McData Hires One, Seeks Another

McData Corp. (Nasdaq: MCDTA) filled a newly created executive job this week, while the CEO continues to do double duty as top sales guy.

McData CEO John Kelley installed Paul Rath as the company's Asia/Pacific VP and general manager, while Kelley himself continues to run the companys sales operation on an interim basis. The top sales job has been open for a month, since executive VP and president of worldwide sales Alain Andreoli left November 26 to become president and CIO of startup XIOTech (see XIOTech Names McData Vet CEO).

So is Kelley having so much fun in the sales job that he wants to keep it? Not exactly. He says he hopes to have the job filled next month.

“I’m still looking,” Kelley told Byte and Switch today. “A lot of real good candidates have come in here. We’re looking at a variety of skills -- channel skills, direct sales skills, VAR skills. It’s a pretty broad-based job. There aren’t a million of those people walking around. Things are moving along. We’d like to have a [sales] leader, and we’ll probably have somebody in January.”

Meanwhile, Rath’s hiring will help McData mine the Asia/Pacific market, which is rebounding from the beating it took from SARS last year. “What we’re shooting for is to upgrade our presence in Asia/Pacific,” Kelley says. “Asia is the world’s fastest growing market. Paul came from EMC, and he has lot of industry experience and a lot of experience in the region.”Kelley expects Rath to accelerate McData’s growth by improving relationships with resellers and OEMs in the region. Rath, an Australian citizen based in Singapore, had been managing EMC Corp.’s (NYSE: EMC) Dell Computer Corp. (Nasdaq: DELL) partnership in Asia.

With Rath’s appointment, McData now boasts high-level executives in charge of the U.S., EMEA, and Asia/Pacific regions. That in turn reflects a growing emphasis on strengthening the company's international presence. Kelley says his work as interim sales chief mostly involves working with those geographic managers. “I’m really getting closer to those managers, to make sure the business is growing in those areas."

McData could use some growth. It lost $50 million in the most recent quarter, and the stock price plummeted because of lukewarm guidance for next quarter (see McData Maudlin Over Price Pressure). The vendor is locked in a struggle with Brocade Communications Systems Inc. (Nasdaq: BRCD) and Cisco Systems Inc. (Nasdaq: CSCO) in the SAN switching market, and that puts pricing pressure on all three companies.

Although Brocade has the highest market share of the three, Kelley says he considers Cisco his biggest threat. "We really only have one viable competitor on the networking side, but it’s a big one,” Kelley says. He sees winning in the SAN market alone as a limited objective. “You hear Greg [Reyes, Brocade’s CEO] talk about price declines and becoming a low-cost switch company. I’d rather be known as somebody that goes out and improves companies and adds value to companies than to try to be the absolute low-cost switch provider.”

Despite the financial guidance, Kelley is optimistic about 2004. He says he’s excited by the prospect of growing IT budgets and a trend toward greater resource connectivity. He's also hopeful that the Eclipse IP storage switches that McData acquired by buying Nishan (see McData Speeds Out IP Switch) will help companies seeking to unify storage networking with mainstream IP."Companies are looking to tie their networks together in the Fibre Channel world and the IP world," he says. "It’s a fun time, but it’s challenging because you have to go execute.”

— Dave Raffo, Senior Editor, Byte and Switch