As Brocade and Ruckus are set on a path towards business integration – the combined entity will pave way to greater level of growth and productivity.
In an exclusive discussion on the future business prospects for Brocade, Gabe Breeman-Senior Director, OEM and Channel Partner Business, Asia Pacific and Japan, Brocade speaks with Zia Askari from ChannelDrive.in about a number of things in store for the company and also about how the Brocade-Ruckus combined entity will create greater opportunities for the channel ecosystem.
Tell us about some of the key priorities you have specifically for the Indian market?
When I look at the growth market that we serve in the world and in this region, China and India are our top priorities where we have a unique opportunity to be part of this transformation. China is transforming very fast. Now we are in Bangalore, New Delhi and Mumbai where we sit with the leaders who are driving this massive transformation.
Everything is going towards ‘software defined architectures’ and we are excited to part of this because Brocade is a pure networking company. We are investing in this country and we have invested in several ways and have grown our presence. We have built our channel organization and we have also established an engineering entity in Bangalore. So this is a vital market to our strategy.
Can you please tell us more about this road show that Brocade is doing?
We are conducting this road show in New Delhi with Hitachi, HP, EMC, Fujitsu and the name of the road show is Storage Networking Road Show.
As part of this road show, we reach out to our customers and try to solve the problems that they are facing due to massive data explosion. We have targeted top 100 customers in this road show. It is a very interesting road show that we conduct with our partners and not on our own.
Is this your first visit to India?
I have been coming here for the past 10 years. I live in Singapore and I am responsible for the APJ business. I have been with Brocade for more than eight and a half years and I am responsible for the partnerships like HP, Fujitsu, and now I run the entire partner business in these regions.
What are some of the defining trends that you are looking at while you target the Indian market?
The internet of things, adoption of wireless technologies as the single most important edge technology and the opportunities it presents, excites us. There are 1.2 billion people in India and statistically speaking more than half of these people have smart phones. More importantly 1/3 of the population participates in social media which is creating data and massive growth of data on the front end and back end. If you think about us as a heritage data center and Storage Company and the management of data becomes critical and this is where we see the growth opportunities.
One of the thing that we talked about in the forum for example was legislation and compliance in the health care industry. The company and government entities are now getting compliance to keep every health care record created but not in a place like Bangalore or Mumbai – but in the cloud environment and also to keep the data safe for the existence of the person’s life plus 10 years. This is just one example and you see all these new devices and mobile edge creates a challenge for the data management and you cannot throw it away. This is a big challenge not the increased volume but the economics of the data. We are gathering all these data, making sense out of it and in the mean time we have to manage all of it. This is a huge opportunity for Brocade to help through the innovation that we deliver.
We hear a lot of interesting stories about 5G and how industrial internet of things is going to create even greater data delusion as you will have bottles and ash trays talking to each other which is already happening. So in that scenario what kind of innovations can we expect from Brocade?
We are an open standard based company and what that means is we interoperate. You will find us either on the software side or the hardware side, IP networks or fibre channel networks, software defined networking, Wi-Fi networks. So you will find that we are working hard to create that ecosystem partnership and it is our DNA. If you think about data center networking portfolio, we have partnerships with nearly all technology companies. We are a pure play networking player and are a pure open standard networking company which allows us to innovate fast, contribute to open source and allows us to open new opportunities to innovation.
How strong is your partner ecosystem in India as of now? Also can you share the numbers of partners you have in India and what kind of partners you are expecting to grow with?
We are getting stronger, we have ambition, and we are aspiring to be a formidable player in this market. On the channel front, in the last few years, we have taken a hard look at the transformation in the market and we have moved to software networking and we are continuing to move to that direction beyond the cloud service provider.
So when you ask me how many partners do you have, we have 100s of partners, we are looking for tight value add revenue opportunities with our partners. So it does not have to be a large number of partners rather we be exclusive with a few as far as both agree at formidable revenue objective and growth path.
What are your core strengths concerning partners?
We are strong in three areas- we have select open systems so for transactional businesses it is very simple to join us and we love to have more of distributor partnerships than premier level and elite level. And these are partnerships around specific components around virtualization, campus, and healthcare. So this is where we do little bit of market segmentation. We look at key players with whom we can work, why we work together and how.
What are some of the focus verticals that Brocade has today?
We are very strong in the service provider and enterprise segment and are increasingly focusing on hospitality, campus and education. Education is a very important segment for us. We are very excited about the intent to acquire Ruckus. We have been working with Ruckus for quite some time in this market too. We are in no way competitors and we have overlap of channels. We have done some engineering and integration work on the backend. We have security protocol that we co-develop and we are already down that path of partnership. I am very excited that in this sum, it is not a zero sum gain but one plus one gain or even a lot more because now we have end to end solutions that we can bring to their portfolio.
I see on the partner side, you won’t be having any issues because there will be completely different set of partners which Ruckus has and they have to be just added to your list?
There are a few overlap of partners as we have been building partners in this region for quite some time. There is going to be a lot of partners who will be getting complementary portfolio from Brocade and as soon as we will close this acquisition, we will figure out ways to enable that root to the market. If you are a Ruckus partner today, you will be Ruckus partner tomorrow and the added benefit is that your root to market will not be only the Ruckus portfolio but the Brocade portfolio as well. That is the obvious benefit that we are going to deliver and it is the other way round as well. So as soon as we close, we will start working on that integration and we are not going to say good bye to anyone and will welcome all.
What is the near strategy for Brocade to welcome the Ruckus ecosystem?
We are going through some internal education, we will figure out what things fit where. I think for sometime it will be perfectly separate as we work to create deeper innovation in our combined portfolio and the roots to market will remain intact and I think what will happen is that we will see the market opening new opportunities to Ruckus partners and to our teams as well. That is going to be our plan. I respect the business that Ruckus has built over the past years. It is a very credible and reputed organization and I do not see any reason to affect this anyway other than to make use of our combined values.
You must have seen that the Indian government is all out in terms of making sure that technology usage is increased so whether it is through creation of smart cities or enabling low cost smart phones so all that is becoming very important at the government level. So is there any role that Brocade is playing?
One of things that we were talking to the government leaders today was about the anticipation of the data asset to continue and the argument that we made was if you think back, 90% of digital media was created in the last two years. So where we spend a lot of our engineering effort is creating networks that is easily secured, safe and easy to manage.
We as a pure networking company have all these protocols and solutions in place, proven and tested by thousands of customers worldwide. So that is the value we bring to that discussion. We build a foundation on which these things come to life and stay up. There are two sides the way this is seen by networking people. In the IP world, most of the traffic is east-west traffic and that is the massive scale that we are building with all the Wi-Fi points and edge devices. But in the outside world the discussion is about the availability rather reliability. In the data center, we are talking about availability which is a different discussion. So one of the things that we bring to our customers are fabrics. We have got a strong history in fibre channel fabrics and we have identical value built in the IP fabric as well.
You have not spoken about the size of the Brocade – Ruckus deal?
Under the terms of the agreement, Ruckus stockholders will receive $6.45 in cash and 0.75 shares of Brocade common stock for each share of Ruckus common stock. Based on the closing price of Brocade’s stock on April 1, 2016, the transaction values Ruckus at a price of $14.43 per common share, or approximately $1.5 billion, and may fluctuate until close. Net of estimated cash acquired, the transaction value is approximately $1.2 billion.
