Brocade Dazzler Starts Low

Brocade Communications Systems Inc. (Nasdaq: BRCD) has started the long-awaited rollout of its new product line with additions to its Silkworm switch family (see Brocade Offers New SMB Switches).

By first announcing the entry-level models code-named Dazzler, Brocade seems to confirm industry speculation that it's willing to compete mainly at the low end of the market, while leaving the high-end director switch space to Cisco Systems Inc. (Nasdaq: CSCO) and McData Corp. (Nasdaq: MCDTA) -- for the time being, at least (see Brocade & McData's Paths Diverge).

Brocade's new 8-port and 16-port Silkworm switches are aimed at the small and medium-sized business (SMB) market, on which Brocade and a raft of other storage players have painted a bull's eye (see The Battle for Smallsville).

The announcement follows one by Hewlett-Packard Co. (NYSE: HPQ) last week, in which HP said it will OEM the new switches in its SAN system aimed at the low end (see HP Aims to Dazzle SMBs).

Brocade's new 2-Gbit/s switches come with basic management software. They are distinguished from Brocade's current low-end switches chiefly by a price reduction of at least 15 percent. Brocade also lets users pay to upgrade the entry-level switches by turning on more advanced features such as trunking, performance monitoring, and security, through license keys.Brocade CTO Jay Kidd says the company will have other product and OEM announcements by mid-may. He won't discuss specific products but Brocade is expected to bring out a director switch code-named Meteor and reveal partnerships with IBM Corp. (NYSE: IBM), Storage Technology Corp. (StorageTek) (NYSE: STK), and Sun Microsystems Inc. (Nasdaq: SUNW) in that timeframe.

For now, Brocade hopes to get a jump on the SMB market. McData has a 4-port Sphereon switch that can be upgraded to 8 or 12 ports, but at least one analyst anticipates McData will cut prices on its low-end switch to compete with Brocades offering.

“Brocade’s expanding the market [downward],” says Kaushik Roy of Susquehanna Financial Group. “Let’s assume McData will cut prices with the Sphereon line to compete. It’s unlikely Cisco will cut prices.”

While emphasizing that Brocade sees the SMB market as a huge opportunity, Kidd denies Brocade is ceding the high end. The plan is to shore up the segments it did not previously concentrate on as sharply. Brocade has dominated market share in the midrange, he says, while McData took the lion’s share in the director space.

“This is the first new hardware we’ve had in a while,” Kidd says. “We refined our view of the market. Now we look at the SAN market as a set of segments. The midrange had been where Brocade concentrated before, so we made adjustments to our roadmap at the end of 2002, beginning of 2003.”— Dave Raffo, Senior Editor, Byte and Switch