Broadcom’s purchase of Brocade will further consolidate the chip and data centre systems markets and heighten competition in next-generation workloads says Krista Macomber. Senior Analyst at researcher TBR. It says it is buying the network specialist to address storage connectivity needs more holistically. Broadcom aims to access Brocade’s Fibre Channel storage-area network (SAN) switching capabilities, to capitalize on the shift to more commoditised and converged underlying data centre infrastructure with more comprehensive storage connectivity capabilities.
Chip vendor Broadcom’s intention to acquire networking provider Brocade is another development in a steadily churning data centre market increasingly characterized by substantial — and in some cases radical — business model evolutions from major long-established vendors. As evolving, modern business requirements, such as real-time processing of exponentially growing and divergent pools of data, fundamentally disrupt long-standing IT architectures and sales models, chip, system and services vendors lean on acquisitions and divestitures to accelerate the pace at which they adapt their portfolios in tandem.
If approved, Broadcom’s $5.9bn deal with Brocade would result in a semiconductor organization positioned to address evolving and critical storage connectivity requirements more effectively and the release of a networking systems and software organisation for acquisition by a larger OEM poised to address customers’ shift to converged and software-defined data centres more comprehensively.
Next-generation technologies such as cloud computing, the Internet of Things and artificial intelligence (AI) require new and more tailored processing capabilities. As customer demand for these capabilities rises rapidly, the semiconductor industry grows unstable, with vendors applying a series of large-scale deals to maximize their future profits and longevity in this quickly evolving market. For example, Broadcom was just acquired by Avago Technologies in February for $37 billion, one of the largest technology acquisitions in history, to drive scale and better serve customers’ mobile connectivity needs. Avago Technologies subsequently adopted the Broadcom name.