Brocade Tops the List as Dell Hunts for Networking Equipment
Following a good financial streak, Dell Inc. is on the lookout for networking equipment to beef up their initiative on assembling a full IT stack. Networking will most likely be crucial for business intelligence and Dell is hunting for their match in the market; to that end, Brocade Communications Systems looks very interesting for them.
In a study by analyst Paul Mansky, he mentioned about good reasons why Brocade would be Dell’s target: “First is the absence of alternatives. Juniper is 80% service provider – not Dell’s business – and Extreme and Force10 carry insignificant share. Second, Brocade’s Fibre Channel business should be an attractive cash engine for at least five years…Finally, Brocade owns Fibre Channel (70% share), exceptionally tight support for which is a must (our view) in a converged world. Net, Fibre Channel is high ROI, legacy Ethernet is low investment and converged products (recently introduced) are the growth engine.”
In an interview with Dave Vellante of Wikibon (full video below), Brocade’s Michael Klayko made mention on the recent developments within their line of business and the future of the company. Their objective now is to increase their worldwide presence and leverage their existing global-scale sales channel and customer base. Brocade also aspires to be the first company to launch Ethernet fabrics as a class of its own.
After rebuilding from the past tremors and improved stocks rating, Dell looks fierce to reclaim market leadership. Their quest to shift away from secular PC’s has pushed their margins up. The company also formed tie-ups with other organizations. Recently, Fusion-io integrated ioMemory into Dell’s storage offering. Dell also went head-to-head with HP during the last Memorial Day holiday weekend and offered great discounts to customers, an effort to push device sales for its hardware end. The company also is exploring the idea of bolstering its data center and lead in internet server platform through various acquisitions.
With cloud storage companies profit surging up, and an estimate of $545-555 million in revenue, Brocade looks very promising. If Dell decides to acquire Brocade, the pairing could possibly be a game changer.
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