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Brocade Communications Systems, Inc.

Type	Public (NASDAQ: BRCD)
Founded	1995
Headquarters	San Jose, California, USA
Key people	Michael Klayko, CEO
Industry	Networking Hardware and Software
Products	Fibre Channel backbones, switches, and directors; SAN extension and routing; network management applications; FCoE/CEE solutions; IP routing, switching, application traffic management, security, and wireless mobility products
Revenue	▲$1.47 billion USD (FY08)
Employees	4,000
Website	www.brocade.com

Brocade Communications Systems, Inc. (NASDAQ: BRCD), based in Silicon Valley, designs, manufactures, and sells networking solutions and management applications for local, metro, and wide area networks (LANs/MANs/WANs), as well as storage area networks (SANs), focusing on data center, enterprise campus, and service provider environments.

History

Brocade was founded in August 1995 by Seth Neiman (CEO and VC funding), Paul Bonderson (VP Engineering), and Kumar Malavalli (Standards and Technology). Dave Banks (Systems and ASICs) and Paul Ramsay (Software) came onboard immediately thereafter. Brocade released its first Fibre Channel switch, the SilkWorm, in early 1997 based on the "Stitch" ASIC and their own VxWorks-based firmware (Fabric OS or FOS). SilkWorm ultimately came to be a marketing designation for an entire line of switches, directors, and routers, with the first product being renamed the SilkWorm 1000 (SW1000) to distinguish it from subsequent platforms. Bruce Bergman was the CEO during most of this period.

In 1998, Gregory Reyes joined the company as CEO. During the next three years of the dot-com boom and bust, Brocade released its "Flannel" ASIC (which supported an FC-AL interface to a switched fabric), added many value-added fabric services (such as zoning and support for translating private loop devices into the fabric), and ultimately the next generation of switches based on the "LOOM" ASIC. In 2001, Brocade released the SilkWorm 6400, a semi-director product, made of a bunch of small switches integrated with a new management application, Fabric Manager 1.0.

From 2001 to 2003, Brocade released numerous switches and a director based on its third generation ASIC, "BLOOM" (Big LOOM). BLOOM introduced increased throughput of 2 Gbit/s instead of existing 1 Gbit/s. Brocade integrated BLOOM into its first director, the SilkWorm 12000, in April 2002. The director offered up to 128 ports in two 64-port domains, and run FOS v4.0 (which switched from VxWorks to Linux kernel). From an internal architecture and technical perspective, the 12000 was significant for Brocade in that it represented a change on five major fronts: it used a new ASIC (BLOOM instead of LOOM), had an upgraded control processor architecture (Intel i960 moved to PowerPC 405GP), changed the embedded operating system (switch from Wind River Systems VxWorks to MontaVista Linux in FOS v4.0), and shifted the system architecture (single motherboard with a single PCI bus to hierarchical PCI buses with hot-swap blades and a backplane). The Bloom ASIC was also the first product in the industry ever to offer hardware-based frame-level Fibre Channel trunking, which provided unmatched throughput through guaranteed even load balancing across multiple "pipes", while maintaining reliable and in-order frame delivery. Also hot firmware upgrade was introduced with FOS v4.1 in October 2003. Accommodation of all these changes mandated enormous modifications to the architecture.

At the time, Brocade's main rival, McDATA, held over 90% market share in director segment. The SilkWorm 12000 director quickly gained over one-third of the market share after its release in 2002. During this initial growth in the director market, Brocade gained the confidence of some customers from the toughest mainframe computer market, by bringing FICON and FICON CUP support to the SilkWorm 12000.

In 2003, the SilkWorm 12000 was named “Storage Product of the Year” by Computing, a European IT Publication.

In 2004, the BLOOM II improved on the previous ASIC design by reducing its power consumption and die size, while maintaining 2 Gbit/s technology. It powered Brocade’s second generation director, the SilkWorm 24000, which supported up to 128 ports in a single domain. The new director also used approximately two thirds less power than its predecessor. In this time frame, Brocade also introduced many additional value-added software features, acquired Rhapsody Networks (a SAN virtualization startup company), and delivered its first multiprotocol Fibre Channel router, the SilkWorm 7420. This was also the time frame in which Brocade first entered into the embedded switch market, delivering multiple switches physically integrated into other vendors' hardware, such as storage controllers and blade server chassis.

