Dissecting the Brocade-Foundry Merger
The huge networking deal between Brocade Communications and Foundry Networks puts a new spin on the competition with Cisco Systems. But Brocade faces serious challenges as it integrates Foundry into its organization.Brocade Communications' $3 billion acquisition of neighboring Foundry Networks, announced July 21, is all about connectivity, and it is causing plenty of talk in the storage and networking analyst communities. After all, if this deal closes as expected this fall, Brocade will have pulled off one of the largest networking sector acquisitions in IT history.
The acquisition now will allow Brocade salespeople to pitch one converged network featuring Fibre Channel SANs (storage area networks), IP 10 Gigabit Ethernet, or both, to potential customers. Simple is always better when it comes to explaining complicated IT networks and trying to sell them.
The deal also makes Brocade-which will become a $5 billion (market capitalization) company after the merger-a much more formidable foe for networking infrastructure kingpin Cisco Systems ($129 billion market capitalization), which has owned the lion's share of the Internet switching and routing market since the dawn of the commercial Internet and the Web in the mid-'90s.
Until now, Brocade has offered primarily top-of-the-line Fibre Channel connectivity for SANs. With the addition of Foundry, the company will offer a complete lineup of networking infrastructure that will include much-needed security improvements.
Many enterprises need to bolster their infrastructures to support the growing preponderance of Web-based and mobile applications, and this merger will provide a realistic new alternative for CTOs and CIOs to consider. As recent failures of high-profile Web-based infrastructures have shown-namely, outages at Amazon S3, Salesforce.com, Google and others-the importance of robust, up-to-date systems that can handle high volumes of transactions cannot be overvalued.