Brocade swinging for the fences with switching

I often joked in the past that Fibre Channel switching leader Brocade Communications Systems followed an "old woman who swallowed a fly" acquisition strategy. To bolster its market position, Brocade grabbed Fibre Channel director vendor McData which purchased CNT which purchased Inrange. What was once a market with over a half dozen vendors is now centered on two: Brocade and Cisco Systems.

Even in this enviable position, Brocade faced two dilemmas: One, Fibre Channel itself will be challenged by 10, 40, and 100GbE moving forward. Ethernet, as you know, is the domain of Cisco, Extreme Networks, and Hewlett-Packard but not Brocade. Two, in spite of its success, Brocade really depends upon storage vendors like EMC, IBM, and Sun Microsystems to pull them into deals. The storage device vendors then own the customer.

So how can Brocade fight these trends? Through acquisition. When the market closed on Monday, Brocade announced it will acquire Foundry Networks in a $3 billion-plus deal. This may help Brocade because:

1. It can be transport independent. Brocade could now care less whether users buy Fibre Channel or Ethernet switches--heck, it will gladly sell them both.

2. The Foundry sales force lets Brocade target the customer directly. Cisco is already doing this with hybrid Fibre Channel/Ethernet switches. Brocade will certainly follow.

3. Brocade now has two doors into the data center. It can leverage storage customers for networking introductions or vice versa.

Of course, Cisco is no pushover, and other networking firms like Extreme, HP, and Juniper Networks have pretty good Ethernet switches of their own. Nevertheless, you have to admire Brocade's chutzpah on this one. It has a chance to unify storage and communication networks and fight a much bigger fight beyond the storage back-end alone.

Jon Oltsik is a senior analyst at the Enterprise Strategy Group.