Well, we all knew that you can't have a three ring circus in mature technology markets. There has been speculation about Cisco buying McData and Cisco buying Brocade but now Klayko has put an undeniably firm stamp on Brocade by buying McData. It's an all-stock transaction at $713 million and tells Cisco that not only has it not had things its own way in the SAN market; it isn't going to have things its own way either.
Brocade sells the Silkworm line of 4Gbit/s SAN switches and Silkworm 24000 and 48000 (256-port) directors. It also has a multi-protocol router, wide area file services (WAFS) through a deal with Tacit Networks, NAS products through Rainfinity and NAS virtualisation and global namespace technology via the NuView acquisition.
Brocade is strong and has a good sense of direction. It has a growth strategy outside the SAN world and knows that the SAN fabric market is mature. The only scope for growth within it is through consolidation.
McData is not a weak company. It has good products and good OEM deals. It also has a great record of growing through acquisition, having bought director supplier CNT, also Nishan, and technology supplier Sanera.
Today McData sells 2 and 4Gbit/s Sphereon switches and blade switches, and Intrepid directors; the 6000 and the 256-port 10000, with 2Gbit/s ports and 10Gbit/s inter-switch links (ISL). Unlike Brocade McData has not yet completed its switch to 4Gbit/s Fibre Channel across its product line.
It also sells a SAN router and has its neat Application Services Module (ASM) concept for layering storage applications onto its Intrepid directors. McData also has a WAFS product, the SpectraNet WDS, which is a resold Riverbed Steelhead appliance. The WAFs product is its main, and somewhat limited, foray outside its core SAN market.
What should customers think? By and large Brocade customers can rest easy. McData ones need to be concerned though, because McData is the junior part of the intended larger company.
The presumption must be that Brocade's product lines will prevail in choices that are going to be made about which products have a future in the new company. Unless Brocade and McData engineers decide that McData technology is superior then we could look to see the following events:-
- Silkworm directors support Sphereon switches.
- Silkworm directors gain application service module technology.
- Sphereon switches gain a migration path to Silkworm technology.
- Silkworm directors gain 10-Gbit/sec ISL technology to link to Intrepid directors.
- Intrepid directors gain migration roadmap to Silkworm directors.
- A single SAN routing product emerges.
- The SpectraNet WDS product gives way to Brocade's preferred Tacit technology.
For Cisco the acquisition represents a short-term sales opportunity as its sales reps can call on McData customers, say they're facing a coming product choice point, and ask why don't they consider the Cisco product alternatives? Longer term the new company will be better positioned to develop switch-on-a-chip products and respond to IP SAN opportunities. Cisco just isn't going to have things all its own way.
To emphasis Brocade's strength, NetApp today announced world-wide availability of Brocade Silkworm switches and directors. Brocade announced reasonable results. McData announced disappointing ones.
McData today also announced a high level sales promotion. Adrian Jones becomes SVP worldwide sales and services. He will 'focus on increasing McData’s market share by expanding McData’s customer base, and increasing velocity in McData’s channels and routes to market.' This is necessary because Gary Gysin, former head of McData worldwide sales and services, has left the company.
Actually Adrian will more likely wonder what his future will be inside a Brocade-led business where there is already a w-w VP sales. Ian Whiting in fact. Ooops.
“I'm thrilled to be leading our worldwide sales and services team at this exciting juncture in the company's history,” Jones said. You bet. I expect Ian Whiting thinks exactly the same way. It's time to revist the thought at the beginning; three into two can go, but two into one cannot.
Jones joined McData in May 2006 from Pillar Data Systems where he was senior vice president of worldwide sales. Perhaps he will go back.
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