Uncommon Wisdom

Jul 22 2008   6:47PM GMT

Brocade to acquire Foundry

Tom Nolle Tom Nolle Profile: Tom Nolle

Brocade Communications, a data center fibrechannel switch player, is acquiring Foundry, the Ethernet switch company. The deal is likely to meet little resistance from any regulatory or shareholder perspective and so can be considered done.

We believe this move is a step toward recognizing a major truth of enterprise networking, which is that in market cycles driven by IT factors, as this one is, data center switching is the most likely to lead the networking portion of the purchase cycle. In addition, data center products can pull through products elsewhere (which this deal is clearly banking on), while the opposite is not true.

Given the increased influence of IT in overall technology procurement (and the collateral decline of the influence of networking), we believe this to be a very smart move indeed. This acquisition may lead to some additional consolidation in the LAN switching and data center area as other players make counter-moves.

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