What Brocade (BRCD), Juniper (JNPR), and other data center networking contenders need to really propel their stock are market share gains against the giant Cisco (CSCO). To do that, they need: a) something new and innovative, b) the giant to stumble, and, c) the giant to stay down long enough for them to take some of the giant's lunch.
The emergence of a new generation of networking called "Fabric" technology has created a major inflection point at which the giant has stumbled, and Brocade is in a position to grab some market share.
Last June, the industry embraced the introduction of the Brocade One architecture, VCS technology and VDX switches -- which brought to life for the first time a new Fabric network design for flatter scale-out in virtualized clouds. At its Technology Day Summit in San Jose, Brocade presented its vision for the Fabric industry, unveiled its Gen2 Fabric architecture called CloudPlex, and announced the availability of several new products.
IT professionals sharing their experiences implementing VDX-based Fabrics highlighted the day. Attendees heard Wim Vanhoof, of De Persgoep in Belgium describe how he evaluated Fabric solutions from Cisco and Brocade, but chose Brocade because “it was available.” Wim told how he selected his vendor in January, received his switches in March, and is now set to migrate from his old network to his recently-installed new Fabric. Overheard at the summit was someone asking the VP of IT for FleetCor in Atlanta to explain why he chose Brocade for his Fabric solution. He answered, “They all work, however it [the Brocade solution] was right for me but, Fabric is the way to go.”
To me, the comment “fabric is the way to go,” is profound because the simple phrase from a real customer validates the vision which Brocade CMO John McHugh captured in his statement earlier in the day, “Every data center is becoming a service provider, and every service provider is becoming a data center.” I agree that Fabric technology will someday bind together private clouds and public clouds into one global cloud.
Doug Ingraham, Brocade VP of Product Management, suggested that Brocade is defining the Fabric market. And McHugh added, “Brocade is installing 2nd generation Fabric products while the competition [the giant] is making announcements and shipping PowerPoint in volume”. I found their claims hard to dispute after hearing customers describe their Brocade VDX Fabric deployments.
I’m convinced Brocade has established early incumbency in the nascent market for Fabric technology, which will eventually displace the networking technology we use today.
On day two of the Summit I heard Barbara Spicek, VP of Global Channel Sales at Brocade, describe the company's race to influence thousands of certified Cisco engineers, and thousands of risk-averse Cisco partners who now depend on Cisco for their living, to follow De Persgoep and FleetCor to Brocade. Spicek and her team reported a 50% increase in partner technical certifications in the last six months over the previous six months, as well as a big increase in channel sales headcount and marketing spend to enable partners.
The bottom line is this: Until Cisco delivers Jawbreaker, Brocade has some innovative new technology that customers are excited about, and Cisco can't deliver. The next 12 months will be be a test of Cisco's grip on its customers, and Brocade's ability to tear them away while the giant is down. I expect Brocade to achieve share gains in data center networking in the next year as the giant reorganizes, painfully moves partners and customers from Catalyst to Nexus, and releases new Jawbreaker technology.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I was at the conference and the quotes are from my notes.
