Tough competition in the SAN market has convinced leading vendor Brocade that it should branch out into server management.
The company sees little opportunity for 20-25 percent growth through further switch/director supplier consolidation, and has told Techworld it plans to switch focus to server management in its product line-up.
Ian Whiting, Brocade's VP for Europe, says: "Our business is changing. There's only so much growth in storage networking. At its core it's not going to change." He added: "The price decline in Fibre Channel is at the 20 - 25 percent mark year on year."
There are four suppliers of fabric switches and directors who matter: Brocade; Cisco; McData ; and QLogic. There has been supplier consolidation in this space, CNT having bought InRange in 2003, and McData having bought CNT earlier this year.
McData and Cisco dead-heated on director systems revenue with 32.6 percent of the market according to a Yankee Group survey of the last 2004 quarter. CNT's director revenue position was then at 9 percent. McData and CNT together had 42.5 percent leaving Brocade with around 25 percent of the director market. Brocade was in third place, but it led in the overall switch market with 57.9 percent share, McData in second place, QLogic third and Cisco fourth.
Broadly speaking the director market is where the margins are whereas the SMB market is where the future growth is. Cisco is growimg strongly. The Yankee Group reckons it has grown director revenue 90 percent since the first calendar quarter last year.
It appears that Cisco and McData are both blocking Brocade's director prospects. In the low end QLogic is a strong player; Whiting saying: "QLogic is snapping at everyone's heels."
Brocade has rejected the idea of trying to buy one of its competitors. It doesn't need the technology and combining two product lines would be costly. So the company has a growth problem. Whiting puts it like this: "The focus for us and Cisco is to take share from McData and grow the market." But it's not enough, McData is no push-over and Cisco theatens Brocade as much as McData.
Whiting says, "We're going to move from a storage networking company to add focus on servers and software ... to manage server farms, to dynamically allocate software between servers." He mentions data migration tools as well. Also: "Blade servers will figure in this - the deployment of blades with software and switching embedded in them."
Brocade is seeing a blade server boom and is already working with Dell and IBM in the blade switch area. An HP relationship will see product shipping in May.
The new Brocade software products: "will to some degree use the fabric application platform. The software will reside in servers or in the fabric. There are multiple options." The new software capability: "is a combination of in-house work and external partnering."
Brocade is an OEM supplier. Our expectation is that Brocade will announce product in June and clarify how customers will get the products, probably disclosing OEM relationships. This may enable suppliers such as IBM and HP to better compete with EMC and its VMWare-led server management products. Sun may also figure in this equation.