McData has revealed plans to purchase CNT.
McData estimated that the merger will wring $25 million to $35 million from it and CNT’s combined annual costs, and this saving should drop down to the bottom line. However the two companies have heavily overlapping product lines, most obviously in the high-end director market, where McData’s Intrepid 10,000 device competes directly with CNT’s UMD. McData yesterday would not reveal any of its integration plans, and its CEO John Kelley said only that the i10,000 and UMD clash will need to be reconciled.
The biggest benefits of the merger for McData are likely to be the acquisition of CNT’s long distance storage networking hardware and services business, alongside a removal of a competitor from the marketplace, and a near doubling of its revenue to around $800 million annually.
The latter will be especially important because McData, like the other incumbents of the SAN market, is dwarfed in size by Cisco. It’s important to be seen as a viable long-term player and we have to be able to afford to keep up with the R&D roadmap. Clearly, size matters, said Jeff Vogel McData vice president of corporate development and strategy.
Although McData like CNT offers long distance storage networking equipment, it has not been nearly as successful in this sector as CNT. CNT began life as a specialist in long distance storage networking, and only broadened out into the wider SAN market when it bought director maker Inrange Technologies in 2003. In the same year McData made a mirror image of that move, when as an established director and switch maker it bought into long distance storage networking by acquiring Nishan Systems.
But Nishan, whose products are based on the iFCP protocol, has been nowhere near as successful as CNT, whose IP storage networking gear is based on the less sophisticated FCIP protocol, which has also been adopted by Brocade and Cisco. Yesterday McData stressed its commitment to iFCP. We see no reason not continue with iFCP-based routing, the company said.
