Brocade Aims for Global Mobile Domination
With the planned acquisition of Connectem announced earlier this week, Brocade is looking to take its mobile technology provider business from zero six months ago to market domination.
"We anticipate that mobile operators want to migrate from physical to virtual, like everyone else. Hence the rationale behind the Connectem acquisition. All of a sudden we're a leading EPC vendor, and all of a sudden we are at the core of mobile networks," says Ken Cheng Brocade, CTO and senior VP of corporate development and emerging business. (See Brocade to Acquire Connectem for Virtual Mobile Networking .)
Mobile is increasingly important to service providers, and Brocade needs to follow those customers' needs. "The mobile side is the growth engine for the industry," says Cheng.
The Connectem buy, announced Monday, is the latest of three acquisitions that will take Brocade Communications Systems Inc. (Nasdaq: BRCD) in new directions, Cheng says.
Brocade acquired Vyatta in 2012, which gave Brocade a virtual services platform that it has continued to build on, Cheng says. Vyatta provides a virtual router, firewall, network address translation (NAT), VPN and anti-intrusion protection services. "So you have a core set of virtual functions that operators and enterprises value. In fact, if you think about NFV, those are the typical virtual functions that people think of," Cheng says. (See Brocade Buys Vyatta for Software Routing Smarts.)
The Vyatta acquisition gave Brocade virtual technologies to complement its physical infrastructure portfolio.
Brocade was quiet on the acquisitions front for a couple of years, coming back to life six months ago with the acquisition of Vistapointe in September. (See Brocade Buys NFV Management Smarts.)
The Vistapointe acquisition got Brocade into the mobile networking market. Vistapointe provides virtual network analytics for mobile networks and gives Brocade a foundation for network analytics, Cheng says.
Brocade acquired the SteelApp virtual application delivery controller (ADC) line from Riverbed Technology Inc. (Nasdaq: RVBD) a month ago. "As customers migrate from physical to virtual appliances, a single function which used to be implemented as a physical appliance will be replaced by a number of virtual machines for those services. As a result, the demand for load balancing and application delivery is going to be critical. That's the rationale behind the acquisition of SteelApp from Riverbed," Cheng says.
Which brings Brocade to Connectem.
Cheng will head up Connectem when the acquisition closes, expected to occur by the end of April, Brocade's second quarter. The current CEO of Connectem, Nishi Kant, will report to Cheng.
Connectem provides a virtual Evolved Packet Core to add to Brocade's product portfolio, as well as expertise in mobile and networking software development.
Telekom Austria AG (NYSE: TKA; Vienna: TKA) last week announced it is working with Connectem and other vendors to provide virtual voice over LTE service. (See Telekom Austria Builds Multi-Vendor NFV 4G Core .)
"Brocade has been a longtime strategic investor in Connectem," Cheng says. In fact, Cheng sat on the Connectem board.
The company has 35 employees. Brocade plans to keep them all on -- no layoffs. "They're going to be a valuable group of employees for us," Cheng says. "They have deep mobile, network virtualization and software development expertise."
Brocade does not plan to go head-to-head with incumbent vendors in mobile, Cheng says. Rather, Brocade is focusing on emerging markets -- machine-to-machine, Internet of Things, small cells and mobile data services for the enterprise sector.
What Cheng didn't say is that the incumbents are focusing on those markets too -- Cisco Systems Inc. (Nasdaq: CSCO), for example, is making a big deal of the Internet of Things, which Cisco calls the "Internet of Everything." (See Cisco CEO: Get Ready for New Digital World .)
With its new vEPC, Brocade expects to rapidly drive down the capex cost of infrastructure and do a better job scaling the virtual packet core to meet requirements of the new network, which has new traffic patterns compared with consumer mobile services.
Consumer mobile services are usually heavy on the data plane, but light on the control plane, Cheng says. For example, video traffic doesn't put much of a load on the control plane to set up a connection, but then moves a lot of data over that connection.
IoT traffic is the opposite -- billions of devices, such as sensors, opening calls rapidly, but sending small amounts of data over each connection, Cheng says.
Currently, networking providers pay license fees per subscriber per function -- often $1 per subscriber. License costs will need to be an order of magnitude lower per subscriber to meet the demands of billions of IoT devices, compared with millions of conventional IoT users, Cheng says.
Is Brocade planning further acquisitions? If so, which companies? Cheng declined to say, though he did say the company is open to opportunity. He also noted that Brocade is focused on software-centric technologies, SDN and NFVs, with relevance to service providers, network operators and high-end enterprise.