As many as half of the 350,000 10 Gbit Ethernet controllers that ship this year could be LAN-on-motherboard (LOM) designs in server blades, according to a new report from Dell'Oro Group. That's up from just ten percent of the 150,000 controllers that shipped last year when most designs were adapter cards often in rack or tower servers.

Dual-port gigabit Ethernet controllers still dominate the roughly 20 million server Ethernet connections that ship each year. "It's still the very, very early stages of the 10G Ethernet transition, but once we see LOM designs, these things can turn very quickly," said Seamus Crehan, a vice president at Dell'Oro and author of the report.

Three factors are driving the rise of the new 10GE design wins. The servers have the necessary plumbing, applications need more bandwidth and the controller prices are falling, he said.

The latest crop of servers sport processors such as Intel's Xeon 5500 (aka Nehalem) with the 5 GHz PCI Express 2.0 interconnect capable of handling multiple 10G I/O streams. Those servers need more bandwidth due to increasing system utilization, thanks to multiple virtual machines running on each physical processor.

Meanwhile, 10GE adapter cards now cost as little as $600 per port, down from as much as $1,200 for first-generation cards three years ago. Gigabit Ethernet cards with optical connections can cost as much as $200 per port, making the switch to 10G cost-effective for systems using three or four ports.

Optical connections make up as much as 60 percent of the 10G Ethernet market, as copper options are still struggling to cut costs and power consumption, Crehan said.

Short-reach copper modules for the direct attached SFP+ standard are just beginning to emerge. Parts for the 10GBase-T standard for Category 6 and 7 cables are in an even more nascent stage.

"The power and prices still need to come down more for 10GBase-T to ramp," said Crehan. "It's getting there, but its a little ways away," he added.