Intel acquires Qlogic's Infiniband Assets - End of Infiniband?

So today, it was announced that Intel had acquired Qlogic's Infiniband assets for $125M.  My immediate reaction was, "uh oh, is the age of Infiniband in HPC over?"

Why would this be the end of Infiniband?  Here's my analysis and thinking on the topic.

In 2005 there were five early players in the Infiniband market worth mentioning: Topspin, Voltaire, Mellanox, Pathscale, and Silverstorm.

• Topspin was acquired by Cisco in 2005 for $250M. Cisco shut down their Infiniband R&D in 2009.
• Silverstorm and Pathscale were acquired by Qlogic in 2006 for $60M and $109M respectively (total $169M). Pathscale's compilers were sold for undisclosed amounts (or atleast I can't find the number online). Given they are undisclosed numbers, its unlikely the numbers were big.  So Qlogic likely couldn't sell their Infiniband assets for even the price they paid for them.
• Mellanox acquired Voltaire in 2010 for $218M.

So that takes us to the beginning of 2011. What was once 5 major players (or 4 if you count the merged Silverstorm/Pathscale as 1) became 2. The growth of Infiniband as a data center solution to replace Ethernet did not appear to be happening.  Naturally, consolidation occurred.

So no worries yet for Infiniband, there were still 2 major players left.  Well lets look at the financials.

• Mellanox has been profitable for awhile.  Last year (2010) they profited $13M on $154M in sales.  Analysts say that Mellanox had huge sales this year at $258M.  Going off old income statements, $50-$60M of that is from Voltaire, so that's some decent growth.  Of course, a non-trivial portion of this profit is not from Infiniband, but from Mellanox's Ethernet sales.  How much?  Unfortunately I can't find breakdowns.
• I couldn't find breakdowns in revenue/profit for Qlogic, but given the sale of their Infiniband divisions was for $125M, it indicates it wasn't much (Qlogic had a market cap of $1.6B starting today).
• As far as I can tell from data sheets, Voltaire never had a single profitable year.

I'm not some fancy financial analyst, but what I derive from this is that the total profitability of Infiniband is somewhere on the order of $25-$50 million globally. It's enough for there to be businesses out there and enough for there to be a market, but it's not a lot.

So the big question is, why did Intel buy Qlogic's Infiniband assets?

1. Were they interested in the ~$5M profit that Qlogic's Infiniband assets could net them?  I doubt it.  (I derived the ballpark $5M because this article puts Mellanox as owning about 85% of the Infiniband market.)
2. Perhaps Intel thinks they can do some bundling to increase the profitability of Infiniband.  Hypothetically, put them on Intel motherboards.  It's certainly possible.  But how much gain can they really get for a market that appears to not be interested in Infiniband?  Turn the $5M into $20-$30M in a few years?  It seems hardly worth it for an Intel.
3. Intel thinks they can turn Infiniband around as a data center/HPC solution and make it far more popular.  If this were 2005, I would be willing to believe it.  I think the lack of wider adoption of Infiniband is a bit cemented.  Newer/better Ethernet solutions are now catching up too, so it's not the same market as 2005.
4. Support Infiniband as a community service.  With Mellanox having 85% of the market, there was a decent chance Qlogic's Infiniband could eventually sink.  Without a competitor and decent prices, the HPC community could buy less Intel chips.  There is a good argument for this, although I think the odds of this are low.  Intel could completely ignore the HPC community and they would still buy tons of their chips.  Perhaps less overall, but is it enough of a difference for Intel to do a $125M community service for them?
5. This is an aqhire move, designed to give Intel the talent necessary to make the HPC networking product they really want to make.  While it could be based on Infiniband, it's unlikely to be standard Infiniband or standardized as Infiniband. There are very few companies/groups out there that know how to make HPC networking equipment, and the Infiniband group at Qlogic is one of them.  They could have bought Cray, but they'd be buying a lot of software assets they probably weren't interested in

My gut tells me its #5 above.  As an additional argument for this point, in 2011  Intel hired away a ton of HPC talent including Chief Architect of Blue Gene from IBM.  Did they hire a whole bunch of these elite HPC executives and architects to help push commodity Intel chips and hardware like they have in the past?  I doubt it.

So how is this the end for Infiniband?  Well, if my guess above occurs, you'll only have Mellanox as the player in the Infiniband market.  While I have respect for Mellanox, I have a hard time believing they are going to care about standardizing their hardware or pushing changes to standards groups if they are the only ones manufacturing it.  Eventually, Infiniband would become synonymous with whatever Mellanox produces, and Infiniband itself will be gone.

Update (4/26/12):

Heh, from #5 above:

They could have bought Cray, but they'd be buying a lot of software assets they probably weren't interested in 

and what do ya know, Intel bought Cray's interconnect assets earlier this week.

With that acquisition, that's a lot of networking HPC expertise to be buying up and absorbing.  Perhaps this enhances my argument that Intel is gathering forces to create a new HPC interconnect technology?

One colleague suggested that Intel might be trying to have a "portfolio" of different products.  It's certainly possible that they are, but it doesn't seem like something they would want to do.  Having a portfolio of products is more up the alley of an HP or an IBM.  It'll be interesting to see what Intel does, but the full manifestation of this will probably not be seen for years.