Cisco's Secret SAN Strategies Revealed

Cisco Systems Inc. (Nasdaq: CSCO) isplanning a two-pronged assault on the storage area network (SAN) market.

The forthcoming campaign represents Ciscos most significant newdirectionsince it spent billions to smash its way into the optical networkingmarketby acquiring Cerent and Monterey back in 1999. And it could be bad newsforBrocade Communications Systems Inc.

(Nasdaq: BRCD), the current SAN market leader.

Stage one of the Cisco SAN campaign kicks off next month when thecompanyplans to announce the SN 5420 Storage Router, Light Reading haslearned. The device comes courtesy of Cisco’s acquistion ofNuSpeed Internet Systems in September 2000. It has two ports, which are implemented by cobbling together a gigabit Ethernet

Intel adapter and a QLogic Fibre Channel card, and will run theiSCSI(SCSI over IP) protocol.

However, it appears that Cisco’s first SAN announcement is little more than afeint -– a stopgap until Cisco can bring its heavy weapons into play.Thoseare currently under development at a stealth-mode startup called Andiamo Systems Inc., which iscontrolledby Cisco.

Andiamo is ostensibly an independent startup equipment vendor -- onethat isstill operating in stealth mode. In fact, Light Reading haslearnedthat it is a “spin-in” operation. In other words, Cisco has set it upwiththe express intention of acquiring it –- amidst suitable fanfare –- onceithas completed product development.It’s not hard to demonstrate the close connections between Andiamo andCisco. The company’s address, 375 East Tasman Drive, San Jose, is on the

Cisco campus (a fact that Cisco’s security office was kind enough toconfirm).

Further, like other members of Andiamo’s executive team, Tom Edsall, whoislisted on Andiamo’s Website as its cofounder and chief technologyofficer,can be reached through the Cisco switchboard. Edsall’s voice mail eveninstructs callers to send email to “[email protected]."

Andiamo is working on a “very large” SAN switch, one with more than 100ports, that will support both gigabit Ethernet and Fibre Channel,accordingto a source at a venture capital firm in Silicon Valley who claims to be

familiar with the operation. The device is not expected to ship for atleast18 months, the source says.

According to another source at one of Cisco’s competitors, the person in

overall charge of the Andiamo project is Mario Mazzola -- senior VP ofCisco's Enterprise Line of Business and formerCEO and cofounder of Crescendo Communications, the LAN switch companyCisco bought in September 1993.(The Mazzola connection might explain the name: Andiamo means “let’s go” in Italian.)

The source says the new product will be based on a new version ofCisco’sCatalyst LAN switch, currently under development, equipped with new line

cards that are being developed by Andiamo.Others think that combination makes sense.

“It wouldn’t surprise me that Cisco was basing it on the Catalyst follow-on,” comments Randy Fardal, vice president, marketing, Nishan Systems, a SAN startup.

Cisco’s decision to aggressively target SANs is both an obvious and asensible one.

Consider: The internetworking giant is already facing increasingcompetitionto its existing product lines -– especially core Internet routers. Rival

Juniper Networks Inc. (Nasdaq: JNPR)isstealing market share at an accelerating rate (see Report: Juniper Still Gaining On Cisco) andrecently proved that it has a superior product (see:http://www.lightreading.com/testing/).

In order to increase revenues and resuscitate its share price (which has

tumbled almost seventy percent in six months) Cisco must move into newmarkets. That’s what it has already attempted to do with opticalnetworkingequipment. (With mixed results: On the one hand, its ONS15454 utterlyredefined the marked for Sonet equipment. On the other, the WavelengthRouter it acquired when it bought Monterey is still lost in space (see

Cisco Preps New Optical Switch ).Storage area networking could provide big, bloated pickings for Cisco --thesort of cash cow that it hasn’t enjoyed since its dominance of theroutermarket in the 90s. Bluntly, the SAN market is huge (see Storage Networks Supernova). And unlike optical transport equipment, Cisco already has thein-house expertise and familiarity in Ethernet and IP to hit a SAN homerun(one reason why it’s chosen to develop the Andiamo product via aspin-in,rather than an acquisition).

Cisco’s strategy has grave implications for other players in the SANsector – especially Brocade, which currently enjoys about 60 percent of

that market. Brocade, however, shrugs off the Cisco challenge.

"By the time Cisco could get a big SAN product out, Brocade will beas dominant in SANs as Cisco is in the IP WAN market," says Jay Kidd, Brocade’s vice president ofproductmarketing. "It's unclear whatbenefitCisco would have from trying to compete with us in SANs."

Brocade’s insouciance surprises other SAN players.

“It puzzles me. They seem oblivious to the fact that Ethernet and IPalwayswin, and are missing the IP-based storage boat altogether. They are anenigma,” says Randy Fardal, of

Nishan Systems.Being enigmatic is good for actors in daytime soaps, but it’s likely togetyou tarred and feathered by your competition in the networking industry(think IBM and LANs, or 3Com and anything). Brocade currently sells eight- and 16-port Fibre Channel switches. Ithas nogigabit Ethernet products (not even for ready money).

Cisco confirmed that it will announce the SN 5420 next month. Itdeclined tocomment on the rest of the story.

-- Stephen Saunders, US editor, Light Reading http://www.lightreading.com