Economic slowdown = opportunity for Brocade
By Goh Thean Eu January 25, 2016
- Disruptive economic environment forces customers to explore other options
- Expects double-digit growth this year for its Malaysian business
US-based networking company Brocade Communications Inc aims to grow its business in Malaysia by double-digits this financial year, believing it can only benefit from the current economic slowdown.
“A disruptive economic environment like this forces customers to explore other options,” said its South-East Asia regional director Beni Sia (pic above).
“If you are the incumbent, this will not be a good position for you to be in. To me, this is a more conducive environment to start the conversation of why should you maintain the status quo,” he said at a recent media lunch in Kuala Lumpur.
Brocade provides enterprise-grade switches, routers and controllers that are used in data centres, large enterprises, telecommunications services providers, and others.
For its financial year ended Oct 31, 2015, it recorded US$2.26 billion in revenue globally. Over 54% of that revenue came from the United States.
Brocade, founded in 1997, is seen as one of the newer players in the networking gear space, which is dominated by bigger players such as Cisco Systems Inc and Juniper Networks Inc.
Cisco recorded total revenue of US$49.16 billion in its financial year ended July 25, 2015; while Juniper’s nine-month period ended Sept 30, 2015 already saw revenue at US$3.53 billion.
The picture for global IT spending is not rosy however. According to analyst firm Gartner, it is likely to be rather flat this year at US$3.54 trillion, a mere 0.6% increase over the US$3.52 trillion spent on IT in 2015.
This year, Malaysia’s economy is set to grow at a slower pace. According to The Edge Markets, the International Monetary Fund (IMF) has lowered its 2016 GDP (gross domestic product) growth forecast for Malaysia from 4.5% to 4.4%. It estimates GDP to have grown by about 4.8% in 2015.
And while Malaysia’s economy may be still growing, there are looming concerns for businesses, such as the weakening of the ringgit versus other major currencies, and the plunging price of oil, on which the country depends a lot for its income.
On the tech market side however, the outlook for Malaysia, surprisingly, is rather bright, with Gartner expecting IT spending here to hit RM69 billion (about US$16 billion) in 2016, up 7.6% over 2015.
“Today, there are so many advancements in terms of technology that there are more cost-effective ways to do things,” said Brocade Malaysia country manager Sean Ong.
“There are companies that are used to following certain standards, and now that the budget is tight, they can’t afford those standards.
“There are also customers which are looking to change and adopt new technologies such as software-defined networking (SDN) and network functions virtualisation (NFV).
“These are the kind of opportunities we are looking at,” he added.
Brocade Malaysia claims to have grown its revenue last year by “strong double digits,” and is expecting double-digit growth again this year, although the company did not give specifics.
One reason for Ong’s (pic) optimism is the fact that Brocade’s resellers are becoming more “comfortable” selling its products, rather than just pitching those from the big boys.
“As you know, we are not a big brand like the incumbents, and most resellers, when they propose something to customers, tend to take the easiest way out [by proposing incumbent products],” he said.
“Today, we notice that our resellers are comfortable selling our products, not only on major projects, but also to replace some of the other vendors’ solutions with ours.
“That’s very comfortable,” he added.
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