up down the line there is going to be Q-Logic backing them up. And as we see industry consolidation your choices especially on the Ethernet side are do you want to buy something from the number one, number two guy or do you want to buy something from the number four, number five guy that may decide doesn't want to be in the market. We made a conscious decision to double down and invest in a significant amount of energy and our resources in the Ethernet space. So we're going to be here for the foreseeable future and we'll be a major provider of IO solutions for whether you're an MSP hyperscale guy or an OEM. So Vikram with your product hat on how are you guys sorting through this huge increase in options that are out there? It was real easy when it was just the 10X improvement on Ethernet, the 2X improvement on Fiber channel. I just said I mean I'm having trouble keeping up with you said 10 and 40 and 100 is what we had and you added 25 and 50. I mean Melanox does a 56 on top of that. So why do we need so many options out there? The 10X improvement did us so well for decades on the Ethernet standpoint. How are you guys sorting that out? How are you helping the industry drive this forward or is it being, where's it being driven from? How do you guys participate in? How do you sort all this out? Oh boy, that's a lot of questions. Yeah. But... Choose one. So the need for some of this is really driven by the fact that our customer requirements have changed. It used to be that an infrastructure solution met most of their requirements but as their application workloads have fragmented and people are focusing more on what is the cost? What is the total cost of running these things? What am I getting out of it? And now I have enough pools of these workloads where I need to start optimizing on a workload basis. And that's what's really driven the need. As people look to optimize, they look for a variety to drive that optimization. From our perspective, what we've brought to market is a lot of flexible solutions that people are able to take at either an ASIC level or an adapter level. Kind of crystallizing some of what you just said. Yesterday we announced that our grantee programs that were just went out. So we basically are shipping over 70 new solutions on the grantee platforms. Five years ago, that 70 might have been 10. So the amount of complexities increased a lot. Now what are we doing? So we're essentially, we've been restructuring, we've been scaling our resources to be able to, instead of saying, hey, you know, customer X, Y, or Z, here's a solution, now you have a series of them. Take your pick. And it certainly has made my product hat a little bit larger and a little bit more complicated, but it's a necessity. That's what it takes to do business in this environment. All right, so change has been a major theme that you talked about. As we've looked forward through the rest of the year, is the grantee release going to be one of the most important drivers of new business? Is there some other technology or new use case or new use set that's going to drive it? What's the most important thing helping adopt some of the new technologies? Well, grantee is absolutely going to be huge for us for two reasons. Some of the capabilities that Intel has enabled in these new platforms is driving a lot more IO, whether it's virtualized IO or bare metal type of infrastructure. So we're already seeing an increase in connect rate on our 16 gig fiber channel. And just because it seems like the industry as a whole, grantee being a part of it, is really seeing a significant ramp also on the ethernet side. Ethernet is like a hockey stick right now for us. So that right now, we're doing our best just to keep up with what the demand is. So we're pretty happy with where our business is going right now. All right, so Vikram, as I look around the cube that we have up here, optimize, simplify, accelerate, change, give us the bumper sticker when people look back as to what the new Q-Logic is, what should they be thinking about? I think they should look at Q-Logic as their one stop shop for IO solutions, whether it be ethernet or fiber channel and moving forward, providing customers even more choices, not from only a form factor, but from a solution level. And there'll be more to come on that in the near future. All right, well, Vikram, always appreciate you coming in, sharing all the information, lots of change, which is good, it sounds like, for Q-Logic and customers and the managed service providers and all the new solutions going out there. So thanks so much for joining us. Look forward to keeping an eye on everything that's going to come out of Q-Logic in the future. So this is Stu Miniman with wikibond.org and our coverage from Oracle Open World will continue after this break.