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Cisco slugs FTC-addled McData

Brocade confused

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Cisco Systems appears to have made the most out of FTC scrutiny surrounding the union between Brocade and McData.

Data released by market analysts at Dell'Oro Group shows Cisco gaining steady ground in the storage area network switch market over the last year and sales of McData, a recent acquisition of SAN switch market leader Brocade, dropping.

From 2005 to 2006, Cisco's share of the switch and HBA market rose 2.2 per cent, while McData's dropped 2.6 per cent.

Brocade stuck back against the report, criticizing the numbers as an inaccurate comparison of the competing Fibre Channel switch makers. While Brocade and McData presented the analysts figures based on their fiscal quarters, Cisco assisted Dell'Oro with numbers for its calendar quarters.

Brocade's qualms with the report, however, were not so strong to keep them from citing Dell'Oro in a press release boasting Brocade's extended lead in the overall switch and HBA (host bus adapter) market in calendar 2006. According to the report, Brocade controlled 31.8 per cent of the market in 2006.

Cisco grabbed 16 per cent of the market - up from 14 per cent in 2005 and 10 per cent in 2004. It sold $393m of Fibre Channel gear in 2006, which compares to $787m in sales for Brocade.

McData, meanwhile, struggled in 2006 with its share of the switch and HBA market dropping to 15.8 per cent from 18.4 per cent in 2005. Sales also slipped to $392m from $402m, according to Dell'Oro.

Tam Dell'Oro, the analyst company's president, said the reason for McData's loss might have been largely due to an ongoing FTC anti-trust investigation into the acquisition of the company by Brocade.

For three months ending in December, McData was not yet formally a part of Brocade. This meant Brocade had to continue acting as a separate entity from McData, and with the FTC watching closely, Brocade was unable to aggressively go after McData customers, said Dell'Oro. Meanwhile Cisco was able to charge the market without any such restraints.

"To use a sports analogy," said Dell'Oro on Brocade's situation, "if both companies were boxers — because of the FTC — one of the fighters had an arm tied behind their back." ®

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