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Brocade: Data, Data, Data . . . and More Data

SAN (Storage Area Networks) is an emerging technology. Basically, it allows companies to store huge amounts of data without clogging regular computer networks. A SAN is setup as a separate, parallel network, which deals exclusively with storage needs, so there is no interference with a company's regular networks. What powers the SAN architecture is the Fibre Channel protocol, which allows for a high degree of efficiency for data storage.

One of the clear leaders in the SAN marketplace is BROCADE (BRCD) . True, there is a good share of competition, such as Gadzoox Networks, Atto Technology, Vixel and Emulex. Then again, Brocade commands about 60 percent of the Fibre Channel systems business, and 36 percent of the overall Fibre Channel market.

Most importantly, BROCADE has shown that it can turn a profit. In the past quarter, net revenues surged to $42.7 million, a 434 percent increase over the $8 million from last year. Net income for the first quarter was $7.3 million, compared to its net loss of $1.8 million for the same fiscal period last year.

The company has managed to attain this growth by signing agreements with systems integrators. IDC projects end-users will pay $1.6 billion in 2003 for Fibre Channel switches, up from $83 million in 1998.

Ten more BROCADE integrators were recently welcomed to its European systems channel: Redstor, who will join Kingswell in the UK; BASIS Advanced Information Technologies GmbH and IQproducts in Germany; COPE and ASETRAmags in Switzerland; ProAct and Dimension in Scandinavia; 2Ai and AntemetA in France; and Telematics and Services in Belgium. To maximize sales, these integrators undergo rigorous quality standards, such as certification.

BROCADE also has made original equipment manufacturer arrangements to sell the Fibre Channel storage switches to server and storage equipment vendors such as Dell Computer (Nasdaq: DELL), Compaq Computer (NYSE: CPQ), and EMC (NYSE: EMC).

BROCADE is becoming a godsend for many companies. For example, Commerzbank, which is a major bank in Germany, integrated BROCADE's Fibre Channel switches in its SAN environment. The BROCADE solution allowed the bank to meet the stringent European banking regulations for disaster recovery, reliability, and fault-resilience.

Or, take Sony Pictures Entertainment. The company is using BROCADE switches for its DVD production center. The DVD mastering process is highly complex and data intensive. Not only is BROCADE allowing SONY to produce large amounts of DVDs, but it is also done in a cost-effective manner.

With the SAN market growing rapidly, it is not tough to show growth. However, BROCADE is finding innovative ways to accelerate its growth. What's more, with the recent fall-off in NASDAQ, you can buy this quality company at a much better price.