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Foundry's Next Move

1:45 PM -- Who'd have thought Foundry Networks could wind up in the hands of Oracle Corp. (Nasdaq: ORCL)?

Foundry's mother ship, Brocade Communications Systems Inc. (Nasdaq: BRCD), is scouting for a selloff, with likely candidates being HP Inc. (NYSE: HPQ) or Oracle, according to today's Wall Street Journal. The story says it's all talk right now, with no deal imminent.

In raw size, it would be a bigger deal than Cisco Systems Inc. (Nasdaq: CSCO) buying Tandberg ASA (OSE: TAA). (See Tandberg Deal Boosts Cisco's Video Plans.) Brocade's stock valuation was $3.2 billion; a 17 percent increase today brings that to $3.8 billion.

HP seems the more likely buyer (but made for a less interesting lead-in!). We keep hearing rumblings about how ProCurve is getting taken more seriously inside HP. More importantly, Brocade would beef up HP's data center story against the growing threat from its "partner," Cisco. (See Cisco Dreams of Data Center Unity and Cisco's Cloud Story.)

An Oracle deal could be fun to watch, though. As a followup to the pending Sun Microsystems Inc. acquisition, it would answer the question of whether Oracle wants to get that deeply into hardware.With Foundry and Brocade gear, Oracle would be offering nearly every aspect of a data center except disk drives and coffee cup holders.

— Craig Matsumoto, West Coast Editor, Light Reading

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desiEngineer 12/5/2012 | 3:55:01 PM
re: Foundry's Next Move

"Oracle would be offering nearly every aspect of a data center except disk drives and coffee cup holders"



Haven't we established they are CD-ROM drives or what?


-desi

Sisyphus 12/5/2012 | 3:54:59 PM
re: Foundry's Next Move if their admission card consists of buying up the companies that were shaping up to be losers in the game, well, good luck to them. :-) the Oracle recipe to lock in customers would and will not work in the HW business. let's watch their assimilation of Sun before we see them entering networking...
that said, it is going to be a fun game with ever bigger companies trying to own more layers and stovepipes in the enterprise infrastructure, all the while claiming integration and synergy and agility and what not.
by the way, what is up with this posting window, it is microscopic - are we just supposed to twitter in here or what? :-)
bollocks187 12/5/2012 | 3:54:58 PM
re: Foundry's Next Move

This is crazy networking days......here are some crazy thoughts.....


1) Brocade is already having trouble assimilating Foundry gear already. Brocade  folks are like a deer in headlights when you try and talk netgworking. They have no clue about networking outside the data center. There are only so many data centers out there for Brocade.


2) Oracale would be a distaster - they are software geeks and have zero clue on hardware.


3) HP might be a good fit except that well the do well with HP Procurve - but have a dirty hidden secret. They provide life time warranty and support on many of their products to essential win over entreprise customers. The down side is they have a huge hidden support and warranty debt as a result of this gimmick - it is one of the main reasons why the dividision has never been able to spin out of HP.


4) IBM ???


 

Pete Baldwin 12/5/2012 | 3:54:58 PM
re: Foundry's Next Move

Sisyphus, you're right about Oracles recipe of locking in customers.  I would think Oracle will need to adapt to new patterns of business (or at least new patterns of M&A) if they really want to be in hardware.


Wouldn't it be interesting to see an Oracle/Cisco rivalry in hardware?  Imagine the spectacle. Larry Ellison would be raging across the seas on his sailboat, while John Chambers.... uh, yells at him via telepresence. OK, maybe this needs work.


As for the size of the posting window -- it looks plenty big on my machine, so it might be a byproduct of certain OSes/browsers/phases of the moon. If you email specifics to [email protected], we can ask our tech guys about it.


Pete Baldwin 12/5/2012 | 3:54:58 PM
re: Foundry's Next Move

Desi -- If you're referring to the Calix patent, it appears from this picture that it's a purpose-built coffee holder, not a workaround:


http://www.lightreading.com/document.asp?doc_id=35497&image_number=1


Truly sets the bar high for anyone like Oracle that's hoping to get into the coffee-holding market.

sjd6 12/5/2012 | 3:54:55 PM
re: Foundry's Next Move

Crazy is right. I don't understand why Brocade needs to be sold. Is this so the execs can negotiate a merger bonus? I believe the employees of Brocade would be better off long term not being sold to some massive company.

Pete Baldwin 12/5/2012 | 3:54:54 PM
re: Foundry's Next Move

More craziness: What if Juniper bought Brocade?


http://blogs.wsj.com/digits/20...


(WSJ blog, might require a paid subscription)


The rationale seems to be: Juniper hasn't bought anything big, and everybody needs to buy something big.


I can see how Juniper would covet Brocade's data-center business.  But just about all of Foundry would be tossed into the trash compactor, wouldn't it?  Products would either be redundant or would have to be ported to JunOS.  I'm having trouble with this one.


 

^Eagle^ 12/5/2012 | 3:54:52 PM
re: Foundry's Next Move

FYI,


I too think that Oracle buying Foundry would be a mistake for BOTH parties.  I just don't think the "oracle strategy" of locking in customers with their platforms is the reason.  Lots of reasons this will have difficulty or ultimately fail.  


I think some of the posters have pointed out the cultural differences between running a software business and a hard ware business.  


Sailboat. 

^Eagle^ 12/5/2012 | 3:54:52 PM
re: Foundry's Next Move

Sisyphus, you state that "the Oracle recipe to lock in customers would and will not work in the HW business."


Well then, I would ask you, what do you think about Cisco?  isn't this also their strategy?  I can find lots of other examples and companies of exactly this strategy working in HW.


There may be other reasons such a buyout would have challenges.  But not the strategy as you have outlined it.


Frankly this is the strategy for almost all high end hardware deals.  Lock in customers and milk it for a long time.  Think of all the big SONET or DWDM builds in North America.  You never see carriers mixing and matching gear.  Each build out tends to have same gear coast to coast, whether it is IP routing, optical transport, SS7 switches, etc.


Fighting for these big network builds is precisely about locking in as a HW supplier for the long term.


I agree, that in smaller IT shops, there is a willingness to shop around.  but in big data centers?  


There might be things wrong with the acquisition, the technology, the platform, etc....  But the strategy is sound in terms of your comment.


Will they be successful?  that is a different question.  But I would say, every attempt in the past to discount Oracle and Larry Ellison has generally met with failure.  He has far more money and success than I or really 99.9999% of us here on this board will every be able to approach.  So he might know a thing or two.  We shall see.


sailboat

Sisyphus 12/5/2012 | 3:54:51 PM
re: Foundry's Next Move

i agree every company declares customer lock-in a top priority. but the fact is that large hardware deals almost always result in dual sourcing. i don't of any true single vendor large infrastructure out there. even those that have seemingly single vendor approaches constantly evaluate other vendors and the ability to bring them in.


in software -very different deal. you can not run a dual Oracle and SAP strategy for the same application. it'd be insanely expensive to do so. you go single vendor, and then you invest so much into it that the replacement cost is impossible to imagine. ask enterprise architects about replacing Oracle... heavens, it's like asking an egyptian pharao when he plans to upgrade his pyramid...

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