As of March 2009, Brocade had sold over 10 million SAN switch ports with over 44,000 directors installed, and held 75.5% of the overall SAN switch market (Dell'Oro Group, 1Q09 SAN Report).

Options backdating issues

In 2005, Gregory Reyes stepped down as CEO after being accused of backdating stock option grants. After spending about a year investigating these allegations, the Department of Justice (DoJ), through the US Attorney’s Office, the SEC, and the FBI filed criminal and civil charges against Reyes. In roughly the same time frame, the DoJ, SEC, and FBI also began investigating over 100 other companies for similar activities. Greg Reyes and Stephanie Jensen, the former vice president of HR, were charged with 12 counts of fraud.^[1] Two counts were dismissed, and on August 7, 2007, Reyes was convicted on the remaining 10 counts.^[2] On January 16, 2008, he was sentenced to 21 months in prison and ordered to pay a $15 million dollar fine.^[3]

Stephanie Jensen, Brocade's former vice president of human resources, was convicted in a separate trial.^[4] On March 19, 2008, she was sentenced to four months in prison and ordered to pay a $1.25 million fine.^[5]

As of May 2009, the convictions of both Reyes and Jensen were under appeal.^[6] On August 18, 2009 the United States Court of Appeals for the Ninth Circuit overturned Gregory Reyes' convictions and sent the case back to the lower courts for retrial.

Michael Klayko was named CEO in January of 2005, when Reyes left the company. Klayko was originally CEO and President of Rhapsody Networks, and had joined Brocade in 2004 as a result of the acquisition of his company.

Acquisition of McDATA

Starting in late 2005, Brocade rolled out a full range of 4 Gbit/s switches, embedded switches, and directors based on the "Condor" ASIC. Brocade continued its innovation with the new director, the SilkWorm 48000. This director has up to 384 ports and introduces NPIV along with other feature enhancements.

These new products helped fuel the company’s steady revenue growth in 2006.

On January 29, 2007, Brocade completed its largest acquisition to date by acquiring McDATA Corporation, one of its leading competitors in the Fibre Channel switch and director market, and launched a corporate-wide rebranding effort. Former McData devices are still sold by Brocade, under Mxxxx designation. Consequently, Brocade dropped the SilkWorm (SW) designation from its products' names starting with Brocade 5000 switch.

Since its beginning in 1995, Brocade has authored more Fibre Channel standards than any other company and it continues its technical leadership today. As of 2005, Brocade employees hold leadership positions in some of the industry’s biggest standards groups, including the T11 Technical Committees (INCITS), the Storage Networking Industry Association (SNIA), and the Data Management Task Force (DMTF).

Acquisition of Foundry Networks

On July 21, 2008, Foundry Networks management agreed to allow the company to be acquired by Brocade for approximately $3B in cash and stock.^[7] On November 7th, they agreed to a reduced purchase price of roughly $2.6B in an all-cash transaction when Brocade was unable to come up with a $400MM tranche of financing required to complete the original deal.^[8] A meeting was scheduled for December 17, 2008, where Foundry shareholders approved the amended agreement.^[9]

The acquisition was completed on December 18, 2008. According to Mike Klayko, CEO of the combined companies, "The close of the Foundry acquisition will significantly enhance our ability to deliver on our mission of connecting the world's most important information. Brocade will now be able to offer a comprehensive IP and data center networking solution portfolio capable of addressing emerging market technology trends while meeting the needs of the world's most demanding, data-intensive organizations." ^[10]

With the acquisition, Brocade added the former Foundry Networks BigIron, FastIron, IronPoint, IronShield, IronView, IronWare, NetIron, SecureIron, ServerIron, and TurboIron families to its product portfolio.

History of Brocade ASICs

1st Generation - 1997

• ASIC: Stitch
  • Ports per ASIC: 2
• Switches: SilkWorm 1000

2nd Generation - 1999

• ASIC: LOOM
  • Speed: 1 Gbit/s
  • Ports per ASIC: 4
• Directors: SilkWorm 6400
• Switches: SilkWorm 2400, 2800, etc.

