Nemertes Impact Analysis

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E Pluribus Unum: Brocade Buys Foundry, Aims to be One-Stop Shop

Brocade (NASDAQ:BRCD) is acquiring Foundry (NASDAQ:FDRY) for $3B. This is a bold move to safeguard its position as a leading data center network vendor in the face of long-term trends towards convergence of data and storage networks. Nemertes' Delivering the Enterprise benchmark, and others, have found enterprises strongly interested in reducing the number of vendors they deal with in order to reduce complexity and operating expense. Preliminary data in the forthcoming Nemertes' Virtualization benchmark, suggest that iSCSI is playing a role in storage access equal to fiber channel for virtual servers.

Impacts:

Enterprises: Cisco (NASDAQ:CSCO) and Brocade joint customers should soon get Brocade's
competing vision and roadmap for data center network convergence, and should carefully evaluate it against Cisco's.

Vendors: Other network vendors, especially Juniper (NASDAQ:JNPR), will need to similarly
gear up for FC's remaining lifespan, or make a point of not doing so and face down their competitor's objections.

Investors: QLogic (Nasdaq:QLGC) may be an attractive acquisition prospect for another network vendor, such as Juniper and HP (NYSE:HPQ).

http://www.nemertes.com/products_services/research/issue_papers/nemertes_issue_paper_data_center_i_o_consolidation
http://www.brocade.com/news/2008/7_21_Foundry.jsp

John Burke, Principal Research Analyst