On September 2nd, Brocade announced an expanded relationship with longtime customer Dell. According to the announcement Brocade will provide Dell customers with a comprehensive suite of end-to-end computing, networking and storage solutions through the Dell global sales organization.
One facet of the agreement marks a change in direction for Dell and significant upside for Brocade's small but growing adapter business and for their newly acquired Ethernet switch business. In contrast to the past where products were Brocade-branded, the products covered in the recently announced agreement include Dell-branded Fibre Channel host bus adapters and converged network adapters, Fibre Channel over Ethernet switches and Converged Enhanced Ethernet switching products.
Dell is skating to the puck
For product planners at Dell, HP, IBM and Sun, the talk about fabric-based servers moved from philosophical discussion to urgent-must-take-action status when Cisco introduced the Unified Computing System. The presence of UCS from the networking giant is tangible evidence that a large piece of the future server value proposition will be intellectual property related to the network embedded in the server.
Blade server vendors pioneered embedded server networks by integrating adapter cards and switches from networking vendors. If Cisco is right, successful server vendors in the future will separate themselves from their competitors with their own sophisticated networking technology that is needed to connect virtual servers, networks and storage residing in environments ranging from a single chassis to part of a public cloud that stretches around the globe.
Dell is skating to the puck by leveraging as much of the expansive Brocade product line as possible and presenting it to their customers as their own. Dell knows that in the near future highly integrated fabric-based server capabilities will be a checklist item for IT professionals making server buying decisions.
Dell branded Fibre Channel HBAs vs. dominant QLogic market share
QLogic has dominant market share at Dell for Fibre Channel HBAs. I expect Dell to change today's vendor-neutral sales behavior when Dell-branded HBAs are introduced in the months ahead. For example, I expect configuration tools to automatically select a Dell product unless told to do otherwise and I expect Dell sales people to make more money when they sell a Dell-branded HBA.
I estimate that Brocade will grab 25% of Dell Fibre Channel HBA market share within one year of general availability and 50% of FCoE converged network adapter market share at Dell within one year.
Brocade Ethernet switches are in the house
Brocade is already the dominant Fibre Channel switch supplier at Dell. This new agreement for Dell branded products not only opens the door for Brocade Ethernet switches, it catapults them to top of the sales line card of products serving the emerging market for unified networking based on Converged Enhanced Ethernet.
Brocade is now in at the ground floor as Dell begins to compete in the new CEE-based unified networking market that will eventually grow to be even bigger then the huge enterprise Ethernet market we know today. Ultimately CEE-based unified networks will replace most of existing data networks based on Ethernet, plus storage networks based on Fibre Channel and server networks based on InfiniBand.
Brocade is in a unique position
Thanks to Cisco, fabric-based server and unified networking technologies have suddenly become strategic assets to server OEMs. But only two networking vendors possess a complete portfolio of products that OEMs can tap for the technologies - Cisco and Brocade. Given that server OEMs don't seem to want to partner with Cisco these days, Brocade is in a unique position to help multiple OEM customers deploy these technologies on a broad basis similar to what Dell is doing.
I also believe product planners at one or more of the major server vendors have placed Brocade on the top of their list of acquisition targets. They realize that owning your fabric-based server and unified networking technology may be a requirement for success in the future.