3rd Generation - 2001

• ASIC: BLOOM and BLOOM II
  • Speed: 2 Gbit/s
  • Ports per ASIC: 8
  • Introduced ISL trunking (4-port groups called quads) and frame filtering
• Directors: SilkWorm 12000, SilkWorm 24000
• Switches: SilkWorm 3200, 3800, 3850, etc.

4th Generation - 2004

• ASIC: Condor
  • Speed: 4 Gbit/s
  • Ports per ASIC: 32
  • Introduced enhanced trunking (8-port groups)
  • Directors: SilkWorm 48000
  • Switches: SilkWorm 4100, 4900, etc.
  • Router: 7500, FR4-18i (Director blade)
• ASIC: GoldenEye (scaled-down Condor)
  • Speed: 4 Gbit/s
  • Ports per ASIC: 24
  • Switches: SilkWorm 200E

5th Generation - 2008

• ASIC: Condor 2
  • Speed: 8 Gbit/s
  • Ports per ASIC: 40
  • Directors: DCX Backbone
  • Switch: 5100 (1 ASIC, 40 ports)
• ASIC: GoldenEye 2
  • Speed: 8 Gbit/s
  • Ports per ASIC: 24
  • Switches: 300 (1 ASIC, 24 ports), 5300 (9 ASICS, 80 ports)

Brocade products

Brocade hardware

Brocade hardware products include Fibre Channel backbones, switches, and directors; Ethernet switches and routers; application delivery controllers (load balancers, etc.); fabric extension switches; embedded switch blades; Fibre Channel host bus adapters (HBAs); and converged networked adapters (CNAs). Other hardware solutions from Brocade support common protocols that include iSCSI, FCIP, GigE, FICON, FCoE, CEE, and Layer 2-7 networking protocols.

Product table (including historical products)

Brocade software

The Brocade product portfolio also includes a suite of network management applications.

• SAN Management Software
  • Data Center Fabric Manager (DCFM)
  • Enterprise Fabric Connectivity Manager (EFCM) (from McData)
  • Fabric Manager
  • Host Connectivity Manager (HCM)
  • SAN Health

• SAN Application Modules
  • Data Migration Manager (DMM)

• IP Network Management Software
  • IronView Network Manager (INM)

Awards and recognition

• 2002
  • Brocade Wins Product of the Year from Storage Magazine and Searchstorage.com

• 2003
  • Innovative Technology of the Year from ComputerWorld
  • Brocade 3800 Finalist in Network Computing "Well Connected" Awards
  • Brocade 3900 Chosen as Finalist in Datamation Product of the Year (Storage Category)
  • Brocade 12000 Director wins Product of the Year Award at Paris Data Storage Forum

• 2004
  • Brocade MultiProtocol Router wins Product of the Year Award at Paris Data Storage Forum

• 2005
  • Search Storage Gold Award: Mi10K
  • Well-Connected Award: SANavigator
  • StorageX Wins Network Magazine Innovation Award
  • StorageX Earns "Excellent" Rating from Redmond Most Valuable Product Evaluation
  • Brocade Router Wins Best FC Product of the Year

• 2006
  • InfoWorld Technology of the Year Award: Mi10K
  • Brocade SAN Director Wins Gold for Storage Product of the Year
  • InfoStor MVP Award for the Brocade 48000
  • Big Bytes SAN Award for Brocade 4900

Mergers and Acquisitions

• 2003 – Rhapsody Networks
• 2005 – Therion Software Corporation
• 2006 – NuView, Inc. Develops software solutions for enterprise file data management.
• 2007 – Silverback Systems, Inc. Provides network acceleration technologies.
• 2007 – McDATA. Key competitor in the Fibre Channel switch and director market.
• 2008 – Strategic Business Systems. Storage professional services company.
• 2008 – Foundry Networks. Ethernet Switches and Routers Maker.

See also

• Fabric OS
• Fibre Channel
• List of Fibre Channel switches
• Storage Area Network
• Application delivery controller

References

External links

• Brocade website
• Brocade's YouTube Video Channel
• Informational page regarding Foundry acquisition
• Dell Oro Group take on Foundry acquisition