Executives can't yet spell out how channels will be integrated when Brocade's acquisition of Foundry Networks for $3 billion is finalized at year's end, but they are confident that partners from both sides will benefit
For their part, channel partners from both sides range from fully supportive to not knowing what to think of a merger that could potentially pull their company into a whole new market sector. And some analysts see sticky spots ahead in channel integration.
The acquisition of networking company Foundry extends Brocade's storage portfolio to cover the entire network from local and wide area networks to data center, storage and even carrier networks. It also sets the company up for next-generation data center play, combining Ethernet and Fibre Channel. Only networking giant Cisco Systems can rival that kind of reach.
"We as an organization are going down a path of integrated [technology] … we've seen the convergence of these two markets coming for quite a while," said Dan Schinsky, vice president of enterprise solutions at Relational Technology Solutions (RTS), a partner of both Foundry and Brocade. RTS provides solutions for voice, video and data networking, as well as data center/storage networks.
For RTS, the Brocade-Foundry merger means working with one company instead of two to provide an integrated solution. And regardless of how difficult mergers can be, Schinsky said the combined Brocade-Foundry technology will likely be strong enough to make the process worth it.
But not all value-added resellers (VARs) cover all markets like RTS. And a couple of specialized partners contacted said they had no idea how the Brocade-Foundry merger would extend their own technology offerings, so they couldn't comment until they had more information.
RTS's Schinsky said switching specialties is "not something you just go and turn on and say, 'Now I know.'" These are skills that are acquired over time.
"There are Foundry partners that are scratching their heads and asking, 'How do I fit into this model?' And there are Brocade people saying, 'How do I accept this into my practice?'"
Marty Lans, senior director for Brocade's data center infrastructure business, said he foresees partners from both channels getting into both ends of the business if they aren't involved already. He also doesn't expect huge channel conflict, because the technologies are complementary rather than competitive, and the two companies have different channel approaches.
"Brocade is primarily an OEM company and Foundry is primarily a channel company," Lans said. "The idea is to leverage those models." As for solution providers that already play in both markets, many are cross-certified between Foundry and Brocade, since it's not uncommon for the technologies to be integrated, he said.
Foundry partners may immediately see an opportunity to take on Cisco, which it has been battling in Ethernet technology for some time. Since the announcement of the acquisition, Brocade made no bones about admitting that it is aiming for Cisco. Until now networking vendors, including Foundry, have had to "pound their way" into enterprises to tell their stories, Lans said. That often happens in the shadows of Cisco's mammoth marketing machine.
"Now we can introduce Foundry inside-out from the data center," Lans said. "It's a different model altogether."
Of course, it won't be until the details of the channel program are worked out that potential problems could shine through. Some questions are already arising, including how Foundry's channel will fit into a predominantly OEM-based model and whether Brocade partners will get priority over Foundry.
The 451 Group noted in a report called "M&A QuickTake: Brocade + Foundry = Cisco?" that Brocade has a strong OEM relationship with Hewlett-Packard (HP), which might be difficult to preserve "given that Foundry's networking lineup competes fiercely with HP's ProCurve switches." Lans doesn't see that as a potential problem. He said Brocade has not had "friendly coopetition" (a term often used by Cisco), but full partnerships with all kinds of technology companies.
The 451 report also sees a potential clash in how the channels approach customers -- Brocade usually sells to storage and server IT staff while Foundry deals with network managers.
More than any channel conflict or culture clash, the Brocade and Foundry channels will have to face a much bigger problem -- Cisco's sheer girth. Cisco is a near $130 billion company, while the Brocade-Foundry duo will be in the $5 billion range. That said, Brocade's technology portfolio will position it ahead of a number of other networking vendors taking shots at Cisco, including Juniper Networks and Nortel, according to multiple analysts.
In the meantime, until the acquisition is finally approved, partners await the whole story. Brocade contacted RTS with the initial acquisition news, but Schinsky doesn't expect to hear more any time soon.
"We know this is good," Schinsky said. "Let them get their arms around this and have the answers ready."