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A Switch In Store

The winds of change are shifting in the Fibre Channel switch market, and it's not yet clear which direction they're taking.

Storage mavens were still mulling the impact of Brocade's announced plans to buy McData when Cisco released surprisingly robust storage revenue figures on last week's earnings call. (See Brocade Bags McData For $713M and Cisco Rattles Storage Sabre.) Then came word that Cisco will invest heavily (possibly over $90 million) in Nuova Systems, a startup founded by the same team that oversaw Andiamo Systems, the Cisco spin-in that gave the router vendor its original stake in storage networking. (See Andiamo Crew Reunites With Cisco.)

Meanwhile, Brocade and McData users ponder their situation. It's no surprise that customers of the takeover company seem more confident of future support than those of the acquired McData. (See Users Mull Merger and Users Ponder Life Under Brocade.)

A larger issue emerges from all this activity, namely this: The Fibre Channel switch market has been forever changed by the Brocade/McData consolidation. And Cisco appears to be taking an aggressive stand from its new position in a market of two. This indicates that the skirmish for FC switch customers is starting a fresh round.

Several elements could make a difference in how the market shapes up. Here's a rundown:

  • Brocade's ability to swallow McData. In our latest poll, 74 percent of 273 Byte and Switch readers say Brocade's biggest challenge post merger will be integrating products and personnel. The fact that McData has more employees than Brocade is just one indicator that Brocade has bitten off something bigger than its head.
  • Brocade's decisions about McData's products. This will be tricky. A full 49 percent of readers polled in our survey think Brocade will scrap McData's i10K director, which has had a mixed history so far. (See Brocade's Costly Victory, McData Takes a Direct Hit, and McData Trails Switch Rivals.) And the rest of McData's lineup fosters more questions. At least one storage analyst, who asked not to be named, thinks the chief value McData brings to the table may already be lost. "A lot of people thought McData's best stuff was from CNT," he says, referring to McData's acquisition of channel extension vendor CNT last year for $235 million. (See McData Bags CNT for $235M.) So far, he notes, McData's integration of CNT's wares has proven minimal.
  • The QLogic factor. There's lots of scuttlebutt regarding QLogic, which continues to build momentum in the switch market. (See QLogic Reports Earnings.) One-third of readers think Cisco will move to buy QLogic in response to the Brocade/McData merger.
  • The iSCSI factor. Brocade doesn't yet offer a lot of iSCSI, but this technology seems to be building momentum. (See 3PAR Offers iSCSI, Huawei Sets Sights on IP SANs, HP Builds SANs for SMBs, EqualLogic Firms Up Virtualization, and ReiJane Huai, CEO, FalconStor.) Cisco pushed into iSCSI early but hasn't done too much with it since. QLogic has iSCSI HBAs. Eventually, both Brocade and Cisco will have to take a bigger stand on iSCSI. How well they do will help determine their future as switch leaders.
  • Virtualization. Virtualization and similar capabilities could determine how well Brocade stacks up against Cisco. Cisco's investment in Nuova is said to be fueled in part by the startup's rumored focus on virtualization. Meanwhile, Brocade must hurry to establish its integrated product lineup. Stay tuned.
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