Brocade announced its earnings yesterday, and they generally exceeded Street estimates. I was interested in their quarter and their comments on it because Brocade is arguably the first of the second tier in network vendors, a player with a real chance to become a giant if they play their cards right.
The key comment from Brocade’s call was “Disruption in IP Networking is also creating business opportunities which Brocade is well positioned to address.” That is absolutely true, because the growth of “the cloud” and the collateral focus of network operators on shifting logic out of devices and into servers is a fundamental change. It’s also true that Brocade is in a good position to address the change because they have powerful Layer 2/3 devices (sales for which were up 14%, making it their leading product area). But telling the truth may make you free but it doesn’t necessarily make you rich.
Here’s the formula for a Brocade success. Think of it as a one-two punch in boxing. Punch number one is HIT THE DATA CENTER CLOUD EVOLUTION and punch number two is HIT THE METRO CLOUD EVOLUTION. They have the pieces to do this, but not yet the positioning.
Brocade’s VDX fabric is an excellent foundation for an evolution to the cloud, but if you look at their website you find, on the VDX 8770 page, a single comment about the cloud: “Simplifies network architectures and enables elastic cloud networking with Brocade VCS Fabric technology.” HO HUM! Here’s the thing. The data center is the hub of enterprise network spending. Develop a compelling and differentiable data center positioning and you own the whole of the enterprise market. The data center is also the hub of network operator service-layer spending. Cloud data centers in metro areas will grow to include hosting for network virtual functions and for content and cloud services, and eventually the whole of the metro will be a logical or virtual cloud. The cloud needs to be the focus of Brocade’s application of fabric technology, not just a throw-away line in a website bullet list.
Brocade’s Application Delivery Switches (ADX) are just about perfect examples of what a “gateway” in an OpenStack Quantum virtual network might look like. The problem is that this particular application isn’t mentioned at all in Brocade’s webpage on the ADX, nor is it in the cloud-oriented white paper. Enterprise networking in the future is arguably a combination of an ADX and a VDX in terms of block diagram, and that’s the combination that needs to be integrated.
SDN is likely a way of doing the integration. Brocade has committed to support for OpenFlow on its MLX and VDX lines but there’s nothing in their latest white paper about the ADX. The thing is that if you segment enterprise data center LANs you have to think of something innovative to do with the segmentation, otherwise it’s a nice figure on a data center block diagram. Multi-tenancy isn’t an issue, so application-based segmentation is the logical strategy. What better way to link that strategy out to workers than to create job-specific worker groupings in offices, link those to application-specific segments in the data center, and then join workers onto the job-group to obtain access to the applications that their type of job requires? An ADX would be a nice way of doing that.
In the metro area, the thing I think everyone tends to miss is that there will be an explosion in the number of “data centers” created by operators’ decisions to host virtual functions. The total addressable data center network market for metro-cloud data centers could be an order of magnitude greater than the enterprise market for fabric switches. The ADX could serve as an on-ramp for Network Functions Virtualization data centers too. So you can see that if you had a killer VDX strategy in the data center and a killer ADX strategy at the edge, you could tout support for the cloud, for SDN, and for NFV. Brocade might well have that potential, but they aren’t positioning it in a compelling way. You have to dig a bit to find references to “SDN” (it’s spelled out once in the “Solutions and Technologies” tab but it’s not there in its familiar initials form). Nothing is said about NFV at all on the site, and Brocade could have a very good story there, something that’s essential to get all those metro-cloud data centers into your “Win” column.
Brocade has some really good SDN ideas; they have an SDN community site that focuses their outbound marketing material and would give them a darn nice bully pulpit to drive a strong SDN and NFV message, but the site doesn’t go quite far enough in positioning cloud, SDN, NFV, fabric, application delivery, and metro in one grand design (or two, if you want enterprise segmentation of the message versus operator). If you’re top-hitter in the best of the minors, you break into the majors by taking advantage of the mistakes of the leaders.
And they’ve made them. Cisco and Juniper are both very tentative about SDN because they have to be to avoid overhanging the router sales that are critical to them. Juniper, as the smaller of the two, is Brocade’s logical target if they want to gain market share. On the earnings call, Brocade’s CEO (Lloyd Carney, who came from Juniper) counterpunched with Juniper’s QFabric positioning, which is too narrow a focus to win with. Juniper’s vulnerability lies in the combination of a need to defend routers and a single-minded focus on products when they should be talking ecosystems. You don’t fight them by jumping into the path of their swing with a product comment, you fight them by picking your own optimum openings based on their weakness in STRATEGY.
Brocade is doing decently in the current market, growing in the switching/routing area. They have fabric, they have application delivery, they have SDN and an SDN pulpit. Go for it.
