Dell’s acquisition of Ethernet switch maker Force10 today should end the expectations that Dell will buy Brocade, which sells Fibre Channel and Ethernet gear.
Financial analysts have speculated and even prodded Dell to acquire Brocade as it tries to move up into an enterprise class vendor instead of a PC and server specialist. There have been whispers for at least a year that Dell was considering Brocade, but it instead followed Hewlett-Packard’s lead in going just for Ethernet switching. HP also looked at Brocade before buying 3Comm in 2009.
Apparently, system/storage vendors prefer to own their Ethernet technology while getting FC connectivity from Brocade and Cisco. The move to Ethernet for Dell and HP is motivated at least in part by Ethernet switch market leader Cisco’s getting into the server business with its Unified Computing System (UCS).
Price may also have been a factor for Dell. It did not disclose how much it will pay for Force10, but it is believed to be around $600 million to $800 million while Brocade would command billions of dollars.
Passing on Brocade doesn’t mean Dell won’t buy another storage company, though. It has picked up EqualLogic, Exanet, Ocarina and Compellent since 2008, and Dell executives including Michael Dell see storage as a major part of the company’s future.