I’ve been discussing the changing IT infrastructure with a number of vendors. Getting schedules to line up, especially in the summer can be difficult, and after a last-minute cancellation of a meeting with Brocade, I sent a note on Twitter (above). It got a lot of responses, so I thought I would give my thoughts on Brocade. Rumors of Brocade being acquired have floated around for many years and M&A activity is always a hot topic for press and bloggers. I have no insider information about any activity, but have worked with Brocade (and most of the companies it has acquired) for 10 years. How would an acquisition affect the legacy FC market or the their entrance into Ethernet?
Arms Dealer to the Industry
Brocade wants to provide their best-of-breed solution to the entire market, supporting a broad spectrum of heterogeneous environments. As you can see in the graphic below, Brocade is well positioned with the server vendors (except of course with Cisco). Brocade also has good partnerships with EMC, NetApp and other storage vendors. If Brocade was to be acquired by IBM or Dell, their relationships with the other server and storage vendors would be damaged and could lead to QLogic gaining further inroads into the market which is currently dominated by Cisco and Brocade. While Fibre Channel is not going away any time soon, it is a niche market, but as mainframe and tape vendors can tell you, there is plenty of money to be made in niche market segments. It is unlikely that a networking company (such as Juniper) would look to get into the FC market now that it is on the decline.
The Next Battle
The challenge for Brocade is that the growth in storage networking is in Ethernet solutions. Brocade is well aware of the market dynamics and acquired Foundry in 2008 to help fully engage in the Ethernet market. The transition from a storage vendor to a networking vendor is not a simple one. Brocade has been fighting attacks from Cisco for years in FC, but in the networking market there is a much more complicated competitive landscape. Brocade is used to being #1, but in the Ethernet switch market, Cisco dominates, HP has moved strongly into the #2 position and there are a number of other vendors (some who could afford to acquire Brocade) who will fight for the #3, 4 and 5 positions. Brocade has launched a couple of new initiatives, but as Enterprise Networking analyst Steven J. Schuchart Jr. posted on SiliconANGLE, “Distill the marketing messages down to the essence and you’ll find few common components that really define next generation networks.” All of the networking vendors are talking about virtualization, cloud and efficiency. Brocade must also deal with the organizational struggles of storage (where it is well positioned) and network (where if it is known, it is as a storage company) teams colliding. Brocade is strong through OEMs, but networking gear is sold through a much more diverse distribution network and many of Brocade’s traditional partners have their own networking gear and relationships with other established vendors (as shown in the stack graphic).
One of the things that I hear regularly from the Wikibon community is that they want choice. Brocade must strengthen their partnerships and provide a compelling vision to customers if it is to be a strong player in the Ethernet networking market. While vertical integration of the IT stack is currently popular, Brocade has a strong field force and good customer loyalty which could easily be disrupted by an acquisition. I look forward to hearing more from Brocade on their transformation.
Last year Dave Vellante posted an in-depth look at Can EMC Remain Independent?