Brocade Buys Rhapsody for $175 Million

Companies that resell Brocade switches are already developing with Rhapsody's XPath architecture in mind, said Brocade CEO Greg Reyes.

Storage switch leader Brocade Communications Systems Inc. Tuesday acquired startup Rhapsody Networks Inc., for approximately $175 million in stock, officials said.

Rhapsodys architecture, called XPath, converts between Fibre Channel and IP protocols. It also runs network-based management software, which Brocade can merge with resellers products, to better compete against arch rival McData Corp. and storage newcomer Cisco Systems Inc.

"We plan to maintain Rhapsody as a separate operating division," said Greg Reyes, chairman and CEO of Brocade, in San Jose, Calif. For users preferring network-based administration, "this presents a tremendous opportunity [for] these data management and movement functions," he said.

Brocade will make an application-programming interface for Rhapsodys switch, which will interoperate with the existing Brocade Fabrice Manager, officials said. Companies that resell Brocade switches, today totaling 23, are already developing with XPath in mind and will be close to general availability by late 2003, Reyes said.

The API for Rhapsody-based switches will be backwards compatible with Brocades entire current install base of 1G- and 2G-bps switches, Reyes said, in an interview with eWEEK. Though he declined to state the first generation products planned port count, Reyes said it doesnt have to be as big as a standard switch because "you would deploy the fabric application platform at strategic points."

The roughly $175 million acquisition accounts for 23.4 million shares of Brocade stock, about 10 percent of the companys outstanding stock, officials said. Regarding the amount, "You can always look at price subjectively. To the extent that were successful I think the purchase price will appear to be cheap in hindsight," Reyes added.

Reyes did not comment further on Brocades planned 128- and 256-port switches, on the companys recent earnings warning for the prior fiscal quarter, or on recent layoffs. The earnings will be announced Nov. 21, officials have said.