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Cisco, IBM, HP and Dell Named as Possible Brocade Suitors

Brocade (NASDAQ:BRCD) has put itself on the market, and Hewlett-Packard and Oracle are among those interested in potentially buying the networking and storage technology vendor, according to a report today in the Wall Street Journal. Several big technology vendors—HP, Sun, IBM and most recently Dell—have built their vertical data center solutions via partnerships with Brocade, […]

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thumbnail Jessica Davis
Jessica Davis
Oct 5, 2009
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Brocade (NASDAQ:BRCD) has put itself on the market, and Hewlett-Packard and Oracle are among those interested in potentially buying the networking and storage technology vendor, according to a report today in the Wall Street Journal.

Several big technology vendors—HP, Sun, IBM and most recently Dell—have built their vertical data center solutions via partnerships with Brocade, combining their own server technology with Brocade’s networking technology to compete against Cisco’s Unified Computing initiative.

Dell and IBM are also potential suitors, say analysts and industry observers.

"IBM has told us that they’re going to make a major move in storage. They haven’t said with who, just that they are," says one large storage integrator.

If any one of these technology vendors ends up buying Brocade, the rest will be potentially left in limbo in their battles versus Cisco in the data center because they are unlikely to use the networking and/or storage equipment of a major competitor.

“Brocade getting bought by IBM or HP would certainly rock the boat,” Andrew Reichman, a senior analyst at Forrester Research, tells Channel Insider. “There’s no longer this nice cooperative space where networking vendors are not interested in any more of the revenue than just the networking revenue.”

Cisco might even be interested in Brocade to further stymie its competitors, says Rob Enderle, principal analyst at the Enderle Group.

“Cisco’s purchase of Tandberg took away HP’s biggest partner in telepresence, and should they buy Brocade, HP would have difficulty completing solutions,” he tells Channel Insider. “Cisco doesn’t need Brocade, but with HP funding their networking efforts heavily, they would likely be willing to buy it to hurt HP.

“And HP is likely thinking of buying it as part of their strategy to build a solution,” he adds. “These companies will likely be knocking heads a lot in the coming years.”

Reichman points out that Brocade’s stronghold has been in the Fibre Channel storage networking space, a technology that is going out of vogue in the data center. And although Brocade purchased Foundry a year ago in a bid to grab some of the emerging Ethernet market from its biggest rival Cisco, they still face the challenges that come with being a smaller vendor going against a Goliath.

“It does make sense for them to get bought and get a bigger research and development budget,” says Reichman. “HP makes the most sense as a suitor because they have a fledgling network division in ProCurve, and Brocade could accelerate those efforts.”

As for other potential buyers, Reichman says IBM makes some sense if they do indeed want to be in that business, “but so far they haven’t indicated they are interested.” Dell is another possibility, but unlikely, he says.

Brocade recently added a services certification for channel partners to help them boost profitability.

 

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