Broadcom's Emulex Bid Inspired by Cisco's Data Center Push

Broadcom made an unsolicited bid of $764 million for Fibre Channel chipmaker Emulex this morning, a deal that offers a 40 percent premium over Emulex’s share price at Monday’s market close. Broadcom, which is an industry leader in Ethernet chips that help connect servers inside the data center, is now trying to get its hands on the chips that hook the computers to the storage network. This move is in line with those made by gear makers Cisco and Juniper, which are pushing for a more prominent role for networking in the data center.

Corporations have a lot of digital information and can’t afford to manage it inefficiently. The emerging idea is that enterprises need to move away from the old-school, server-centric data centers, toward a real-time data processing model that is network-centric. Cisco’s new servers are part of this revolution, and thanks to the ability to virtualize everything inside its unified computing system, it can offer a box that allows for the three parts of a data center — the servers, storage and networking — to function as a seamless unit.

Cisco’s system incorporates a networking box that combines Ethernet and Fibre Channel. With its offer to buy Emulex, Broadcom could to take the integration further and unite two distinct networking technologies on a a single board — and potentially even unite them at the chip level if corporate data center clients really buy into this network-centric vision.

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