Brocade rapturous about Rhapsody

Fibre Channel switch vendor Brocade Communications announced Tuesday that it would acquire start-up Rhapsody Networks for $175 million. Brocade will integrate Rhapsody’s applications-based multi-protocol director-level switching technology into its products for enterprise storage area networks.

Brocade has been rumored to be on the acquisition hunt ever since Cisco announced its own acquisition of Andiamo Networks’ director-level Fibre Channel switches in August. Rhapsody, while not having announced any products yet, is known to be making director-level switches of its own that will host applications such as virtualization and replication software.

“My first take [is to] wonder why [the acquisition] is valued at this level, because it isn’t clear that Rhapsody has been in the market for that long,” says Jamie Gruener, senior analyst with the Yankee Group.

Brocade leads the market in entry- and mid-level fabric switches, but trails McData and InRange in the director-level area, according to IDC. One year ago, Brocade announced a 128-port director-level switch of its own, which it shipped earlier this year and positions in this high-end market.

The company has been more concerned, however, according to sources, about the effect Cisco’s entry will have on the Fibre Channel market than on shipping products into the director-level space. Brocade’s acquisition of Rhapsody, observers say, reflects a direct reaction to Cisco’s entry into a market it plans to dominate.

“There is increased pressure on Brocade to do more [in this area] and accelerate its technology quickly if it is going to compete against Cisco,” says Gruener. “Cisco will offer incentive programs and affect when customers purchase additional storage networking gear based on the fact that a lot of customers are waiting for Cisco’s products to come to market and be certified with storage OEMs.”

Brocade will, as the result of the acquisition, market what it terms “application switches” – Fibre Channel switches that work with software and hardware from OEMs and software vendors that allow the hosting of volume management, replication and data management applications.

Cisco previously announced that it would partner with Veritas as a member of its Veritas Powered Program to integrate Veritas software into its switching platforms.

The deal is expected to close in January. Rhapsody is presently shipping development products to OEMs.

Brocade estimates that customers will be able to purchase products resulting from the acquisition by the end of 2003.