Brocade buys up to fight Cisco

By Paul Montgomery

Brocade Systems has bought a small switch manufacturer called Rhapsody in an effort to combat Cisco's entry to the storage networking industry.

Brocade will give away 23.4 million shares, or about 10 per cent of its stock, for the company. Based on the last closing price of US$6.40, this would amount to US$150 million, although the date set for the transaction is in January. Brocade's shares fell US$1.01 overnight on news of the acquisition, a drop of 13 per cent.

The acquisition is being spoken of as being in reaction to Cisco Systems' buyout of Andiamo Systems, since both Rhapsody and Andiamo were developing so-called "next generation switches" which could handle Internet Protocol-based traffic over a storage area network. Brocade said the sale would help it "deliver the industry's first open, intelligent platform for fabric applications".

Brocade said Rhapsody's switches, which have not been released as yet, would be "highly complementary" to its range of SilkWorm fabric switches, adding Fibre Channel over IP and iSCSI support to SilkWorm's existing Fibre Channel capabilities. The company promised to ship integrated systems including Rhapsody technology before the end of October 2003.

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