McData & Riverbed: A Rumored Pair

Twenty-two months after Cisco acquired Actona and nine months after Brocade bought a piece of Tacit, switch vendor McData is getting into the wide-area file services (WAFS) game.

Sources say McData and Riverbed Technologies will unveil an OEM arrangement later this month for McData to rebrand and sell Riverbed's Steelhead appliances. (See Riverbed Fords WAN/WAFS Divide and Riverbed Extends Family.)

The potential arrangement makes sense. As remote sites proliferate, storage and networking vendors are increasingly interested in WAFS and WAN optimization products that streamline data delivery to those sites. (See Remote Access Advances.) The market for products like Riverbed's that bridge WAFS and WAN optimization has been rife with acquisitions and partnerships -- and McData has been on the sidelines.

Riverbed would neither confirm nor deny the deal, and McData did not return calls for comment by press time.

The would-be twosome are Johnnies-come-lately. Cisco spent $82 million for Actona and added another WAFS startup, FineGround, for $70 million last May. (See Cisco Acts on Actona and Cisco Chomps FineGround.) Also last May, Brocade invested $7.5 million for a stake in Tacit and a product reseller deal. (See Brocade Invests in Tacit.) Network switch vendor Juniper Networks bought startup Peribit for $337 million last April. (See Peribit Deal: More to Come.) And Riverbed signed a deal last May with storage vendor Hewlett-Packard to use its software in HP's WAN accelerator product. (See HP Upgrade Features OEM Crowd.)With its major storage switch competitors, Brocade and Cisco, already in the space, it's no surprise McData wants to wade into WAFS. And with Cisco, Brocade, and Juniper in the market, Riverbed can use the help of an established storage vendor.

"Cisco moved down the path via acquisition and Brocade moved down the path via investment, leaving McData as the only SAN switch vendor without a WAFS strategy," says one analyst, who asked not to be named. "Riverbed is the other major player that's not involved with Cisco or Brocade, so you can piece it together."

Although McData waited longer than its competition, it is picking a partner that storage and financial analysts consider the market leader. Riverbed claims more than 500 customers and is just starting to see sales through the HP deal. Meanwhile, Cisco and Juniper have found their WAFS integrations going more slowly than expected.

Riverbed apparently isn't for sale or looking for investors now. CEO Jerry Kennelly has been sending signals through the financial community that he wants to take Riverbed public this year. Kennelly told Byte and Switch earlier this year he expects to be profitable by the end of 2006.

"McData would probably like to buy Riverbed," says a Wall Street analyst who follows the switch maker. "But they can't afford them."Other WAFS and WAN optimization startups include Availl, Certeon, DiskSites, Expand, Orbital Data, Packeteer, Signiant, and Silver Peak -- and they're likely looking for their own partnerships.

Dave Raffo, Senior Editor, Byte and Switch

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