FCoE is a protocol which allows Ethernet to encapsulate fibre channel SAN networking traffic into Ethernet Frames. This is an important capability since it will allow IT managers to deploy an unified network based on 10 Gigabit Ethernet - in place of the separate IP and SAN networks which are common in the enterprise today.

The technology is becoming increasingly popular because the network consolidation provided by FCoE can deliver reduced data center costs for power and rackspace consumption through the elimination of networking equipment (switches, cables, adapters). We have written a pair of case studies on some early FCoE deployments which I could forward if you are interested. Over the long haul, a single unified network could eventually lead to simplified management and provisioning.

More Here