storage networking; storage vendors

Will Hewlett-Packard and Brocade tie the knot?

There have been rumors for years that Hewlett-Packard might buy Brocade, and they intensified today after a Wall Street Journal report that Brocade has put itself up for sale.

The WSJ cited unidentified sources and obviously none of the companies named would comment, but the article mentioned HP and Oracle as potential bidders. Wall Street and storage industry analysts who follow Brocade say HP is the likely buyer if Brocade gets acquired. HP has a long-term relationship with Brocade, and Oracle is currently trying to complete its Sun deal and integrate that company.

“It is possible that HP is looking to buy Brocade,” Wedbush Securities analyst Kaushik Roy said today. Roy said he “would guess” Brocade would go for about $11 per share or between $4 billion and $5 billion.

However, there is likely a good reason why HP hasn’t already acquired Brocade. If it did, Brocade would probably lose a good piece of its business because its large OEM customers EMC and IBM wouldn’t be so enthusiastic about selling switches owned by their competitor HP.

“If HP buys Brocade, they would in reality pay a much higher premium because the future revenue forecasts would be revised downwards,” Roy said. “Brocade is an OEM business. EMC is likely to move from Brocade more to Cisco [for Fibre Channel switches] and IBM is likely to move towards Juniper on Ethernet.”

In a note to clients today, Stifel Nicolaus Equity Research analyst Aaron Rakers wrote that HP makes most sense as a Brocade suitor but threw a few others into the mix.

“We find it a bit interesting that the [WSJ] article is not including names such as
IBM and Juniper,” Rakers wrote.

Enterprise Strategy Group analyst Bob Laliberte said when he heard about the WSJ story, “My first thought was that HP would be a potential suitor. When you look at a company the size of Brocade and what they offer, you’re down to IBM, HP, Oracle, maybe Dell. I don’t think you’ll see EMC or Cisco buy them.”

A Cisco-Brocade deal probably wouldn’t clear anti-trust regulation, and EMC is too close to Cisco to buy Cisco’s chief switch competitor.

A Brocade acquisition by anybody is still a big if at this point. The WSJ story said no deal is imminent, and it sounds like Brocade could just be shopping to see how much interest is there.

One thing for sure is that Brocade’s stock price is soaring. It opened at $8.60 today, more than 12% above its Friday closing price of $7.65.

Dot Hill goes in software direction with Ciprico IP

Dot Hill Systems, which sell storage systems that are rebranded by OEM partners, is entering a new market thanks to intellectual property it acquired from bankrupt vendor Ciprico last September.

Dot Hill today launched what it calls a virtual RAID adapter (VRA), which is basically a software-based host bus adapter for low-end storage systems.

“This is a pure software play, it goes inside Windows or Linux servers,” said Andy Mills, Dot Hill’s VP of marketing and business development. “We’re doing it entirely on the host.”

Development of the product was well under way by Ciprico, which had exclusive rights to license Broadcom’s RAIDCore technology. The RAIDCore VRA software supports Intel servers’ SATA I/O ports and I/O ports on SAS/SATA controllers, and adds RAID functionality without a RAID-on-chip device.

VRA software is aimed at entry level direct attach storage for now, rather the high-end Fibre Channel storage systems.

The product brings Dot Hill a different set of OEM partners. While it now sells storage systems rebranded by NetApp, Hewlett-Packard, Sun and others, VRA software will be sold by server vendors. Mills says he expects an OEM deal with a Tier 1 server vendor by the end of the month. That deal was in the works at Ciprico before Dot Hill picked up its IP.

Mills says Dot Hill plans to eventually add data management and protection features such as snapshots and thin provisioning to the VRA platform. Customers will be able to unlock those features with license keys.

Mills also hinted that Fibre Channel support could be coming down the road, too. “We’re not ready to talk about that yet, but we eventually plan to manage a unified protocol,” he said.

Broadcom accuses Emulex of patent infringement

Emulex hasn’t heard the last from Broadcom after all.

Broadcom, which unsuccessfully tried to acquire Emulex this year, Monday filed a lawsuit charging that the HBA vendor infringed on 10 of its patents for storage and networking technologies. The chipmaker is seeking monetary damages and injunctions to stop Emulex from using the technology.

The patents include Fibre Channel, FCoE, TCP offload engine, remote direct memory access (RDMA), and serializer/deserializer (SerDes) technologies.

“As we developed our plans for the Fibre Channel over Ethernet market, we discovered that Emulex is infringing multiple Broadcom patents in an effort to use Broadcom technology to compete against both our existing and future products,” Broadcom VP for intellectual property David Rosmann said in a statement. “We believe Emulex is infringing a broad range of Broadcom patents; we are concerned that Emulex’s infringement is pervasive.”

Emulex released a brief statement, claiming: “Emulex is reviewing the patents associated with the complaint filed today by Broadcom. Emulex has a policy of vigorously defending the company against assertions of this kind.”

Stifel Nicolaus Equity Research analyst Aaron Rakers maintains the suit is a reaction to Emulex fighting off Broadcom’s hostile takeover attempt. He says it also indicates Broadcom is now looking to develop its own FCoE technology rather than trying to acquire a company with the technology.

“This is not a move against Emulex to reconvene discussions on a possible combination,” Rakers wrote in a note to clients.

Rakers also wondered if Broadcom found any patent infringements against Emulex rival QLogic, but when he brought this up to a Broadcom representative he was told Broadcom has not looked at QLogic’s product portfolio.

Broadcom successfully sued its rival Qualcomm several years ago for violating patents, and Qualcomm agreed to pay Broadcom $891 million in a settlement earlier this year.