So Brocade's agreement to buy Foundry Networks is "a move that could challenge Cisco's dominance in the network equipment market" (San Jose Mercury News ) , packs the "potential of making Brocade a stronger competitor against networking powerhouse Cisco Systems" (Information Week) and will "pose a direct challenge to Cisco" (Associated Press).
Well, maybe. But probably not.
Reading about this deal, it's hard to erase the image of Cisco CEO John Chambers sitting in a sumptuous office stroking a white cat. Two much smaller competitors combining could make Cisco look a little less like the dominant force in its category if you squint hard enough, and that could be good news for Cisco and others as their immense scale makes them obvious targets for regulators. But if it swings through the trees, is covered in hair and has a large appetite for bananas, then it's probably an 800-pound gorilla, and Cisco remains the 800-pound gorilla of internetworking.
This, it seems to me, is the way the industry is heading. Oracle can buy up a ton of other ERPs but it's still small beer compared to SAP. Google might buy every web startup in Silicon Valley but it still doesn't have anything to compete with Microsoft's Office. Sun buys StorageTek but that doesn't make it EMC. And HP can add Compaq, EDS and Mercury to its mix but it's still IBM's Mini-Me.
The category leaders are out there and they ain't budging. Just like Premiership football, the established order is becoming very hard to change: give Newcastle United Â£100m and they might move up the league a few places; give Brocade $3bn and we'll see if we notice a big difference. Combining the second placers and the stragglers is worth something in terms of business efficiencies and taking out a competitor but the real consolidation may already have occurred.