McData Acquires Storage Networking Rival

The storage switch maker buys Computer Network Technology in an effort to expand its offerings to large enterprise data center customers.

In an attempt to round out its portfolio and compete more effectively with key competitors, storage networking vendor McData Corp. has announced intentions to buy Computer Network Technology Corp.

The deal, which is expected to close by July 31, will transfer all assets of the Minneapolis-based CNT to McData.

The main benefit of the acquisition, said McData Chief Financial Officer Ernie Sampias, is a better path to expanding McDatas offerings to large enterprise data center customers—the customer base CNT also targeted.

"It gives us a critical touchpoint with large enterprise data center customers beyond just fibre channel switches, particularly in the area of WAN, MAN [metropolitan area network] and distance capabilities," Sampias said.

The acquisition also gives McData more to offer in the area of professional and maintenance services—services CNT offered to its large enterprise data center customers both for their storage area networks and their distance capabilities.

"It gives us an added seat at the table early in the decision process with large enterprise data center customers to help them create a solution for storage issues, particularly SAN or distance issues around business continuity and disaster recovery," Sampias said.

The move is a good one for McData, said Rick Villars, vice president of storage systems at IDC, a Framingham, Mass., research firm.

"Storage networking, especially in the larger enterprises, is definitely moving to another level of maturity, and one of the key components of that maturity is that its not just about the local environment anymore. [Vendors] have to have a complete wide area story—hardware, software and professional services," he said. "And CNT was one of the few companies out there that had the credibility and skills that other companies in the space could use."

Another reason for pursuing the acquisition was to allow McData to go head to head more effectively with chief rival Cisco Systems Inc., and to a lesser extent Brocade Communications Systems Inc., which also have been targeting the enterprise space.

"Clearly they are much larger than just fibre channel directors, and we are trying to make sure we have a level playing field in terms of the capabilities we offer to data center customers so we can maintain our leadership position in terms of storage area networking not only in terms of hardware, but in terms of software, services and the ability to connect data centers over distance," Sampias said.

When evaluating the acquisition, its critical not to focus too heavily on the switch itself, Villars noted—a difficult temptation to avoid, considering that McData also announced a new switch Tuesday.

/zimages/2/28571.gifClick here to read about the embedded blade server switch that McData is developing with QLogic Corp.

"If you look at what CNT brings to the table, the switch overlap for the entire business isnt that great," Villars said. "Much more critical for the success is how well the two integrate the wide-area expertise and disaster-recovery functions, as well as professional services and products."

Thats exactly what McData plans to focus on in the upcoming months, Sampias said. The next six months will be the integration phase, dedicated to finding overlaps. "That way, when we close the transaction, we can effect synergies as quickly as possible and get the combined organization running as smoothly as possible," he said.

The latter half of 2005 will be spent executing the vision of the combined organization before deciding what else might make sense from an acquisition standpoint, he said.

In other news, McData on Tuesday announced the Intrepid i10K, a backbone director supporting dynamic network partitioning, secure SAN island and large fabric consolidation.

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