Certainly investors can't be happy with the performance of their Brocade investment, now valued at one-tenth of its price as little as six months ago. Employees are probably even less satisfied. Brocade claims it has not lost many employees, but with their options so deep underwater, skilled staffers are bound to leave and take their experience and expertise elsewhere.
Brocade, which makes switches for Fibre Channel storage area networks, is also feeling the bite because of the economic downturn. Storage consumers, a conservative lot, are skeptical about investing in any technology that isn't yet sufficiently vibrant or popular with a large number of customers.
It would be different if Fibre Channel was less expensive. But Fibre Channel remains the most expensive storage interconnect in the market. What's more, with alternative technologies being introduced, Fibre Channel does not have enough of a foothold to defend itself from an Ethernet or IP networking industry that needs to expand its business. EMC's choice of Brocade's rival, McData, as the preferred switch platform will only accelerate Brocade's downward momentum.
The leaders of the storage industry are still the storage subsystem companies such as EMC, Network Appliance, IBM, Compaq Computer and Hewlett-Packard. All of these companies have developed Fibre Channel technology to some degree. Still, it is certainly not the most important piece of the puzzle for them. In any calculation, they will adopt new storage interconnects technologies that allow them to showcase their storage products most effectively.
iSCSI products are starting to come to market, and while they won't compete immediately with Fibre Channel SAN switches, it is only a matter of time before they do. After iSCSI will come InfiniBand, and then there will be additional pressure on Fibre Channel as DAFS technology is delivered. Where is the excitement and push to revive Fibre Channel? Those days of excitement and mystery are over. Even if these other technologies take a couple years to launch, what is a year or two in the big picture of infrastructure technology developments? Fibre Channel is already as good as dead--as sure as FDDI is. The question facing Brocade is whether it will be able to change its stripes and create new technology based on Ethernet, IP and InfiniBand.
It is quite possible that Brocade can make this transition. Although Cisco may like to think customers will automatically line up, its products need to work much more effectively in storage applications. But though it may take Cisco a few attempts to get it right, that interregnum won't last forever, especially when one considers the current availability of storage network engineers.
So when does Brocade face up to the new reality and make this change?
Herein lies the problem.
As the last viable Fibre Channel supplier, Brocade faces a dilemma: If the company announces plans to switch technologies, it will kill Fibre Channel in its tracks. If Brocade fails to go full-force into new technology areas, it will shrivel up and fade away. That is the hard reality of life at Brocade these days.