Since launching its Sphereon 4500 switch back in October, McData has gradually tunneled its way into Brocades share of the sub-32-port SAN switch segment (see Brocade Hit With Q2 Loss). McDatas success appears to have prompted Brocade to slash prices on its 16- and 32-port SilkWorm switches.
Last month, Ader brushed aside concerns that Brocades pricing pressure could seriously hurt McData, pointing out that the Sphereon has a less expensive architecture than the SilkWorm switches. "We do not believe Brocade has enough pricing room to foil McData gains," Ader wrote in his June note.
Today, however, Ader gave Brocades discounts a bit more weight, pointing out that the company has been more aggressive than expected on price cuts. He adds, however, that competition from Cisco Systems Inc. (Nasdaq: CSCO) does not seem to have affected McDatas quarter. Last month he said Cisco was more of a threat to Brocade than to McData. (Ader could be reached for additional comment by press time.)
The Street, meanwhile, seems to expect Brocades "short-term nuisance" to give McData a whopping headache. While McData was getting pummeled, Brocade saw its stock jump nearly 4 percent on the news, ending the day at $6.82 a share.
Eugénie Larson, Reporter, Light Reading
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