FCoE (Fibre Channel over Ethernet) is a storage protocol (or language) that lets fiber channel communications run over the Ethernet, specifically the 10G Ethernet. This has gained popularity because it allows both the regular traffic and the storage traffic to consolidate to just one network (instead of having one set of switches for fiber and one for Ethernet). This also reduces the number of cables and switches, thus reducing power and cooling costs as well.
Basically (and very simply) you will use converged network adapters (CNAs), a new FCoE switch and a lossless Ethernet protocol. You will be able to use your 10G Ethernet network while preserving the fiber channel protocol. Servers connect to FCoE with CNAs which combine both fiber channel HBA and Ethernet NIC functionality on a single adapter card.
One of the benefits of FCoE is that it preserves the high-speed data connections, which a SAN requires. Additionally, since you are consolidating your SAN and network infrastructures, your operational expenses will be lower and you will use less power, cabling and data center space.