Ethernet

Brocade to acquire Foundry

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.

Juniper launches enterprise Ethernet products

Juniper announced its long-awaited EX series of enterprise Ethernet switches, and marketing partnerships with Microsoft, IBM and Oracle. The move to enterprise switching was expected but the partnerships are more a surprise, though how well they will pan out for Juniper is yet to be seen. Juniper lost its COO, Steven Elop, to Microsoft in January, and it may be that there are links between the move and the partnership, though details again are lacking at this point.

Dueling Cisco/Juniper Ethernet switch rumors

Rumors continue to spin around a new Juniper enterprise Ethernet switch and a competing Cisco product launched, not surprisingly, at about the same time. As we reported last week, financial analysts were predicting that Juniper would launch its Ethernet switch on January 29th in New York at a meeting scheduled for the financial and media communities, and Cisco has traditionally worked to trump competitive announcements by making one of their own just before that date. All of this is aimed at the larger “data center” or enterprise headquarters market, a market that in 2008 may be more challenging than it was in 2007 according to our research.

Juniper Quarterly Earnings Benefit from NGN Investment

Juniper reported strong sales, with its infrastructure products up about 35% and its service-layer technology up 17%, beating Street estimates. The stock was lower in after-market trading, however. Some analysts expected even faster growth rates, and this will clearly put some pressure on Juniper for the coming quarters. Dell’Oro Group puts Juniper’s router market share at 15%, far less than Cisco’s 65% and double that of Alcatel-Lucent. However, many analysts believe that Alcatel-Lucent has targeted Juniper for market share gains, though Alcatel had a very weak quarter in contrast to Juniper’s. Juniper is benefiting from service provider NGN investment, which we believe will continue to be strong in 2008 and through at least the first half of 2009.

The key question for Juniper is the enterprise business (part of their Service Layer Technology) and there the issue is Ethernet switches. It is very unlikely that Juniper can maintain engagement in the enterprise space lacking these products, and so we believe that Juniper is indeed likely to field a family of enterprise switches either late this year or early in 2008. However good this might be for SLT, it will certainly put more pressure on Juniper’s management and strategy, particularly since Cisco is executing extremely well in the enterprise sector at this time.

Verizon seeks multi-service edge device

September 27 2007: Verizon will likely announce the winner of its RFP for a multi-service edge device by late November, and the announcement could come as much as a month earlier. The company, like many access providers, has been looking for a device that could be used to transition customers from the multiple packet protocols used to deliver business services today, to a converged Etherenet/IP infrastructure. Verizon is looking initially for products to deploy IP VPNs and Ethernet services, primarily over carrier-grade Ethernet infrastructure. The box will have IP features but is likely to be acting as an edge router for IP-over-Ethernet rather than direct IP connection. We believe that Verizon is also asking for a PBB/PBT commitment.

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