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Cisco rival Brocade for sale again?

Rumor exhumed, with IBM, Dell and Juniper said to be on the prowl

This rumor is not exactly hotter than a July 4 firecracker. Over the weekend, The Register posted the possibility that Cisco partners/rivals IBM, Dell and Juniper may be interested in acquiring Cisco rival Brocade.

A Brocade acquisition has been on the rumor mill for quite some time. CEO Mike Klayko denied the company's for sale but everyone has a price, and IBM and friends have some deep pockets.

The rationale, according to The Register post, is that Dell and IBM need their own Ethernet and SAN technology to compete more effectively with HP, Oracle and the Cisco/EMC/VMware coalition. Juniper, meanwhile, needs "more Ethernet" and an entry into storage networking, the post asserts.

Personally, we don't see Dell or Juniper making a play for Brocade. A Brocade acquisition would undermine Dell's recent EqualLogic iSCSI buy, and there are much cheaper ways (Extreme Networks or Force10) of obtaining an Ethernet base. Brocade's market cap is $2.26 billion vs. $233 million for Extreme; Force10 last spring filed for a $144 million IPO and has yet to make money - its revenue for 2009 was $139 million.

As for Juniper, its own EX Ethernet switching line is gaining traction and it is well into development - or should be -- of its Stratus data center switching fabric strategy with IBM and others. Acquiring Brocade for Ethernet would undermine that though the FibreChannel storage networking piece would certainly fill a void.

But if FibreChannel storage is ultimately converging over Ethernet anyway, this would be an expensive and short(er)-term solution for Juniper. We just don't see it happening - Juniper is way too conservative and vulnerable to distraction and indigestion from a large-scale deal like this.

IBM? SANs yes; Ethernet no. We think IBM is too smitten with Juniper and far along in Stratus development to acquire a competitor's Ethernet platform at this stage. We see IBM more likely to acquire Juniper, with a growing, though small, Ethernet base (and a leading position in enterprise security and a No. 2 position in service provider routing).  But IBM could, of course, buy Brocade for its 70% FibreChannel SAN base.

Now, all this has been hashed out before. What would really make this a hot rumor is if the three suitors were collectively - not individually -- buying Brocade, with IBM and Juniper taking the SAN business for Stratus and Dell taking the Foundry Ethernet piece. The Register post did not make it clear whether this was the rumored plan or if these three were, again, eyeing Brocade individually.

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