McDATA may be giving competitors Brocade and Cisco fits in the storage switch space, according to new analyst reports.
Michael Jung of SG Cowen recently reported that IBM continues to lower list prices on Cisco’s MDS storage switches, indicating that IBM faces a “challenge to spur demand for Cisco’s storage switches. Our price analysis shows that…McDATA still maintains a significant price/performance advantage.”
And Thomas Weisel analyst Jason Ader said this past week that McDATA’s Sphereon 4500 is giving Brocade a run for its money in the fabric switch space, also because of price/performance advantage.
IBM announced the third price cut on the MDS 9216 fabric switch and the first price cut on the MDS 9509 switch, modules, and on-site maintenance charges, Jung wrote. “Four months after IBM initial pricing was announced, we believe IBM is still trying to find the right price customers are willing to pay to give Cisco a try.”
Cisco acquired its storage switch technology from Andiamo last August.
With IBM price cuts of 11%-45% on Cisco’s switches since February, “we believe that this data point reinforces our thesis that Cisco’s progress in storage networking will be slower than most people expect,” Jung said.
Even with the price cuts, McDATA’s 4500 is still 50%-60% less than Cisco’s 9216 and about 30% cheaper than Brocade’s 3800, according to Jung. “We continue to believe that the 4500 is gaining significant share due to price, port flexibility, and high-availability features.”
At the high-end director segment, McDATA also maintains a price advantage of 13%-44% over Cisco, depending on the configuration. For comparison, SG Cowen said it used pricing on Cisco’s 16-port module, which is not oversubscribed (every port can run at the full 2Gbps speed), unlike the 32-port module.
For Brocade, SG Cowen sees risks from a weakened competitive position, an aggressive revenue ramp assumption for Rhapsody-based products, and an increasing reliance on OEMs to scale the business. McDATA, on the other hand, has strong product demand and expanding OEM channel opportunities, according to Jung.
“Given McDATA’s large installed base at the high-end and the director’s high-end features and support for both Fibre Channel and FICON, we believe McDATA can protect its leading share in the director segment,” Jung said.
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