Gartner positive on Brocade’s purchase

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By  Published  September 1, 2006

Brocade’s US$713million acquisition of rival McData will stabilise the fibre channel (FC) switch market and allow the combined company to compete better against Cisco Systems, according to analyst firm Gartner.

The purchase will also resolve a developing crisis for McData, which has seen a steady erosion of its FC director market share that was undermining its leadership position, the research firm said.

“McData’s merger with Brocade will result in a stable vendor with sufficient resources to compete successfully with Cisco in the FC director market,” Garter stated in a recent online advisory.

“The acquisition will boost Brocade’s professional services to a staff of 150, which will provide a strong competitive differentiator against Cisco,” it added.

Brocade CEO Michael Klayko said in a statement announcing the acquisition that, in addition to boosting resources, simplifying administration and delivering greater interoperability were key drivers behind the deal.

“The combined company will accelerate innovation and the delivery of a diverse set of compelling and cost-effective solutions to customers, while preserving investment protection, simplifying administration and management and delivering greater interoperability,” he added.

Gartner estimated the combined share of Brocade and McData as more than 70% of overall FC switching products and more than 60% of the FC director market.

However, the research firm warned that customers should choose carefully between the two US vendors’ products — giving preference to Brocade over McData.

“Buyers still face difficult choices during the next six months while McData and Brocade consolidate two complete sets of FC switch products,” Gartner recommended.

“Expect continued support for McData products, but plan for possible disruptions in the transition to next-generation products,” it said.

The firm advised customers to purchase McData products only for expansion of installations where interoperability was a requirement. Gartner also suggested users would likely benefit from having their choices narrowed down to two stable suppliers of FC directors as the market favoured a two-vendor environment.

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