What's Next for Brocade?

Now that it will remain independent, Brocade could go on a shopping spree.

I never really believed the rumors about HP buying Brocade. No disrespect to Brocade, I just thought that HP's interest was really in Ethernet and IP networking and not Fibre Channel.

Will another company acquire Brocade? I can't think of any obvious takers. The financial analyst rumor that Juniper would buy Brocade were ridiculous and obviously spread by someone who doesn't know Juniper. IBM and Dell? I don't think either company is gung-ho to get back into the networking game. Besides, both companies already have a Brocade OEM relationship in place.

Since Brocade is likely to remain independent, my advice would be to prepare for the long-haul by filling in product gaps with innovative startups and doubling down on its direct sales and distribution channel resources.

If I were in charge of M&A at Brocade, here are a few areas that would top my Christmas shopping list.

1. WLAN. Yes, I know Foundry has a wireless offering but I can't imagine that it is selling a lot of equipment. If Brocade's board can stomach another big deal, Aruba Networks would give the company an immediate WLAN leadership position where it could upsell other switches and routers. If Aruba is too rich for Brocade's taste, Meru Networks has great technology and would probably sell for a song.

2. Network security. The pickings are slim here but one interesting play might be Crossbeam Systems. Crossbeam is one of few high-end "Network Security Super Gateways" (NSSG) and has been very successful in the service provider and ISP markets. This could help Brocade in both areas and also bring an instant relationship with Crossbeam OEMs like Check Point and ISS (now IBM). This would also complement Brocade's data center strength.

3. Security management. Like Aruba, Brocade could reach for the stars and pick-up market leader ArcSight but this would cost over $1 billion. Again, if this price is a bit too scary, Brocade could choose networking-savvy Nitro Security or feisty LogRhythm. Any of these choices could give Brocade a Cisco MARS alternative.

4. WAN optimization/Application Delivery. Brocade has a pretty good portfolio of Application Delivery Controllers but it could become a market upstart by grabbing A10 Networks. A10's economic value proposition could be extremely attractive for companies with large and growing web applications and A10's founder has roots at Foundry. This could also leverage Brocade's data center prowess. On the WAN optimization side, SilverPeak has some strength in data center-to-data center networking and is likely available.

5. Network management. Lots of niche players here, too many to name. My advice would be to work closely with CA.

Brocade could stand firm as it has the Fibre Channel market pretty much locked up but Cisco, Dell, and even HP have interal agendas that probably favor FCOE over time. Nevertheless, FC isn't going away any time soon. This gives Brocade a data center beach head to build from. In this regard, Crossbeam and A10 Networks would definitely be a short-term fit while the others mentioned above would provide instant diversification.

In my humble opinion a creative M&A or aggressive partnering strategy would be extremely useful for Brocade in 2010 and beyond.

• Data Center
• A10 Networks
• ArcSight
• Aruba Networks
• Brocade
• Check Point
• Crossbeam Systems
• LogRhythm
• Meru Networks
• Nitro Security