Brocade & Emulex Shake Hands

Emulex Corp. (NYSE: ELX) and Brocade Communications Systems Inc. (Nasdaq: BRCD) today decided to push a pesky lawsuit to the side and pool their efforts to capture the SMB market (see Emulex, Brocade Expand Partnership).

The companies said they would co-develop a SAN management wizard to integrate installation and management of Emulex HBAs and Brocade Fibre Channel switches into one interface. We’re looking to make SANs easier to use,” says Doug Rainbolt, Brocade’s VP of transport business. “The biggest complaint we’ve had from SMBs is they want us to make things easier.”

The companies also announced a three-year litigation standstill of a lawsuit Emulex inherited when it bought Vixel last October for $310 million (see Emulex Drops Cash for Vixel). Vixel filed suit against Brocade in May 2003, claiming Brocade infringed on three patents to produce and sell various switches (see Vixel Slings Suit at Brocade). The standstill means no claims will be pursued for three years.

“We looked each other in the eyes and said it’s important to put this behind us,” says Rainbolt. “We can’t collaborate and have this [suit] going on.”

The companies will jointly market their products to channel partners that will bundle the Emulex LightPulse HBAs and Brocade SilkWorm switches. Rainbolt says that means making sales calls together to push their bundles.It’s certainly not the first time a HBA and switch vendors have collaborated. Just last month, QLogic Corp. (Nasdaq: QLGC) and McData Corp. (Nasdaq: MCDTA) announced that McData’s Fibre Channel switches would work with QLogic blade server switches. But there’s more potential for Emulex and Brocade to go from cooperators to competitors than there is for QLogic and McData.

Emulex and QLogic are both moving into the low-end switch space (see HBA Guys Switch Gears). There, they will compete with Brocade while McData concentrates more on the director market. Brocade’s low-end Fibre Channel switches compete with the low-end loop switches Emulex acquired from Vixel.

“My sense is that this is a reaction to the QLogic-McData relationship,” says financial analyst Kaushik Roy of Susquehanna Financial Group. “Also, everyone knows that QLogic has close ties with Cisco, so Emulex is developing a relationship with Brocade. But while Emulex and Brocade can argue that there is no product overlap, the reality is that if Emulex is going to sell loop switches, then it is a lost opportunity for Brocade’s entry-level, full-fabric switches.”

— Dave Raffo, Senior Editor, Byte and Switch