Brocade's installed base of Fibre Channel storage-area networks is both an asset and an albatross.With a 65% share of the SAN market, the company is in an enviable position to jump on next-generation data center opportunities due to its established presence and familiarity among IT professionals in current data center infrastructures.Slideshow: 7 Innovative Data Center DesignsYet, as the industry moves to a converged LAN\/SAN infrastructure with Ethernet at the core, Brocade must balance the trend delicately. It must migrate its installed base to Fibre Channel-over-Ethernet without disrupting the revenue stream and profit margins it currently relies on from that base. It must also stave off aggressive competition from rivals -- chiefly Cisco -- invigorated by the next-gen data center opportunity.And it must demonstrate an expertise in Ethernet through a proven product line that appeals to customers, ability to integrate with Fibre Channel and a road map to embrace new Ethernet standard specifically for the next-gen data center opportunity.What's beyond 10G Ethernet?That's where the company's $3 billion acquisition of Foundry Networks in 2008 comes in. Foundry has a proven product line that carved out a 2%-plus share of the $17 billion Ethernet switching market over the past 10 to 15 years. But Brocade is now faced with refreshing that line, integrating it tightly with its Fibre Channel SAN base and making it attractive to new markets needing a next-gen, Ethernet-based fabric for their data centers."A challenge for Brocade as a company is trying to understand how you marry the two efficiently," says Zeus Kerravala, an analyst at The Yankee Group. "When you're the market leader in a technology like they are with storage that's sold through OEMs, you have to be very disciplined around how you do things. That's a different mentality when you're the little, niche 2% vendor challenging Cisco. You have to be nimble, you have to be quick, you have to be in your customer's face all the time. It's how do you take this unstructured process that Foundry had that allowed them to be versatile and nimble, and marry that with a heavy process-oriented organization like Brocade that's necessary for the company to sell through the channel it does. It's not clear to me that the two actually should mesh. They've allowed the two to run separately. You're not getting a lot of leverage from one to the other."The task has been a sticky one for Brocade to date. Sales of the Foundry product line dropped significant in the first quarter of Brocade's fiscal 2010 year. But the business finished the year strong, with a record fourth quarter in terms of revenue, which helped Brocade post a record revenue quarter of $550.4 million.Foundry is also well-entrenched in federal government networks: federal sales make up about a quarter of Brocade's Ethernet revenue. But that means it is also susceptible to upheavals in that market.After that solid fourth quarter, Brocade said the first quarter of 2011 would be flat to down some due partly to delayed spending bills going through Congress. And the federal market challenge comes at a time when Brocade is also significantly revamping its Ethernet product line.The company just announced the VDX line of data center switches that are optimized to deliver a lossless Ethernet fabric to the converged data center. The VDX line was kicked off with two access switches but a chassis-based core data center switch will be coming in 2011.The VDX switches are based on the Virtual Clustering Switching technique and Brocade One architecture Brocade introduced last June. But Brocade's challenge will be to demonstrate the advantages of its VDX switches, VCS technology and overall Brocade One data center\/cloud architecture over Cisco's Unified Computing and Juniper's Project Stratus data center fabric\/cloud computing plans.And Brocade must juggle this along with maintaining sales in its current generation Foundry switches as customers size up the new VDX line.CEO Mike Klayko is confident of Brocade's opportunity in light of these challenges."Foundry had a little niche in a high performance, very dense application," Klayko recently told Network World. "Now we're taking data center robustness to that Ethernet product set to create what we're calling Ethernet fabrics. We believe this is the most innovative product to come out in networking in the last decade, and I think it is the foundation that will carry us forward for another decade."Read more about data center in Network World's Data Center section.