Local channel debates Brocade acquisition

Local channel debates Brocade acquisition

Brocade Communications' acquisition of McData this month for $US713 million will open up new consulting opportunities for the channel, according to a local player.

As a result of the deal, only three vendors remain in the switch market; Brocade, Cisco and QLogic. CEO at storage integrator XSI, Max Goldsmith, said this consolidation was typical of the network and storage industry.

He said the rapid market changes were presenting opportunities for integrators to take on an advisory role.

"We are now more consultants and advisors to customers because we are not making money out of selling Brocade or McData switches," Goldsmith said. "They are looking for advice from sources other than the vendors, who without strong competition can say what they want."

He said about 30 per cent of XSI's business stemmed from independent consulting services rather than more traditional fulfillment. This evolution is even more necessary as vendors consolidate their channels.

"Some of their [Brocade and McData's] products are quite different so the deal will strengthen their range overall," Goldsmith said. "There will be some consolidation of who is selling the products, with the channel make-up narrowing slightly. Already most of the sales go through OEM arrangements."

Principle consultant at local storage specialist SLI Consulting, Jose Goldmann, said he expected to benefit from a combined Brocade/McData channel structure.

"The channel that remains will benefit as Brocade will put dedicate more resources, funding and support," he said.

Goldsmith and Goldmann both viewed the acquisition as a defensive move by Brocade to strengthen its market position against Cisco. However, they were skeptical that the vendor would realise any significant gains from the deal.

Goldmann predicted integration issues would stem from the different approaches to networking that the two vendors have. Brocade traditionally delivered modular solutions to lower and mid-level customers, while McData's totally wired solutions were more suited to high-end customers. But this diversity could also be an advantage, he said.

"McData comes from the enterprise high-end and Brocade has recently moved into the high-end. So they were competing head on but had different expertise," Goldmann said. "By consolidating they will be able to get to market quicker and cover all customer bases because they will have more resources and money to invest in R&D."

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