Well, I’m finally getting around to commenting on the Brocade One announcement earlier this week. To understand the present, however, it often is necessary to have an appreciation of the past. Brocade’s recent history was the precursor to its announcement this week, and recounting that history will help us understand what the company is trying to accomplish.
Cast your mind back to last fall. You might recall that a neon “for sale” sign had been placed in front of Brocade’s corporate logo. The company was being shopped aggressively by its investment-banker agents. Its executives appeared to have concluded that the company would be better off under the auspices of a bigger industry player than it would be as an independent vendor. Rumors abounded that somebody — HP, IBM, Oracle, Dell, even Juniper — might take the company off the market for copious riches that would keep Silicon Valley’s luxury-car dealers from having to carry lower-end models. Of course, the rumored deal never happened, and Brocade’s CEO protested that he wasn’t shopping the company.
That non-event still reverberated, primarily within Brocade’s installed base. Customers don’t like hearing their vendors are for sale. When customers buy products, they invest in relationships with vendors that sell the products. Amid all the heated hype and careless whispers about Brocade’s rumored sale, customers got nervous. Who would buy the company, and what would the new owner, when on materialized, do with Brocade’s product portfolio?
Investment bankers might have stopped talking about a Brocade acquisition, but many Brocade customers couldn’t and didn’t forget about it. They wanted to know whether Brocade had thrown in the towel, whether the company remained committed to them and dedicated to the markets it served. These were valid questions, and just having field sales representatives provide stock answers wasn’t enough.
In the period preceding the acquisition chatter, Brocade was struggling to integrate its own $3-billion acquisition of Foundry Networks, an Ethernet-switch vendor that, like so many before it, tilted quixotically at Cisco’s enterprise windmill. Brocade, which made its name in storage networking, didn’t seem to know what to do with Foundry, whose morale and sales suffered in the deal’s aftermath. Pulling the companies together under a shared vision and unified product strategy proved exceedingly difficult for Brocade’s executives.
When it became clear that Brocade wasn’t about to find a buyer, that it had to solve the Foundry problem on its own, the company changed gears. It brought aboard some seasoned executive talent, including John McHugh, who had extensive experience battling Cisco in Ethernet switching, and it sought to craft a new narrative stressing reinvention and a bright future.
So, that’s the context for the announcement that took place earlier this week. Brocade’s challenges were threefold: calm a nervous customer base concerned about the company’s direction and future viability; demonstrate that it had righted the foundering Foundry ship; show some thought leadership on the future of data-center networking, with due consideration given to rampant virtualization and increasing adoption of cloud computing.
In announcing Brocade One, the company addressed all those issues. Brocade showed it had the necessary chops for vision and strategy, it illustrated that it finally had harnessed and integrated the Foundry portfolio into a cohesive solution set (at least on paper), and it demonstrated to customers that it was ready to provide new collapsed network fabrics for evolving data centers.
Well played, Brocade, well played. You turned an existential corporate crisis into an opportunity for triumphant reinvention. The company deserves credit for recognizing its dilemma and climbing out of the hole it had dug for itself.
Not surprisingly, Brocade is taking a partnering approach to providing solutions for the next-generation data center. In this case, though, necessity is the mother of invention. Unlike Cisco, but like Juniper, Brocade has chosen the partnering path because it’s the only one available to it. That doesn’t mean that path isn’t the right one, or that it won’t lead to a pot of gold, but Brocade didn’t have much choice in the matter. Against Cisco or HP, it wouldn’t win in a competition based on resources and vertical scale.
All the big networking players are emphasizing virtualization, cloud computing, and convergence. Brocade is no exception. Theoretically, they’re all in agreement about the need to abstract (hide) complexity from customers through automation, and they’re all seemingly committed to simplifying and flattening network architectures. All networking vendors are saying today’s networks won’t adequately support increasing virtualization, but some beat the drum more fervently than others. Obviously, Cisco — as the enterprise networking behemoth — has more to lose than its competitors from a jarring or sudden market transition away from the status quo.
Clearly that transition presents a once-in-a-lifetime opportunity for Cisco’s competitors. An awareness of that opportunity was implicit in much of the message Brocade delivered this week.
Meanwhile, Cisco, Juniper, and Brocade are taking different architectural approaches to redesigning the data-center networks, whereas HP, for now, seems content to position itself as the vendor who will commoditize the hell out of them. Cisco is pushing its Nexus switches, its Unified Computing Systems (UCS), VMWare virtualization technologies, and EMC storage. HP is coming at the market with a similar one-stop-shopping approach, though it will play the field on virtualization, pushing a cheap-and-cheerful approach to low-priced, standards-based networking gear. For HP, at least at this point, networking is where it will pound away at Cisco’s margins rather than where it will innovative its way to market leadership.
Juniper, as we know, has laid out its 3-2-1 strategy, on the road to Stratus. It’s a partner-intensive formula, with IBM and Dell critical to the company’s success. Juniper has spent a lot of time formulating a JUNOS strategy that looks relatively well baked. The more substantive value it can deliver to its customers and partners through JUNOS, the more likely Juniper will prosper. It’s a good plan, albeit one that remains, like much of the next-generation networking architectures, a work in progress.
An interesting sidebar will be HP’s partnership with Brocade. Now that it owns 3Com, HP has Ethernet switches that span the enterprise gamut. Those will compete against Brocade’s Foundry portfolio, even though HP still carries Brocade’s storage-networking products.
Some observers believe Brocade remains for sale, and that the company chose to pursue a strategic makeover for the sake of appearance, to make it look both more attractive and more threatening to potential acquirers. If that’s true, HP remains a company whose attention Brocade would want to draw. Oracle has yet to play its networking cards, too, and Dell is at a crossroads, unsure of whether to follow the path of HP or of IBM.
In any good story, the reader can’t wait to see what happens next. As data-center networking gets redefined by pervasive virtualization and cloud computing, we’ll all be closely monitoring events.
For the first time in years, and to a far greater extent than in recent history, customers will hold nearly all the cards in enterprise networking. Incumbency has its privileges, obviously, but it’s no guarantee of indefinite rule. Change is coming, vendors are staking positions and making claims, but customers ultimately will decide which vendors will lead them into a brave new world.