By John E. Burke, Principal Research Analyst, Nemertes Research Inc.
Aug. 18, 2006
Brocade (NASDAQ: BRCD, http://www.brocade.com) is acquiring McData (NASDAQ: MCDTA, http://www.mcdata.com) via stock swap, highlighting ongoing consolidation in all storage-related markets and reflecting the continuing growth of centralized, networked storage in data centers as file servers get stripped out of branches, data centers are consolidated, data streams swell, and retention horizons increase.
Brocade and McData benefited from these trends, competing fiercely in the storage networking market for years. However, both have been threatened as Cisco's (NASDAQ:CSCO, http://www.cisco.com) share of that market continues growing at their expense. By acquiring McData, Brocade will immediately leap to roughly three-and-a-half times Cisco's market share, changing the tightening one-two-three SAN race into a first and distant second (Cisco) race- for now.