"Much has to do with Oracle's long-term growth plans," states Oppenheimer & Co. analyst Ittai Kidron in a bulletin on the Brocade speculation. "If the company truly plans to become a systems company (one-stop shop software/hardware), then Brocade would be a nice fit, especially including Sun Microsystems with no overlap. We're a bit in the dark on strategy here.
On HP, Kidron writes: "Brocade would add the missing data center switch architecture as well as a strong presence in the SAN switch market. That said, there would be massive overlap with HP's ProCurve networking unit, which we believe would be disruptive. Also, IBM and EMC are 10% customers for Brocade and could be lost as customers (along with HP's 10% business of Brocade)."
If HP acquired Brocade, business from IBM and others could swing back to Cisco, according to UBS analysts Nikos Theodosopoulos.
A dark horse in the Brocade stakes would be Juniper, according to investment firm UBS. Juniper and IBM are tightly aligned in data center and cloud computing, and a Brocade acquisition would flesh out much of what’s missing in the IBM/Juniper data center arsenal -- specifically, an FCoE line of switches.
"We believe Juniper may be another potential buyer of Brocade, although recent commentary from Juniper suggests it is not looking at large deals now," UBS analyst Theodosopoulos states in a bulletin on the prospects of a Brocade acquisition. "An acquisition of Brocade would make sense for Juniper, in our view, because it is the only other clear networking partner for IBM, while IBM is currently supporting Juniper's development of an FCoE switch, alleviating some of the R&D budgetary constraints on Juniper as it pursues both LTE & FCoE technologies."
Juniper has a major announcement slated for Oct. 28 in New York. Speculation has it the company will flesh out its Project Stratus cloud computing strategy and/or announce a significant alliance or acquisition with a major IT player.
IBM may also be interested in Brocade but that would dash its Juniper partnership, kill HP and EMC as 10% revenue customers, and get IBM back in the network and SAN hardware business which may not appeal to the company, Kidron notes.
Another wild card is Dell. Acquiring Brocade would give Dell, a maker of servers for the data center, more credibility in that market with minimal overlap, according to Kidron. But Dell just acquired Perot Systems last month for $4 billion so the prospects of making another major acquisition so soon after is remote, Kidron states.
That doesn't necessarily rule them out though.
