Brocade Communications Systems Inc. said its US$713-million takeover of rival McData Corp. will lead to a converged storage platform, which could spell major changes for some of the latter’s Canadian customers.
Based in San Jose, Calif., Brocade said Broomfield, Colo.-based McData would become a wholly-owned subsidiary as part of a transaction announced Tuesday afternoon. Brocade is best known for its Silkworm line of fabric switches, while McData operates in the exact same area, providing routers and other tools to help corporate enterprises set up and manage storage area networks (SAN). The two firms are planning to operate as separate businesses until the acquisition closes later this year.
Michael Klayko, Brocade’s CEO, talked up the cost-cutting opportunities the merger of the two firms would represent, particularly in terms of headcount. However he also said the takeover would lead to management “unification” among the two firms’ product lines.
”They have a long list of technology to integrate into their environments . . . data growth creates complexity and limits the ability to implement next-generation technology,” Klayko said in a teleconference call. “We’re going to be able to provide them with a unified platform with interoperability and convergence to promote the long term protection for their investments in SAN infrastructure.”
Though considered the more financially troubled of the two storage providers, McData had built up a small roster of significant Canadian customer wins since it opened up a sales office in Toronto five years ago. This includes the City of Calgary, which in 2002 set up a McData-based SAN to replacee a Brocade storage network based on the Silkworm 2800, which was determined was inadequate to support its stringent availability, scalability and manageability requirements.
In January, meanwhile, McData had signed an agreement with Telus, which plans to use it Eclipse SAN Router to move data between its Calgary and Toronto locations for a business continuity and disaster recovery implementation. McData said that Telus would use its hardware to transfer data between the locations, which are 1700 miles apart, to meet high availability and customer service level agreements.
Just two weeks ago, Durham Region School District announced it will implement two of McData’s 4 Gbps 4700 Fabric Switches facilitate the flow of data between more than 135 facilities across the region to a central data centre.
Klayko refused to elaborate on what the converged platform will look like, other than to suggest it will offer “compelling choices and new solutions for customers.”
“McData has been a reasonably strong second in the market,” said Jennifer Ewan, a storage analyst with Evans Research based in London, Ont. “I’m a little surprised that’s the one they would choose to buy, but it will definitely make Brocade the dominant force in the market.”
McData CEO John Kelly said it was using its own experience with acquisitions to ease the transition with Brocade.
“When looking objectively about our ability to continue to meet customer requirements, we believe size, financial wherewithal, magnitude of customer installations and technical prowess are characteristics we must continue to incorporate,” he said. “I think there’s a huge opportunity to put these tough cultures together in a hurry.”
Brocade’s Canadian partners include Hitachi Data Systems, which formed an agreement with the firm to provide SAN integration expertise and support for Brocade’s customers.