Brocade deal signals shift in Ethernet space

Brocade's $3bn acquisition of Foundry is indicative of forthcoming consolidation in the Ethernet switch marketplace, according to analysts.

A recent report by Dell'Oro Group suggests that significant new Ethernet switch product introductions should help propel market growth, especially over the next year.

Products geared towards the data centre will begin to ramp up in the second half of 2008 and the first half of 2009.

"We anticipate that the Ethernet switch market will segment into more specialised products for different functional network areas," said Alan Weckel, senior analyst at Dell'Oro.

"For example, products focused on the data centre are evolving with features such as converged fabric that provide the ability to combine Ethernet and Fibre Channel.

"Meanwhile, products for the wiring closet continue to push convergence of VoIP and wireless Lan with features addressing PoE, QoS and robust security and authentication."

The report indicates that this divergence in products will make it difficult for vendors to develop a product for one segment of the market and then modify it slightly to address another segment.

"We expect that some smaller vendors will pick one area of specialisation or partner in order to offer a complete solution that covers the unique characteristics from the wiring closet edge to the data centre core," said Weckel.

"Brocade's announcement earlier this week to purchase Foundry is an excellent example of two unique data centre companies combining to address the opportunities of a converged fabric."

Brocade said that the two companies have entered into a definitive agreement, and that both boards of directors have given the green light.

The acquisition is now subject to approval by Foundry stockholders, as well as regulatory approval and other closing conditions.