Brocade Communications Systems maintains silky smooth computer network operations. A leading supplier of data center networking products, Brocade makes Fibre Channel switches and related software for connecting corporate storage systems and servers. Its products are used in storage area networks (SANs), which pool storage resources across enterprises for easier management and more efficient asset utilization. The company's SilkWorm switches reroute data upon path failure and reconfigure the SAN when new devices are added. Brocade's products support Internet connectivity and enterprise mobility, as well as key technologies such as virtualization and cloud computing. It generates about 60% of sales from the US.
Brocade's products are made by such contract electronics manufacturers as Hon Hai Precision (Foxconn Electronics), Quanta Computer, and Sanmina-SCI. The company also relies on Flextronics International for service repair.
Data storage products -- which include switches, directors, and other products used for SANs - account for nearly 60% of sales. Ethernet products (switches and routers for network connectivity) and global services (maintenance, installation, consulting, and other assistance) contribute about 25% and 15%, respectively.
The company generates nearly 40% of sales outside the US, including about a quarter from the EMEA region. The Asia-Pacific region, including Japan, accounts for nearly 15% and is by far Brocade's fastest-growing geographic segment.
Sales & Marketing
Brocade sells directly, as well as through systems integrators, distributors, and value-added resellers. EMC, Hewlett-Packard, and IBM together generate more than 40% of the company's sales.
Brocade has experienced solid growth over the past half dozen years; revenue rose about 3% in fiscal 2011 (ended October 31) to nearly $2.2 billion as a result of strong Ethernet product sales and growth in the Asia-Pacific region. Although data storage products and global services were both flat in 2011, the Ethernet segment grew 13% year-over-year on demand from enterprise and service provider customers. In the Asia-Pacific region and Japan, Brocade saw growth of 23% and 28%, respectively.
The company's profitability took a tumble in fiscal 2011, falling more than 55% to about $50 million. In addition to increased operating expenses, Brocade recorded a nearly $13 million loss on the sale of its Strategic Business Systems subsidiary.
To stay competitive and ahead of the trends in virtualized and cloud computing, Brocade is focused on product development and partnerships. In 2011 the company joined with Avnet to build virtual compute blocks and integrate them into its CloudPlex architecture platform. It entered into strategic partnerships with VMware and McAfee the previous year.
Another focus for the company is the Asia-Pacific region, where Brocade sees great opportunity for virtualization and cloud computing products. In early 2011 the company initiated a $100 million evaluation program to help Asia-Pacific customers use Ethernet fabrics in highly virtualized data centers. The following year it joined with Fujitsu Australia and New Zealand to provide network switching products for the High-Performance Supercomputer (HPC) at the Australian National University's National Computational Infrastructure data center.
Brocade sold IT services subsidiary Strategic Business Systems in 2011 to focus on its core operations. – less