Cisco VARs Not Scared of Brocade/Foundry Union8:26 PM EST Thu. Jul. 24, 2008
Storage vendor Brocade positions its impending acquisition of Foundry Networks as a shot across Cisco Systems' bow, but Cisco channel partners say they're not afraid of the competition.
The acquisition brings together Brocade, seen by some solution providers as a channel-friendly player with a strong OEM strategy, and Foundry, a networking player that derives the majority of its revenue through direct sales.
Brocade Monday unveiled plans for a $3 billion acquisition of Foundry in a move that will bring the Santa Clara, Calif.-based vendor's networking portfolio of enterprise routers, switches, security and traffic management products into the Brocade fold.
The move positions Brocade as the only alternative to Cisco for end-to-end data center solutions, Marty Lans, Brocade's senior director of data center marketing, told ChannelWeb.
"We believe that to do this new data center, right now Cisco is the only option for the total end-to-end space. We provide an alternative," Lans said.
A Cisco spokeswoman said via e-mail that the company does not comment on competitor's announcements, but noted that "Cisco remains confident that we will continue to lead in delivering comprehensive, end-to-end data center solutions that meet our customers' critical business needs and fulfill our vision for helping to create next generation data centers, based on the Cisco Data Center 3.0 vision."
Several solution providers said that Brocade's plan to buy Foundry makes sense, given the trend toward the convergence of storage and data networking in today's virtualized data centers.
Still, the match-up of Brocade vs. Cisco does evoke images of David and Goliath. Combined, Brocade and Foundry have a current market capitalization of some $5 billion and sales of $1.85 billion for 2007, compared to Cisco's market capitalization of $129 billion and sales of $34.92 billion in 2007.
Cisco partners said Foundry lacks the networking muscle to add much oomph to Brocade's battle with the networking giant.
"We have competitors all around, but I don't see how this makes them more powerful," said Mont Phelps, president and CEO of NWN, a Waltham, Mass.-based Cisco partner. Phelps noted that Brocade is a significant player in the storage space but said he doesn't see Foundry "as a substantial factor" in the networking market.
Pat Scheckel, senior director of the solutions practice at Vernon Hills, Ill.-based CDW, who joined the direct market reseller via its acquisition of Cisco-focused solution provider Berbee, said he doesn't expect Brocade to pick up any market share gains from its Foundry purchase.
"Will Brocade take Cisco share by doing this? I just don't see it," Scheckel said. "You're either a Brocade shop or a [Cisco] MDS shop, and you're a Cisco shop or a Foundry [shop]."
For Mark Teter, CTO at Advanced Systems Group, a Denver, Colo.-based solution provider that works with all three vendors, the Brocade/Foundry deal isn't about market share. It's about choice.
"People want a choice, and Foundry was really becoming that choice in Layer 2 switches and some of the router space, so I think it's a good match ... Money well spent," Teter said.
NEXT: Challenges Loom For Brocade/Foundry
From a channel perspective, Brocade's planned purchase of Foundry creates several challenges. For one thing, the bulk of Brocade's channel partners are focused on storage. At the same time, Foundry can't fill the networking void because it brings few channel partners into the mix. Foundry counts CDW as one of the largest among its 250 worldwide partners, a company spokesman said, noting that the majority of the vendor's revenue comes from direct sales.
"[Foundry] doesn't have a channel. We recognized that and recently have been working with them, and they were acknowledging that they need to build their partner base," Teter said. "Our partnership was really the genesis of doing just that. They will need to build a channel organization that addresses both of these product lines. They're going to also need to increase their partnerships during this integration to rely on networking and Fibre Channel infrastructure partners."
"I think it will take some time potentially before storage-centric partners pick up Foundry products as they are. My expectation is we will start gravitating toward the converged roadmap of the two product lines," said Kent Christensen, product manager at Datalink, a Brocade partner based in Chanhassen, Minn. "Which is not to say that there isn't an opportunity near-term with the Foundry products. We as an organization are definitely exploring going further into some of those areas."
Dan Carson, vice president of marketing and business development at Open Systems Solutions, a Willow Grove, Pa.-based Brocade partner, said he expects there to be a need for solution providers with niche expertise. "Probably not," Carson said, when asked if Open Systems Solutions would add Foundry products to its portfolio. "Our focus is exclusively on storage and the storage space, and we don't branch out."
A combined Brocade/Foundry will face uncertainly in the market as customers wait to see how the two companies join forces and meld into one, said Raphe Reeves, vice president of Cisco operations at ProSys, a solution provider based in Norcross, Ga.
Many questions loom, such as how -- and how quickly -- Brocade can bring the two product lines together, whether customers will have to undergo forklift upgrades to take advantage of synergies between the products and how simple or complex data center solutions based on Brocade/Foundry technology will be to deploy, Reeves said.
"It's going to be 12 to 18 months before Brocade/Foundry gets to the point where customers will see them on a level playing field with Cisco," Reeves said.