Happening as it did just as I was going on holiday this one nearly passed me by, but it still deserves a post – at the beginning of August Brocade announced its intentions to spend $713M on acquiring the only acquirable competition in the storage switch space (the other guy’s Cisco), namely McData. Interesting times indeed, not least as Brocade, once one of the darlings of the storage networking revolution, is giving indications that it’s getting back in the driving seat. Brocade’s star fell as fast as its share price at the start of the downturn; more recently it has had difficulties in growing its business beyond storage networking; while it has had its own internal problems it is currently showing there’s still money to be made out of switching. McData brings a heritage in mainframe-class switching, and has long since given up on the notion that man can live on switches alone, as illustrated by last year’s acquisition of CNT on the hardware side and in 2003, Nishan and Sanera on the software side. Put it all together and you start to get a pretty comprehensive storage portfolio.
The acquisition won’t complete until next year, which gives us plenty of time to think about the consequences. Meanwhile, here’s some food for thought. There must be a reason why there are so few vendors of storage switches, and why the largest companies in the storage space – think IBM, EMC and HP – choose to partner with companies like Brocade rather than building their own switches. The answer, I believe is that it is very hard to build a storage switch – far easier to partner than to attempt to compete and fail. So – by taking out the competition, Brocade is strengthening its position and broadening its offering as a good partner should. However, it is now starting to talk in more general terms of “data centre optimisation”, as if storage networking is a done deal and Brocade’s sights are turning to data networking. While this might be just the rhetoric of acquisition, if I were Brocade I’d be careful not to target the bigger guys too directly. Perhaps they won’t feel too threatened, but equally, Brocade should perhaps stick to its knitting (one is reminded of VMware’s focus, and its resulting success, as a comparison).
It may not make much difference anyway. By buying McData, Brocade has turned itself into quite an attractive acquisition target. The major storage vendors may not want to upset the careful equilibrium that exists between them, but by Juniper (or indeed, by Cisco), there are sure to be others that would see an investment in Brocade as further advancing their own data centre strategies.
Wondering if any thoughts on whether regulators at the DoJ would view this merger as anti-competitive and seek to block the two companies from combining?
I didnt think this combination would significantly change OEMs view of Brocade and thus effect their pricing power. But it seems like the DoJ is investigating more into the pricing power of the two combined companies.
Wondering if any thoughts on whether regulators at the DoJ would view this merger as anti-competitive and seek to block the two companies from combining?
I didnt think this combination would significantly change OEMs view of Brocade and thus effect their pricing power. But it seems like the DoJ is investigating more into the pricing power of the two combined companies.
Wondering if any thoughts on whether regulators at the DoJ would view this merger as anti-competitive and seek to block the two companies from combining?
I didnt think this combination would significantly change OEMs view of Brocade and thus effect their pricing power. But it seems like the DoJ is investigating more into the pricing power of the two combined companies.
Tricky perhaps, given that Cisco remains as a competitor. I have long wondered about the durability of the pureplay SAN switching market, and this perhaps takes it one step closer to its demise.
Tricky perhaps, given that Cisco remains as a competitor. I have long wondered about the durability of the pureplay SAN switching market, and this perhaps takes it one step closer to its demise.
Tricky perhaps, given that Cisco remains as a competitor. I have long wondered about the durability of the pureplay SAN switching market, and this perhaps takes it one step closer to its demise.