Brocade Grows IP Networking Business in 3Q15

Friday Aug 21st 2015 by Sean Michael Kerner
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Brocade's CEO is now seeing opportunities in the Software Defined Networking (SDN) space.

Brocade announced its third quarter fiscal 2015 financial results on August 20, showing renewed reasons for Software Defined Networking (SDN) optimism.

For the quarter, Brocade reported revenue of $552 million for a one percent, year-over-year gain. Net income was reported at $92 million, up from $87 million in the third quarter of 2014.

Looking at Brocade's product mix, its SAN storage product revenues were reported at $309 million for a five percent year-over-year decline. In contrast, IP networking market revenues grew by 16 percent year-over-year to $154 million. Part of Brocade's IP networking revenue now comes from the SteelApp virtual application delivery controller business it acquired from Riverbed in February.

One area of additional further growth for Brocade will be in the emerging landscape for both SDN and Network Functions Virtualization (NFV) technologies.

"On the NFV front, I think, much has been written about, how it was overhyped in the beginning, now it's getting back to a more acceptable norm, " Lloyd Carney, Brocade's CEO, said during the company's earnings call. "We're seeing the large service providers and the large hosting providers as the most likely early adopters of this technology."

Carney added that when it comes to enterprise, so far SDN is still too complicated for them at this stage.

"So we have focused ourselves on the clients mostly likely to adopt NFV, " Carney said.

When it comes to what NFV and SDN deliver, the key promise isn't about capital expenditure saving. Carney said that while there can be some marginal capital expenditure savings, the primary reason for SDN adoption is usually about the structural and operational efficiency that a network can achieve.

Carney added that when it comes to telcos and figuring out next generation networks, they are enthusiastic about trying to find out what the next technologies are to help them better monetize their businesses.

"So they're looking at this as the way of really getting their business right sized for the next two, three, four, five years," Carney said.

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist.

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