Brocade HBA Business Poised for Growth

The company is executing on its technology and go-to-market strategies.

For years customers have been telling OEMs they would love to see HBAs that cost less, perform better and are more interoperable with ubiquitous Brocade fabrics. This type of customer sentiment exists because the Fibre Channel HBA market operates like a gentlemen's club where propping up prices is preferred over ill-mannered competition. I confess that I would do the same if I could, but that's not the point.  The point is unmet customer demand and growing complacency among the Fibre Channel HBA duopoly was an invitation to competitors.

In 2007 Brocade answered the call. The new leadership boldly announced it was entering the HBA business. Management knew that 8Gb Fibre Channel was a technology inflection point at which a new cycle of design wins would be up for grabs. Therefore Brocade engineering would have to execute their strategy for technology development with military-like precision.  The company also learned from LSI's failed attempt to crack the duopoly. The LSI technology was solid, but lacked the capability to convert the technology into revenue.  Brocade management was confident they had the brand equity from their dominant switch business and field resources to leverage their own HBA technology into both OEM design wins and end-user demand.

In my opinion Brocade is executing crisply on its strategies, plus is the beneficiary of some extremely good luck.  I believe the two dynamics combine to poise Brocade's HBA business for steady growth.

Executing on Technology: A Better 8Gb

To unseat the incumbents Brocade can't offer the same level of performance -- they have to be better.  It appears to me the company responded with a better 8Gb mouse-trap, especially in the areas of performance and management.

When 4Gb Fibre Channel was introduced, customers were ambivalent because they didn't believe they could take advantage of it.  Today Virtual Operating Environments (VOE) and the corresponding aggregation of I/O have made SAN administrators believers in the need for more network bandwidth. I too believe HBA performance is a key differentiator for Fibre Channel HBAs. To that end I looked at work done by three highly respected test houses that published side-by-side comparisons of 8Gb HBAs: Medusa Labs, OpenBench Labs and The Tolly Group. By all accounts the Brocade 8Gb HBAs are reported to outperform the competition. In addition, I can't help but consider the lack of independent side-by-side comparisons from the other guys as tacit acceptance of the testing sponsored by Brocade.

In the area of management I believe Brocade is the only vendor seriously investing in creating synergy between HBAs and switches for their resellers and end-users.  Long term I expect Brocade to see a return on this investment as customers opt-in to an end-to-end architecture that gives them better quality of service and less complex fabric + host management with a single pane of glass.

OEM and Reseller Validation

The lifeblood of the Fibre Channel HBA business is OEM design wins and qualifications.  At each inflection point HBA vendors must first convince OEMs that customers will buy boat loads of their new products. The products must then pass incredibly rigorous qualification testing before the product goes on the OEM price list.

How hard is it to get an OEM design win?  Just ask LSI.  The company is a world-class technology company and proven storage partner for every major OEM, yet they never secured a single major HBA design win.

In contrast, Brocade has won designs and completed qualifications at EMC, HDS, HP and IBM.  This is a strong testament to OEM confidence in Brocade technology and OEM belief there is substantial customer demand for Brocade-branded HBAs.

I consider design wins and OEM qualifications to be pre-sales activities, so I called two resellers to get a pulse on what's going on in the field.  I talked to Harry Aine, President and CEO of SAN Solutions, and Bryan Champagne, Director of Storage Engineering for TOSS Corporation.

Mr. Aine and Mr. Champagne work with entertainment companies and hosting sites and are successfully installing Brocade HBAs in sophisticated environments that include VMware ESX, HDS HDLM multi-pathing and the Quantum StorNExt file system.

I came away from my conversations with Mr. Aine and Mr. Champagne with a reminder that resellers are all about maximizing their sales time.  They have no interest in working with a vendor or product that will cause them trouble with their end-user customer. Case in point, both resellers performed their own qualification of the Brocade HBAs before presenting them to their customers.

Looking towards the future, it is clear that Brocade's vision of centralized management is appealing to both Mr. Aine and Mr. Champagne.  They like the idea of managing switches and HBAs from one application.  It means less time mucking with different vendor management tools and more time for selling.

Good Luck

Who would of thunk in 2007 that Cisco would enter the server market in 2009!  But they did and Yahoo Finance reported that Brocade's share of the $188-million  market high-end storage switch segment grew 14% in one quarter, from 52.7% in the fourth quarter of last year to 67.1% in the first quarter of this year.

I believe the success of Brocade's HBA business is partially dependent on the halo of the Brocade switch brand.  I expect the recent surge in switch market share will ensure continued investment by Brocade in the HBA business and will add confidence to end-users considering a switch to Brocade HBAs.

It looks to me like Brocade HBAs are here to stay.  They have a steep hill to climb, but I look for Brocade to steadily gain market share as their worldwide sales team works unopposed in end-user accounts to convert the masses to Brocade branded HBAs.

Related Links

http://www.tolly.com/DocDetail.aspx?DocNumber=209102

http://www.brocade.com/downloads/documents/technical_briefs/HBA_Performance_GA-AG-114-00.pdf

http://www.virtual-strategy.com/VSM-Labs/Lab-Brocade-20090612.html