Broadcom Offers Megabucks for Emulex

I know I promised to give you my admittedly snarky view of the software bundle that makes the Symmetrix V-Max tick, but as a New York guy, this week's M&A news is just too juicy. On top of Larry Ellison playing white knight to rescue Sun when it was jilted by that 800-pound Gorilla IBM, we have fabless chipmaker Broadcom making a hostile offer for Emulex. The $9.25 a share offer is about a 40 percent premium over Emulex's closing price.

According to Broadcom, they met with Emulex management in December about a friendly takeover but were rebuffed. Emulex's management went so far as to adopt a flip-in poison pill that will allow current shareholders to buy additional shares at a discount when a suitor's ownership exceeds a trigger percentage --- raising the cost of a hostile takeover.

I've thought for a while that Broadcom was the wildcard in the FCoE business. With its Gigabit Ethernet chips on the motherboards of most of the i386 servers that Dell, HP, and IBM sell, Broadcom has the inside track on LAN-on-Motherboard (LOM) designs, and it's been constantly adding features so its current top-of-the-line gigabit and 10-Gig cards do TCP offload, RDMA (kinda like V-Max?), and iSCSI offload. While startups and innovators like Neterion, Netxen, and Chelsio get lots of mindshare, Broadcom's LOM and PCI-e 10-Gig products are actually hitting the data centers of America in Dell, HP, and IBM boxes. In fact, the gigabit server card market is pretty much limited to Intel and Broadcom -- even former NIC powerhouse 3Com left the market altogether.

While the early FCoE buzz was all about dedicated CNA hardware, I knew that for the CEE/DCE/Data Center Bridging/FCoE vision to become the default data center design we'd have to reach the LOM version. After all, one of iSCSI's biggest drivers has been the fact that, despite what some "Steely Eyed Storage Guys" will tell you, it runs just fine over plain old Ethernet. If iSCSI, with its crushing CPU overhead and glacial latency, can run with a software initiator, it was only a matter of time before someone came up with a software initiator for FCoE, which should be simpler.

That someone was Intel, which showed at SNW its 10-Gig Ethernet card, working with Xeon 5500 processors, and even had them included in the hands-on lab -- so I can say I have used software FCoE and it works.So I was expecting Broadcom to add FCoE to its portfolio. Buying Emulex adds FC expertise it didn't have and allows it to play in the FCoE market earlier, as players from Cisco and Brocade to NetApp try to establish a beachhead behind the new technology. It also puts Broadcom in a position to get the "I want FCoE because I can still use my $100,000 SRM package to manage it from HBA to disk like I manage my FC SAN today" crowd, or at least the Emulex-using part of it.

Anyone else remember when Emulex was a NIC vendor?

Howard Marks is chief scientist at Networks Are Our Lives Inc., a Hoboken, N.J.-based consultancy where he's been beating storage network systems into submission and writing about it in computer magazines since 1987. He currently writes for InformationWeek, which is published by the same company as Byte and Switch.

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