On September 25th, Brocade held its annual “Tech Day” conference. This yearly event is normally a pretty geeky show where the company talks about things like Ethernet Fabrics, software defined networks (SDNs), and other exciting topics like the transition from 16 Gig to 32 Gig FibreChannel. This year’s conference included its fair share of geek talk, but new CEO Lloyd Carney did take the time to give an update to the business and talk about the market at a high level.
There were several underlying themes to Mr. Carney’s keynote, but the main, high-level theme was focusing the company. Historically, Brocade has played in many markets across both the enterprise and service provider landscapes, particularly with its IP portfolio. Moving forward, the company will channel its resources almost exclusively into building products that can accelerate the transformation of the data center.
For many reasons, I think this is the right decision for the company. First, the data center is where the action is. Last month, I got the results back from a joint ZK Research/Tech Target Network Purchase Intention Study that indicated that the momentum we saw in the data center last year would continue into this year. Data center and wireless LAN were, by far, the two highest-rated networking initiatives for the upcoming year. Virtualization, SDNs and cloud computing have forever changed the data center network, and it’s this change that gives Brocade a shot at taking some share. One the principles by which I conduct my research is that significant share shift only occurs at points of market transition, and the data center is going through more transition today than it has in decades.
As an aside, Brocade actually addressed the WLAN market this week by announcing a strategic partnership with Aruba Networks, considered by many, myself included, as the technology leader in the market today. Historically, Brocade has leveraged the wireless products from Motorola, but the once-dominant wireless vendor has slipped in terms of product capabilities compared to the competition. Aruba provides a much better set of products, including Clear Pass, Aruba’s BYOD solution. Given Brocade’s focus on the data center, it makes sense to address the wireless market through an OEM relationship.
Going back to data center, another reason I like this focus for Brocade is that the company has a stronger presence in the data center than most realize. Carney showed a market share slide from IDC that showed Brocade as the No. 2 data center vendor behind only Cisco. This includes Brocade’s networking products, but also the storage-networking portfolio for which Brocade has north of 70% share. Historically, the company hasn’t been able to leverage its position in storage to grow its Ethernet share, but many of the new products, such as the VCS fabric, were built on design principles from the storage world. This should bode well for Brocade as fabrics become more widely deployed as the foundation for a software defined network.
The networking industry is becoming increasingly competitive and, unless you’re Cisco, it’s almost impossible to be all things to all people. Brocade had been expending a tremendous amount of resources in markets where gaining share is tough and keeping up with the rapid price declines was enough tougher.
The past year has been one of change for Brocade – a new CEO, cost reductions, the acquisition of Vyatta and a new wireless partner. Now it’s time to execute on all these changes, and that starts with some long-overdue focus for Brocade.