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The stock deal is valued at $175m (£112m) and is expected to close in January. The transaction will give Brocade a new class of multiprotocol switches that can run network-based storage applications such as storage virtualisation, an area in which the company lacks expertise.
"My concern with Brocade had been that they needed more intelligence in their ports," said Arun Taneja, an analyst at Enterprise Storage Group. "The rules of the game had changed. I think this is a wonderful acquisition for Brocade and the industry."
Brocade chairman and chief executive officer Greg Reyes, explained that Rhapsody's technology and engineering team will help Brocade accelerate the next phase of the SAN market's evolution.
Brocade expects to offer the new switches, with full interoperability with Brocade's existing SilkWorm family of fibre channel switches in the second half of next year, said Jay Kidd, director of product marketing at Brocade.
Kidd explains the switches are available today to software developers from Brocade and had been available for some time from Rhapsody.
Rhapsody had been working with various partners, such as StorageAge Networking Technologies, FalconStor Software and Veritas Software who had begun developing software that would run on Rhapsody's storage application directors rather than on the individual host servers.
Unlike traditional FC switches, the new class of switches promises to centralise storage applications within the SAN itself, rather than running on the host or the storage systems.
Cisco Systems is also building an intelligent storage switching platform with technology gained in its August acquisition of Andiamo Systems. That deal was also a stock transaction and will be valued based on sales of Andiamo products by Cisco during a three-month period shortly preceding the closing.
Cisco's acquisition of Andiamo Systems was the company's foray into the fibre channel switch market. Along with the acquisition in August, Cisco also introduced Andiamo's products to the market under the MDS 9000 family.
Initial releases included the 9500 series of multilayer directors and the MDS 9216 multilayer fabric switch. The 9500 comes in 6, 9 and 13-slot versions, while the 9216 came equipped with one fixed slot containing 16 ports of 1 or 2GB fibre channel and one expansion slot for additional ports.
Brocade intends to take on an undetermined number of the 110 employees at Rhapsody to finish building the platform. The offices will, eventually, be consolidated at Brocade's headquarters.