Any number of pundits will tell you BRCD is on the ropes, hanging by a fingernail, ready to succumb to a combination of 1.) flat growth rates in FC and, consequently, no TAM to fuel BRCD’s expansion in the data center; 2.) technology obsolescence at the hands of FCoE and big price and margin erosion in core storage products due to insufficient differentiation; then 3.) a plunge into the really deep end with the Foundry acquisition, which the punditry avers will destroy BRCD’s very foundation.

Sounds pretty bad. But wait! Our checks show BRCD is far from rolling over, taking it on the chin or moving to the Jersey Shore. In fact, PGR’s network accentuates the positive noting BRCD style and panache that should stand it very well this year.  Check it out:

 FC demand is robust because of refreshes and green-field opportunities. If someone counted the total number of FC cable, HBAS and switches in 2010 vs. 2009, they might not see a big difference but it seems no one is counting the huge “rip and replace” opportunity in the ongoing storage and data center consolidation build out.

 There is a huge co-location capacity squeeze. New co-lo space is expected to come on line throughout 2010. And, although SANs by and large do not saturate BRCD 8Gb/sec Director class switches, it is only an INCREMENTAL cost to refresh the SAN with high-performance products as part of an upgrade in the co-los. Furthermore, BRCD is well positioned to handle FCoE when it becomes real. That and CSCO has stopped attempting to “buy accounts” with the largely unimpressive Andiamo legacy products. Hence, we do not expect accelerating product erosion.

 Everyone likes to say that if BRCD could “do it over again,” they would have given the Foundry acquisition a second thought. However, the reality is that BRCD controls its own destiny if it can manage the integration of the Foundry products well. In that scenario, it is quite possible for BRCD to “pick off” some incremental share from the likes of JNPR. And, with sufficient effort, they can move up in the networking hierarchy. HPQ’s acquisition of COMS is the end of any possible merger with BRCD because the war in the data center between CSCO and HPQ will center around the winner of the storage battle.  All that and BRCD is a free agent that can join either side.

Not so bad after all, we say.

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