Cisco SAN Share Slumps As HP And IBM Switch To BrocadeCisco SAN Share Slumps As HP And IBM Switch To Brocade

Cisco's recent entry into the server business has caused two of its former partners, HP and IBM, to retaliate by buying more high-end SAN switches from Brocade rather than from traditional supplier Cisco. The result: "a landslide shift in market share in just one quarter."Indeed, Brocade's market share rose 14 points in the first quarter while Cisco's fell by the same amount, reports researcher Dell'Oro Group in an article in Investor's Business Daily. CIOs must be enjoying these developments because enhanced levels of competition always result in more choices, more flexibility, and more value.

Such are the contortions of the free-market system, and those gyrations are particularly intense these days in the IT business as many leading companies are breaking out of their traditional and sometimes narrowly defined roles as customer needs and buying patterns change. As a quick example, the hardware business: Oracle's now in it via its Sun acquisition, while IBM has dramatically limited its involvement to specific high-margin hardware sectors.

For Cisco, the big shift came in March when it introduced its Unified Computing System, which incorporated into one package the formerly disparate elements of computing, networking, and storage. In so doing, Cisco moved from being a huge but somewhat narrow supplier of networking and security products to being a broad-based supplier of enterprise-level infrastructure.

Cisco made that move to make itself even more relevant for business customers, and Cisco was clearly willing to accept that benefit in return for stirring up some hard feelings among former industry partners like IBM and HP, whose traditional turf Cisco stomped all over with its Unified Computing System move.

Tam Dell'Oro, founder of the research firm that bears her name, told Investor's Business Daily that as a result of HP and IBM spurning Cisco in favor of Brocade for high-end SAN switches, "There's been a landslide shift in market share in just one quarter" because "Brocade is directly benefiting from the channel conflict."

The IBD article also included this forceful conclusion from a financial analyst who also pegged much of the upheaval in that market sector to Cisco's move into new territory:

"Brocade is taking "meaningful share" away from Cisco, according to a recent research note from Ryan Hutchinson of Lazard Capital. Cisco's storage-switch sales bookings fell 45% year-over-year in the first quarter, Hutchinson says. "While we believe that Brocade's strong product portfolio had much to do with this development, it seems likely that Cisco's moves into the data center have begun to agitate and undermine its relationships with key ... players," he wrote."

So, now we know: payback's a switch.