Users See Good, Bad in Brocade's McData Buy

IT executives, analysts cite overlaps in vendors' storage switch product lines

IT managers last week said that Brocade Communications Systems Inc.'s planned buyout of storage switch rival McData Corp. has them concerned that it may mean the end of life for some of the products they use.

A Brocade executive said the two companies plan to tightly integrate and then converge their product lines in little more than a year's time. But some users and analysts noted that there is a substantial overlap between the offerings of the two switch vendors.

Mike Campbell, director of PC systems and support at University of New Mexico Hospitals in Albuquerque, chose McData equipment over Brocade switches in March. Campbell said he was surprised by last week's buyout deal. "We bought McData [products] because we thought the company had good technology, so we're going to be concerned about what Brocade might do there," he said.

McData announced late last month that the Durham District School Board in Whitby, Ontario, had consolidated its direct-attached storage devices onto a network built around the company's director-class switches. Wilson Chan, manager of technical services for the school board, said he sees both advantages and disadvantages to the acquisition.

The combination of Brocade and McData likely will spur "bigger, better services" as well as stronger products, Chan said. On the other hand, he said he's worried that Brocade will drop some of McData's products.

Arun Taneja, founder of Taneja Group Inc., a research firm in Hopkinton, Mass., said the biggest challenge facing Brocade and McData is the need to rationalize the many overlaps in their product lines. "Someone's going to have to play Solomon," Taneja said. "Someone's going to have to make the call, 'You live, and you die.' "

Tom Buiocchi, Brocade's vice president of marketing, said the planned acquisition would benefit users by providing them initially with interoperability between switches and then with a converged hardware platform and common management tools.

User Loyalty

The companies have yet to determine the criteria that will be used to decide which of their respective products will continue to be offered, Buiocchi said. But volume and user loyalty will play a part. "As long as [users] want to buy those products, they're going to get them," he said, adding that Brocade may continue to offer competing technologies in order to retain customers.

San Jose-based Brocade agreed to buy Broomfield, Colo.-based McData in a stock-swap transaction valued at $713 million under current prices. Brocade expects to complete the deal after its fiscal first quarter, which ends Jan. 30.

Rich Ward, director of technical services at Philadelphia Stock Exchange Inc., said he isn't particularly concerned about the acquisition. However, he noted that as a Brocade user, the transition will affect him less than it will McData users.

Scott Saunders, director of MIS at Ion Media Networks Inc. in West Palm Beach, Fla., is another Brocade user. He said a possible advantage to the buyout is that users could end up with more interoperability between different Fibre Channel switches.

But Saunders said he's worried that Brocade could mismanage the acquisition and lose focus on customers, product quality and technical advancements.

Saunders is in the process of budgeting for a new disaster recovery site for Ion, which operates a network of 60 television stations. He said that the McData buyout could limit his product choices -- although he's satisfied with the Brocade switches he now uses.

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Copyright © 2006 IDG Communications, Inc.

  
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