Brocade’s new CEO Lloyd Carney said one of the reasons he took the job is because he sees an exciting future for Fibre Channel storage networks.
On Brocade’s earnings call Thursday, Carney spoke on the record extensively for the first time since replacing Mike Klayko as CEO last month. He said technologies such as virtualization, cloud and flash create more demand for FC, especially the newer 16 Gbps switches that Brocade has been selling since mid-2011. Brocade has had the 16-gig switch market to itself because its main rival Cisco has yet to upgrade from 8 Gbps. That is expected to change over the next few months, but Carney and other Brocade executives said Cisco’s entry to 16-gig should pump even more life into FC storage.
Although Brocade has spent a lot of resources developing the Ethernet switching business since acquiring Foundry Networks in 2008, it has continued to lead FC switching market share. Brocade has taken the approach that FC will continue as the dominant storage protocol for the foreseeable future while Cisco maintained the future of storage lies in Ethernet and converged Fibre Channel over Ethernet (FCoE) networks.
“One of the reasons I joined Brocade was it was clear to me from the outside looking in was that Fibre Channel wasn’t dead despite the cloud that our friends at Cisco had put on it,” Carney said. “FCoE didn’t take over the world, and Cisco has drawn back from that now that FCoE has become a bit player in the overall scheme of things. Every trend that’s out there in storage points back to Fibre Channel.
“Fibre’s not dead anymore … I’m confident in the growth of Fibre Channel.”
Carney’s last job was CEO of I/O virtualization startup Xsigo Systems, which Oracle acquired last year. Carney has a lot more experience in networking than storage but said the “SAN market continues to represent an exciting opportunity for Brocade.”
Jason Nolet, VP of Brocade’s Data Center Networking Group, said he welcomes Cisco’s move into 16-gig FC.
“We expect that product to be in the market in the first half of the year and, candidly, we’re excited to see that happen,” Nolet said. “We’ve been telling you guys quarter after quarter that the Fibre Channel market is alive and well and growing, and customers want to continue to invest. We’ve been a lone voice there until now. The fact that Cisco was pushing an Ethernet-only agenda and an FCoE agenda almost exclusively the last several years, and they’re now coming forth with a dedicated Fibre Channel product, is the best testament of all to the strength that remains in this market.”
Brocade reported $362 million in SAN product revenue last quarter — its highest ever — compared to $140.5 million from Ethernet networking and $86.5 million from services. And 42% of its storage revenue came from 16-gig directors and switches.
Brocade projects the demand for storage capacity will increase 37% per year over the next five years. “And as long as storage demands increase, the demand for Fibre Channel will also increase,” Carney said.