The first question is easily answered: Brocade was early to market with its Fibre Channel switch and managed to establish key OEM and reseller agreements, including ones in the optical networking area. Its partners include Cisco Systems Inc. (Nasdaq: CSCO), which plans to integrate Brocade's switches with its DWDM gear; and ONI Systems Corp. (Nasdaq: ONIS), which has put Brocade SAN modules into its metro platform.
There are questions, however, about Brocade's ability to continue riding quite so high. For one thing, Brocade is invested entirely in one product, its Silkworm Fibre Channel switch. And neither Silkworm nor Fibre Channel are guaranteed any market immortality. Companies such as Nishan Systems Inc. already are looking to create alternatives, particularly for carriers with IP-intensive networks. (See SAN Surprise Jolts Market).
Another threat to Brocade's dominance could come from standards. This fall, the American National Standards Institute is expected to ratify Fabric Shortest Path First (FSPF), an interoperability protocol that routes storage traffic across multivendor Fibre Channel switches. If the protocol passes, it could give other switch vendors a chance to compete with Brocade on price.
Brocade originally tried to stymie its competitors' efforts to establish an interoperability spec. It refused, for instance, to participate in demonstrations of a competing protocol called Open Systems Routing Protocol (OSRP) conducted at leading trade shows by Ancor (now Qlogic), Gadzoox, McData, and Vixel. (See Fibre Channel Vendors Split On Standards).
Then, this spring, Brocade bowed to the inevitable, but with a catch: It played its hand at a leading Fibre Channel industry group, the National Committee for Information Technology Standards, which has input to ANSI. Brocade representatives there urged a vote for FSPF, based on Brocade's market position and the fact that FSPF is already installed in its switches. And the gorilla won.
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