Written by David Vellante
Data Center Madness
Its been an interesting first quarter. Cisco and HP dumping on each other last month, 3PAR turns up the heat in automated storage tiering and then HPs two-day analyst event in March, followed up by EMCs grand vision for federated storage and then LSIs analyst event in NYC. Next week is Iron Mountain in Boston where well hear about the Mimosa acquisition. Then its SNW in April which will bring a ton of announcements.
It looks like 2010 is shaping up as a good rebound year. Earnings reports in December were optimistic and the year-on-year comparisons with Q1 2009 should be excellent because Q1 2009 was so miserable. Tech companies are exiting the downturn with outstanding balance sheets. Keep an eye on the relationship between housing starts and unemployment.
Major themes have of course been virtualization and cloud computing. The Wikibon community heard in early March from business continuity practitioners how the cloud has the potential to transform disaster recovery and business continuance, dovetailing with EMCs vision of federated storage.
Shifting Data Center Landscape
The subtext to all this high level action these past couple of months is a shifting landscape in the data center. Were seeing big players like Oracle, IBM, HP, Microsoft, Intel and Cisco position for the next wave of innovation; and were seeing companies like VMware and EMC trying to get a seat at the big dancewhile NetApp stays focused on doing what it does bestmaking storage simpler.
The sub-sub-text here is the competitive developments in the Fibre Channel business. The vendor community wants to keep users locked into FC without it looking like a lock-in so theyre giving customers a dual FC and FCoE path. Users are uneasy about FCoE but ultimately they will have little choice to adopt as costs come down and the technology moves from CNAs in servers to top-of-rack switches and ultimately converged switches and native FCoE devices. While networks might not converge in the near term, technologies willaround 10 Gb Ethernet and FCoE.
Fibre Channel Ripple Effects
Were also seeing a new wave of competition in the FC switch business. HP recently dumped Cisco (theyd never admit this) and began private labeling QLogic FC switches. Yesterday QLogic announced that its switches are seeping into EMC (EMC is of course playing Switzerland saying it sells Cicso, Brocade and QLogic products). HPs move to private label QLogic switches essentially funds QLogics entry into a market thats dominated by Brocade (~80% market share according to DellOro). Every market needs competition and the FC switch business really needs more competition.
Of course QLogic is only focused on edge switching and doesnt have an edge-to-core offering so perhaps the threat to Brocade is benign. But somethings happening in this space and its important because a lot of these big data center, federated, cache coherent installations will be running on FC or FCoE. FC wont die. Wikibon estimates there are $25B in FC assets installed and CIOs are not going to rip and replace that infrastructureit would be crazy. That means theres a good business still to be had and because its a mature business thelogical way to grow is to gain share. Who has the share? Brocade.
Wither Brocade?
Two blogs got my attention yesterday. First was one posted on Silicon Angle pointing out that Brocade is under pressure. John Furrier wrote:
Recently Brocade has been under fire for lack of performance due to pressure from Juniper and QLogic. Vendors are broadening the ecosystem to create more competition and accelerate the convergence of storage and networking and servers.
I doubt QLogic has had an impact on Brocade yet but theres clearly some friction brewing there. But in another blog yesterday, StorageMojos Robin Harris was even more cutting. Entitled Brocades unraveling, Harris argued that Brocades strategy has painted it in a corner because its OEMs had diverging objectives to those of Brocade. Harris wrote:
Brocades troubles reflect the dangers of an OEM strategy when your partners strategic interests are different than yours. None of them wanted Brocade to succeed as a networking company.
The FC business is not growing. FCoE is a measure to keep the business alive for another 10 years and lock-in customers to a path that is safer than alternative protocols. Sure, eventually the world will go all Ethernetthe operative word there is eventually. The only ways to grow in this business are to raise prices or steal share from Brocade. And because Cisco is at war with the world it seems as though companies like HP are willing to become benefactors to QLogic which creates more pressure on Brocade. The company is getting squeezed by a backlash from SAN complexity and competition from Cisco, QLogic and Ethernet generally. Whats more, no one seems to want to shell out the $2.5B+ to buy Brocade even though the company has been shopping itself. Yes it has cash on the balance sheet (~$500M) but its debt is also high (~$1B).
Complexity
All this near term posturing underpins the bigger issueusers want things to be simpler. SAN was supposed to deliver that. It didnt. And now theres so much installed storage network infrastructure that users cant get rid of stuff easily. Everyone understands that the Google Effect is changing everything and all companies need to figure out how to simplify infrastructure management. Thats why all the arms dealers are trying to figure out an Ethernet strategy; EMC is riding VMware and guys like HP are trying to add value by simplifying outside of the hypervisor.
Bottom line: Simplify or diewhats your strategy?
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Tags: Brocade’, FC business, FC switch business, s strategy, s troubles