Brocade Plans Services Blitz

Customers of Fibre Channel specialist Brocade could get better services in 2006, according to CTO Tony Canova. But they'll have to open their wallets.

The customer views us as an objective and trusted partner,” he said. “What we have not done a very good job at is translating that into revenue.”

Speaking at a financial conference in Phoenix, Arizona, earlier today, Canova issued "a business as usual" message, even as the firm looks to emerge from a period blighted by financial controversy and fierce competition.

Brocade suffered a sales slump earlier this year, losing share to rivals Cisco Systems Inc. and McData Corp. (See Brocade Bloodied Again and Brocade Bungles Quarter.) The vendor has also faced delisting by Nasdaq for failing to file earnings reports on time; been under investigation for the way it accounted for stock options; and embroiled in trying to get out of a deal to pay CEO Greg Reyes as a consultant. (See Brocade Notified by Nasdaq , SEC Gets Formal With Brocade and Brocade Blasts 'Consultant' Reyes.)

Against this backdrop of upheaval, Brocade recently made its Q4 financial forecast. Canova admitted that services is one area with significant room for improvement -- though apparently, he sees the lack of service revenue as the problem, instead of a lack of capability to provide good service. (See Brocade Forecasts Q4.)Brocade is now planning a services offensive for 2006. This, explained Canova, will focus on areas such as SAN management, assessment, design, and implementation.

Although without giving too much away, Canova said Brocade is looking to forge partnerships to support this push whilst also adding bodies to its services division. “I am not going to go into specifics about headcount, but I would look to build it in a way that generates some revenue this year.”

Canova also sought to draw a line under Brocade’s recent financial woes, expressing his relief that the firm’s internal audit is out of the way. (See Brocade Makes Deadline.) “It has been anything other than an inexpensive exercise,” he moaned. “Hopefully I have received the last bills from many people on that.”

But the U.S. Security and Exchange Commission’s investigation into Brocade is still very much a going concern, according to the CFO. “It could be months to years before it is concluded,” he said, adding that Brocade will continue to work with the Feds throughout the process.

Canova used his presentation to highlight growing demand for 4-Gbit/s technology. Brocade is keen to be seen as a 4-Gbit/s trailblazer, recently filling out its product line with an embedded 4-Gbit/s switch module for blade servers. (See Brocade Rolls Out Gear and 4-Gig Fans Fawn.)Products based on 4-Gbit/s technology accounted for around 25 percent of Brocade’s business in its third financial quarter this year, according to Canova. But the exec suggested that this figure could be as high as 40 or 50 percent in the firm’s fourth quarter results.

— James Rogers, Senior Editor, Byte and Switch

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