Broadcom Switches on FC

Chipmaker Broadcom Corp. (Nasdaq: BRCM) has its eyes on the embedded Fibre Channel switch market, now that it's officially picked up what was left of Gadzoox Networks Inc. (see Broadcom Acquires Gadzoox).

As reported by Byte and Switch last month, Broadcom was the winning bidder for Gadzoox, the formerly high-flying Fibre Channel switch vendor that filed for Chapter 11 bankruptcy last year. Broadcom says it will pay about $5.8 million in cash, subject to a post-closing adjustment, for Gadzoox's assets -- a far cry from the company's market cap of nearly $2 billion just three years ago (see Broadcom Gulps Gadzoox and Gadzoox Runs Out of Road).

"What we're doing is leveraging all the Layer 1 expertise we have and filling in the missing piece to expand our footprint in the data center," says Shriraj Gaglani, product line manager for Broadcom's storage networking group.

Broadcom, whose forte is developing integrated silicon for communication and networking gear, has already offered Fibre Channel SerDes (serializers/deserializers); now, with Gadzoox, it plans to offer a variety of FC-based silicon products. The company also sells Gigabit Ethernet and iSCSI controllers, Serial ATA controllers and I/O bridges, multiprotocol Gigabit Ethernet switch fabrics, and broadband network processors.

The company claims its overall strategic goal is to drive the Fibre Channel market toward commoditization. "We're a high-volume supplier of silicon technology, and markets don't become high-volume until they become standardized," Gaglani says.He adds that Broadcom was especially interested in Gadzoox because of its legacy in the FC market: "They're the only guys who can connect up to Brocade Communications Systems Inc. [Nasdaq: BRCD] via E-Port."

Eric Sheppard, SAN infrastructure analyst at IDC, notes that "there are still Fibre Channel incompatibility issues that are well-known by end users, and these could be dealt with by a silicon supplier." However, he adds, in order for that to happen, a chip supplier would have to gain the support of the large influencers in the market -- the major storage systems vendors.

Now, with Gadzoox in its back pocket, Broadcom appears to be going after QLogic Corp. (Nasdaq: QLGC), which has successfully pursued its "Fibre Down" embedded connectivity strategy, landing wins at Hewlett-Packard Co. (NYSE: HPQ) and IBM Corp. (NYSE: IBM) (see QLogic FC Ships in IBM Blades, HP Puts QLogic in Blade Server, and QLogic Sharpens Push Into Blades).

However, Gaglani says, QLogic may also be a customer for Broadcom's silicon. "What we're really interested in doing is standardizing the silicon for Fibre Channel the way we did in the Ethernet market," he says.

Broadcom plans to retain Gadzoox's engineering team, but the company would not specify how many of the company's approximately 47 employees will be offered positions. A Broadcom spokesman says Steve Dalton, former CEO of Gadzoox, will serve as the general manager of Broadcom's storage networking line of business.As it integrates the smaller company's operations, Broadcom will continue to offer some of the existing Gadzoox products, which include switches and embedded-switch blades, as well as a customizable FC switching ASIC. "We're still figuring out our strategy," he says. "Wait for a few weeks to hear how it will play out."

Was the fact that Gadzoox had gone bankrupt a concern? "Obviously, there was a perception of damaged goods because of their Chapter 11 filing," Gaglani says. "But once we did the due diligence on them, we found their core engineering team has been there for years and years."

Todd Spangler, US Editor, Byte and Switch