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EMC eying Arista, Brocade?

Would make "stronger than anything" alternative to Cisco, firm says

Stoke the rumor fires once again. Bernstein Research has issued a note this week that states storage giant EMC is prepared to buy, and that Arista Networks and Brocade might make good fits.

Arista, for one, combined with EMC’s VMware possession and go-to-market capability would create an alternative to Cisco “stronger than anything present in the market today,” the note states.

The report’s authors say the catalyst for the EMC buying speculation were remarks by CEO Joe Tucci at a recent analyst meeting that “consolidation opportunities” existed for EMC that were instantly accretive. They say EMC could do up to a $10 billion+ cash deal.

The Bernstein analysts then boiled down their potential candidates to Arista and Brocade:

Arista has leading network switch technology, has strong alignment with EMC’s software defined vision, and has strong technology talent and a good working relationship with VMware. Unfortunately, the company...could cost $6B to acquire. Enter Brocade – a mature, SAN and IP switch provider that is highly profitably and would be materially accretive to EMC. Collectively, the companies might cost $10-$12B but would make EMC a powerful player in the networking space, with strong platform/product synergies between storage, virtualization and switching…Acquiring Brocade would be a reversal for EMC, which spun out McData in 2001, and in turn was acquired by Brocade in 2006 – moreover, its ownership by a storage company could disadvantage it (vs. independent switch vendors such as QLogic and Emulex) in selling situations where the solution architect is a competitor to EMC’s, though Brocade’s position as market leader (it commands 53% share) could mitigate that.

Bernstein also offers insights on why HP’s enterprise business, NetApp, Juniper Networks, F5, Citrix and Symantec’s Veritas business would not make good targets for EMC.

The authors say EMC’s recent buyout of Cisco’s stake in the VCE converged infrastructure joint venture might whet EMC’s appetite to acquire its own networking company to complement its convergence vision: EMC storage, VMware server and network virtualization, and Brocade and/or Arista physical networking hardware.

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