Brocade Buys An Ethernet Company, Finally

The technology shift is obvious. Enterprises are increasingly networking their storage with Ethernet. If Fibre Channel lives on, it will live on as Fibre Channel over Ethernet. And like other technology domains, there is a demand for a single vendor for all networking gear. It’s one throat to choke. But what on earth took Brocade so long?

The company’s $3 billion acquisition of Foundry Networks this week has been a long time coming.

Cisco marched into the Fibre Channel switching market five years ago and has been forcing Brocade’s hand ever since. Brocade’s acquisition of rival McData was a clear example of a land grab to fend off Cisco’s increasing market share, not a step forward in evolving network technology.

Meanwhile Cisco’s leverage as the No. 1 supplier of Ethernet switches has enabled it to up-sell its Fibre Channel gear to just about every customer it could and nothing has stemmed this tide.

Finally, Brocade has made the appropriate counter move and sees the writing on the wall for Fibre Channel. But is it buying the best company?

Foundry has all but conceded the enterprise market and has been selling its switches to metro providers building Ethernet MANs. It suited Foundry’s strengths of scalability and reliability. However, as a result, for nearly two years the R&D has been focused principally on building service provider functionality.

The remaining six of the seven dwarfs in the Ethernet market are Extreme, Nortel, ProCurve, 3Com, Enterasys, and Alcatel. Why did Brocade pick a company that concedes that it has not been focused on the enterprise market? Sharing the same VC partner (Seth Neiman, a manager partner with Crosspoint Venture Partners) likely had a lot to do with it.

It might also have to do with the move towards cloud-based services, where Foundry’s gear has a solid footing within service providers, and Cisco is traditionally weak. Cloud-based services are accelerating enterprise interest in MANs. The same goes for the WAN, although that’s some two years further behind in development. It’s also likely service provides will have less of a problem buying Ethernet-based networking gear from Brocade, who has struggled to be seen as more than just a Fibre Channel networking vendor. Right now, enterprise networking teams will not buy Brocade (or Foundry) for Ethernet. Period. It’s too risky and operationally foreign. But it’s possible a more robust service provider could do it if there was a competitive angle.

Fair play to Brocade on the one throat to choke story. IT infrastructure and operations professionals are desperate for fewer vendors to deal with. And maybe one day will be able to describe this as one hand to shake. Long term it could also mean they will have a viable alternative to Cisco for end-to-end networking within the datacenter and across the enterprise worldwide.

By Jo Maitland

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Comments

[Stephen Foskett]

Jo,

Good analysis, I have to say. I agree that perhaps ProCurve might have been a better choice for enterprise Ethernet switching capability, but Brocade is building a next-generation datacenter product. They don't need Juniper's routers, they only need solid Ethernet switching technology, and they got that from Foundry. I'm very impressed with the move, though it certainly could have happened a year ago, and think it really solidifies Brocade's spot in the datacenter. This makes them a solid alternative to Cisco, and that's good news for the market.

Stephen