Given the wide number of choices and all the uncertainties about user needs and wants, there is no single solution that is likely to satisfy the requirements of all customers. Hence suppliers are hesitant to pursue the classic integrated approach of soldering a LAN chip on a server motherboard -- called LAN on motherboard (LOM) -- that would otherwise facilitate early migration to 10Gbps. Instead, major server vendors such as HP, IBM and Dell are using modular integrated network cards, called daughter adapters or modular LOM, to help IT managers through the transition by providing choice of speed, type of network connectivity (10G Base-T or SFP+ DAC), type of protocol and brand.
While these new adapters provide more flexibility to end users, they come at a premium. The 10Gbps daughter adapters cost two to three times more than LOM counterparts. We estimate the price of a 1Gbps server LOM port to be around $7, the price of a 10Gbps LOM port to be about $24, and the price of a 10Gbps daughter adapter port to be over $65 (note that these are prices to the server vendor and not the end user).
Given the daughter adapters' price premium, the question is whether or not 10Gbps LOM server connectivity is required for a mass migration to 10Gbps. Certainly, a move toward a LOM would accelerate the 10Gbps transition. However, we believe daughter adapters may persist in the market for two or more years. We also believe that a mass migration to 10Gbps could still occur without a full conversion toward LOM since the price of a server network port comprises less than 10% of the total price per server connectivity as illustrated in Figure 2.
We believe the vendor decision to switch from a daughter adapter to a true LOM will depend on several considerations:
" Uncertainties about users' requirements. We believe users' move towards a more common and converged set of choices will favor server vendors' transition towards a LOM solution.
" The ability to justify the price premium of daughter adapters, which again depends on users' need for flexibility.
" The degree of data center consolidation and the move to the cloud. It is not yet clear whether enterprises and small and midsize businesses (SMBs) will keep their own data centers or outsource them to service providers. We believe an outsourcing model would favor a move toward true LOM, as cloud providers usually can specify their needs and buy LOM in bulk.