Brocade set to Acquire ‘Connectem’ and Strengthen SDN, NFV Offering

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With the sustained focus on building out its software networking portfolio in order to help organizations transition to ‘The New IP’, Brocade has announced its plans to acquire Connectem, a privately-held company that has identified a way to bring the advances in virtualization techniques and Software Defined Networking (SDN) principles to the mobile wireless network.

Brocade was an early investor in Connectem and the decision to acquire the company is another master stroke and strategic move considering the growing momentum around enterprise mobility, machine-to-machine (M2M) and Internet of Things (IoT) connectivity.

Although the sum has not been disclosed, Brocade has confirmed that the acquisition will be an all-cash transaction. Upon completion of the acquisition, Connectem will be included in Brocade’s Emerging Business Group reporting to Ken Cheng, who leads the company’s technology strategy, software networking solutions, key business initiatives, M&A, and investment portfolio.

Connectem is the leader in developing & deploying the first Software based virtualized EPC running on standard datacenter infrastructure. With this vision and design for “Network transformation” carrier customers can combine assets in a way that provides unique services and superior products to their customers. The industry is saddled with the high cost of proprietary boxes and then with high operational cost due to the complex procedures and dimensionally challenged interconnection.

This domain has been yearning for transformation. This critical industry initiative of moving proprietary network assets onto commercial server technology is gaining momentum in the carrier community and has been validated under the auspices of a group of carriers that is supporting the concept of Network Functional Virtualization or NFV.

The potential benefit of this approach to the carrier community is revolutionary from both a CAPEX and OPEX perspective with the potential to reduce these costs to roughly 10-20% of current economic structure. Connectem believes that it will not only provide economic benefits but enhance the ability for carriers to increase service velocity and enable the monetization of network information for adjacent industries.

The acquisition of the ‘Mobile Virtual Evolved Packet Core Innovator’ extends Brocade’s leadership in software networking and virtualized network functions, by enabling service providers and enterprises to offer ubiquitous connectivity between mobile and IoT devices, data centers, as well as public and private clouds. Connectem’s vEPC solutions integrate seamlessly with Brocade’s software and physical networking product portfolios to deliver industry-leading New IP data center infrastructure.

Brocade is making all the right moves in order to align itself with trends that the company sees will have a major impact on the networking world. Early this year when making predictions for 2015, Yarob Sakhnini, regional director, MEMA at Brocade said that ‘it is no secret that the future lies in new compute models – such as mobile, cloud computing and the Internet of Things – and this will in turn lead to a major shift in networking and give rise to the New IP, a new networking paradigm that is better aligned with the evolution of the rest of IT – and increasingly open, software-driven, and user-centric’. He also predicted that SDN and NFV will really take hold and the Internet of Things will start to impact business.

With Gartner predicting that 26 billion connected units – from watches to refrigerators and treadmills to cars – are expected to be installed by 2020, businesses will need to cope with an ever-growing network of connected devices generating and accessing data. Many of these connected technologies will be brought on to existing corporate or public networks, making investment in the underlying infrastructure that supports these advancements absolutely essential.

“This acquisition strengthens Brocade’s position in the networking industry as the adoption of software-centric networking continues to accelerate,” said Lloyd Carney, CEO of Brocade. “I am very pleased to bring this technology into our portfolio as we invest strategically in New IP across NFV and SDN to provide seamless data center and cloud solutions.”

Nishi Kant, CEO of Connectem made a statement saying that ‘Connectem’s pioneering technology dramatically improves the flexibility, scalability, and total cost of ownership of mobile vEPC solutions and that the Connectem team is excited to realize the full extent of this vision as part of Brocade, a widely recognized leader and innovator in software networking.’

The acquisition of Connectem is another key component of Brocade’s transformative investment strategy, complementing the acquisitions of Vyatta, Vistapointe, and the recently-announced SteelApp virtual ADC product line from Riverbed. “This acquisition reaffirms our SDN and NFV strategy,” said Ken Cheng, CTO and Senior VP of Corporate Development and Emerging Business for Brocade. “We believe the Connectem technology is a key enabler for emerging markets including IOT, M2M, Industrial Internet, and enterprise mobile data services.”

Terms of the acquisition are not being disclosed, and it is expected to close in Brocade’s second quarter of fiscal 2015, subject to customary closing conditions and regulations. Following the acquisition, Brocade expects its FY15 financial performance to be consistent with the non-GAAP operating margin target of 25% provided during its fiscal first quarter earnings call on February 19, 2015.

 


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