TeamKCI Blog: Brocade Confusion
Category : Uncategorized
“A sales restructuring at Brocade Communications has added confusion and delay to the storage and networking vendor’s field engagement model, making it difficult for solution providers to close deals and, in some cases, causing them to move business to rival vendors, partners told CRN.”
“We feel like we’re getting into the homestretch right now of a very disruptive year…“, Brocade Channel Chief Sandra Glasser Cheek added.
And, all this was before the closing date for the Brocade acquisition by Broadcom was moved back from early third quarter to the fourth quarter of 2017.
If you have doubts about your coverage we’d like to recommend that you call TeamKCI. We’re tracking the Brocade/Broadcom merger and divestiture and stand ready to guide you through the pitfalls of what is turning into a sticky and oft times confusing realignment. Call us to discuss the latest developments and find out your best strategies to keep your equipment covered until the merger is completed.
It all began benignly in November 2016 when chip maker Broadcom, Ltd, agreed to buy Brocade Communications Systems, Inc. for $5.9 B. Brocade a leading manufacturer of Data Center, Campus Network and Ethernet switches is best known as the leading manufacturer of fiber channel SAN switches and directors. Brocade claims that 90% of the world’s 1000 largest companies use Brocade products in their SANs.
Broadcom’s said its interest in Brocade was limited to Brocade’s fiber channel Storage Area Network (SAN) business. Perhaps true but Broadcom, the largest manufacturer of chips for Cisco Systems, made sure to announce simultaneous with the Brocade acquisition that it intended to sell off the IP networking segment of Brocade’s business along with other non SAN related platforms in order not to be in conflict with Cisco. Recent quarterly numbers show that fiber channel SAN comprised roughly 60% of Brocade’s revenue while IP networking products made up the remaining 40%.
Broadcom has also agreed to wall off the divisions that make ASICs for Brocade from the division making ASICs for Cisco to avoid conflicts of interest.
Brocade’s Ethernet networking business was built primarily on the acquisition of Foundry Networks in 2008 and the organic expansion of Foundry product lines from 2008 to 2016. Brocade expanded into wireless networking with the acquisition of Ruckus Wireless in 2015.
On February 22, 2017 Brocade/Broadcom agreed to sell the former Ruckus Wireless unit that Brocade had acquired in 2015 to the Arris Group, an American company that provides cable operators with high speed data, video and telephony systems for home and business. Also included in the deal was Brocade’s ICX campus switching line of products which Brocade once called “the next-generation” of IP networks.
Followed on March 29, 2017 when Broadcom announced that it sold its data center switching, routing, and analytics business to Extreme Networks, Inc. (EXTR) a company that itself has been involved in a raft of acquisitions recently.
Broadcom then sold Brocade’s Virtual Traffic Manager, (formerly known as the SteelApp Traffic Manager) to F5 as part of further divestiture of its IP product lines.
Other product line sales include the Vyatta and vRouter products to AT&T. Its Virtual ADC product to Pulse Secure. And, its Connectem product to Mavenir. In an unusual move, Brocade is spinning off its SDN controller to a new startup called Lumina Networks. And lastly, Brocade sold off its Federal maintenance group to Hitachi Data Systems Federal.
Seem confusing? Ponder this: even Broadcom is not really Broadcom. A little more than a year ago Avago Technologies agreed to acquire Broadcom; then took the Broadcom name for itself. But Broadcom still goes by the Avago ticker symbol (AVGO) on the NASDAQ. Prior to acquiring Broadcom the Avago management team had made a half-dozen acquisitions of technology companies including Emulex and LSI.
The chip industry has had a wave of acquisitions recently. Industry analysts point to more than $100 billion in deals in the last two years. Just following all of these moves is exhausting.
So while we are all waiting for the Brocade/Broadcom merger to sort itself out feel free to call TeamKCI. We’re tracking the Brocade/Broadcom merger and will gladly discuss developments and provide guidance as merger details continue to evolve. For solid advice to guide your Brocade and Foundry strategy call TeamKCI. We’ve been following the switch business for the last 35 years!