Prices for 10 Gigabit Ethernet Declining

'Lackluster' market linked to lack of recognition, need for the technology.

Force10 Networks Inc. last week gave 10 Gigabit Ethernet a shove down the price curve with a 44 percent reduction in the cost of its line cards.

The move comes as prices for the emerging high-speed networking technology have begun to inch downward among the primary vendors supplying 10 Gigabit Ethernet interfaces.

Since Extreme Networks Inc. introduced its 10 Gigabit Ethernet offering eight months ago, it has discounted the offerings list price twice, said John Erlandson, director of product management at the Santa Clara, Calif., company. "We originally introduced our 10 Gigabit Ethernet at $59,995 [per port], then dropped it to $49,995, and today we have a special promotion for $25,000 per port," Erlandson said.

Force10s price reduction cuts the list price of its two-port 10 Gigabit Ethernet line cards from $110,000 to $62,000, or $31,000 per port. "Customers in volume will be able to get it in the $17,000[-per-port] range. The street price before the change was about $35,000 per port," said Steve Mullaney, marketing vice president at the Milpitas, Calif., company.

Meanwhile, Foundry Networks Inc. next week will introduce a second-generation 10 Gigabit Ethernet module for its switch/router line that will be 10 to 15 percent less expensive per port than the current module, according to Foundry officials. "We think itll come down to $5,000 or $6,000 per port by 2006," said Chandra Kopparapu, director of product marketing at Foundry, in Sunnyvale, Calif. That is the kind of pricing needed for the technology to become mainstream, said Frank Dzubeck, president of Communication Network Architects Inc., a Washington-based consulting company.

"It will have to be below $10,000 [per port] to accelerate," Dzubeck said. Force10s move, if IT can push competitors to further cut prices, is "the first evolutionary price drop that will go from the 5 percent early adopters to the 20 percent of the people who can afford to do it," he said.

Force10s decision to discount follows a "lackluster" 2002 for the 10 Gigabit Ethernet market, according to Chris Kozup, an analyst at Meta Group Inc., in Burlingame, Calif.

"The majority of enterprises outside those that are very processor-intensive dont have a requirement for 10 Gigabit Ethernet. Between a lack of recognition in the market and a lack of need, it isnt surprising to see this price adjustment," Kozup said.

But processor-intensive installations are growing as a result of the move toward grid computing and the consolidation of data centers, where users are clustering Linux blade servers, according to Force10s Mullaney.


Vendors of 10 Gigabit Ethernet products are slashing per-port prices. Some notable reductions include:
  • Force10 Networks Dropping per-port volume rates from $35,000 to around $17,000
  • Extreme Networks Adding promotions to reduce per-port costs from $59,995 to $25,000
  • Foundry Networks Slashing prices up to 15 percent on new line with goal of less than $6,000 per port by 2006
"All those blade servers come with one or two ports of Gigabit Ethernet for free," Mullaney said. "You need a way to aggregate thousands of Gigabit Ethernet-attached servers, so you have to interconnect switch/routers with a higher-speed trunk. Gigabit Ethernet to the server is driving 10 Gigabit Ethernet trunks."

And grid computing is catching on faster than most in the industry realize, Dzubeck said. "[Its] happening in corporations for all sorts of diverse applications, " he said.

Still, 10 Gigabit Ethernet is "a bit ahead of its time," Metas Kozup said. With no word from Cisco Systems Inc. and Nortel Networks Ltd. on their pricing plans, its impossible to tell how quickly demand will ramp up. Both vendors declined to comment. But the promise is there long term. "It allows you to scale the Ethernet technology without costly protocol changes and the management challenges those bring," Kozup said.